United Nations A/CN.9/SER.C/ABSTRACTS/176*

General Assembly

Distr.: General

1 December 2016

Original: English/French

V.16-10249 (E) 081216 091216

*1610249*

United Nations Commission on

International Trade Law*

CASE LAW ON UNCITRAL TEXTS

(CLOUT)

Contents Page

Cases relating to the United Nations Convention on Contracts for the International Sale

of Goods (CISG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Case 1631: CISG [7; 8]; 46; 47; 48; 49; 50; 51 - Australia: New South Wales Supreme

Court, No. 50185/06, Guang Zhi Gao Australia PTY Limited (GDA) v. Fortuna Network Pty

Ltd (Fortuna) (4 November 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Case 1632: CISG 1(1)(a); 6; 19; 92; 97(4); 100 - Denmark: Sø og Handelsretten,

No. SH2015.H-20-14, Blohm + Voss Oil Tools GmbH v. C.C. Jensen A/S (15 September

2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Case 1633: CISG 39; 39(2) - France: Court of Cassation, Commercial Division, Appeal

No. 14-25359, Caterpillar Energy Solutions GmbH v. Allianz IARD SA, Electricité

industrielle JP Fauche SA and CirclePrinters Europe SA (21 June 2016) . . . . . . . . . . . . . . . . 6

Case 1634: CISG 1(1)(a); 58; 59 - Mexico: Tribunal de Apelación de Baja California,

Banks Hardwoods California LLP v. Jorge Ángel Kyriakides García (24 March 2006) . . . . . 7

Case 1635: CISG 35 - Norway: Agder Appeals Court, LA-2012-186207, Gulvplassen AS v.

Homburg Houtimport B.V (7 June 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Case 1636: CISG 1(1)(a); 25; [39]; 61(1); [62] - People’s Republic of China: Zhejiang High

People’s Court, Zhe Shang Wai Zhong Zi No. 144 (2013) (27 December 2013) . . . . . . . . . . . . 8

Case 1637: CISG 1(1)(a) - People’s Republic of China: Supreme People’s Court, Min Shen

Zi No. 1402 (2012) (24 December 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Case 1638: CISG 1(1)(a); 47(1); 49; 80 - Russian Federation: The International

Commercial Arbitration Court at the Russian Federation Chamber of Commerce and

Industry, Arbitral award in case No. 14/2014 (3 December 2014) 10

Case 1639: CISG 9(2) - United States: Bankruptcy Court for the Eastern District of

Pennsylvania, 511 B.R. 738 (Bankr. E.D. Pa., 18 June 2014), In re World Imports, Ltd.

(18 June 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

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* Reissued for technical reasons on 23 January 2017.

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Cases relating to the United Nations Convention on Contracts for the International Sale

of Goods (CISG) and to the Convention on the Limitation Period in the International

Sale of Goods (1980, amended text) (Limitation Convention) . . . . . . . . . . . . . . . . . . . . . . . 12

Case 1640: CISG 3(1)(b); 8; 11; Limitation Convention (1980, amended text) [8];

9(1); 19 - Poland: Warsaw Court of Appeals, I Aca 368/14, Company W. v. Company S.

(23 July 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

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Introduction

This compilation of abstracts forms part of the system for collecting and disseminating

information on Court decisions and arbitral awards relating to Conventions and Model

Laws that emanate from the work of the United Nations Commission on International

Trade Law (UNCITRAL). The purpose is to facilitate the uniform interpretation of these

legal texts by reference to international norms, which are consistent with the international

character of the texts, as opposed to strictly domestic legal concepts and tradition.

More complete information about the features of the system and its use is provided in the

User Guide (A/CN.9/SER.C/GUIDE/1/REV.1). CLOUT documents are available on the

UNCITRAL website: (www.uncitral.org/clout/showSearchDocument.do).

Each CLOUT issue includes a table of contents on the first page that lists the full

citations to each case contained in this set of abstracts, along with the individual

articles of each text which are interpreted or referred to by the Court or arbitral

tribunal. The Internet address (URL) of the full text of the decisions in their original

language is included, along with Internet addresses of translations in official United

Nations language(s), where available, in the heading to each case (please note that

references to websites other than official United Nations websites do not constitute an

endorsement of that website by the United Nations or by UNCITRAL; furthermore,

websites change frequently; all Internet addresses contained in this document are

functional as of the date of submission of this document). Abstracts on cases interpreting

the UNCITRAL Model Arbitration Law include keyword references which are

consistent with those contained in the Thesaurus on the UNCITRAL Model Law on

International Commercial Arbitration, prepared by the UNCITRAL Secretariat in

consultation with National Correspondents. Abstracts on cases interpreting the UNCITRAL

Model Law on Cross-Border Insolvency also include keyword references. The abstracts

are searchable on the database available through the UNCITRAL website by reference

to all key identifying features, i.e. country, legislative text, CLOUT case number,

CLOUT issue number, decision date or a combination of any of these.

The abstracts are prepared by National Correspondents designated by their

Governments, or by individual contributors; exceptionally they might be prepared by

the UNCITRAL Secretariat itself. It should be noted that neither the National

Correspondents nor anyone else directly or indirectly involved in the operation of the

system assumes any responsibility for any error or omission or other deficiency.

____________

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Cases relating to the United Nations Convention on Contracts for the

International Sale of Goods (CISG)

Case 1631: CISG [7; 8]; 46; 47; 48; 49; 50; 51

Australia: New South Wales Supreme Court

No. 50185/06

Guang Zhi Gao Australia PTY Limited (GDA) v. Fortuna Network Pty Ltd (Fortuna)

4 November 2009

Original in English

Available at: http://www.austlii.edu.au

In early 2005, a Chinese air-conditioner manufacturing company, through its

Australian agent, the plaintiff, entered into a contract with an Australian company

(i.e. the defendant) owner of a trademark used to sell a range of goods, including

air-conditioners. During the course of their commercial relation, the parties signed a

series of agreements for the commercialization of Chinese air -conditioners using the

defendant’s trademark brand. The defendant, in return, would be in charge of the

marketing and after sale services. However, the defendant was faced with a high

volume of warranty claims from consumers, which at first were solved by the

shipment of new units to replace the defective ones, but ended up with the complete

suspension of the sales of the air-conditioning units. As there were no further sales of

air-conditioners they remained in stock, depreciating at the defendant’s expense. To

solve the issue, the defendant requested financial assistance from the Chinese supplier

for the replacement of the non-conforming goods and used its own resources to make

some of those replacements. The supplier did not provide any financial assistance but

rather sent some technicians to investigate and assist in the replacements. Eventually,

the parties entered into a final agreement (September 2006), which according to the

plaintiff was a deed of release that terminated their contractual relationship. One of the

most important questions before the court was whether such purported deed of release

was valid or not.

The defendant, contending the validity of the deed, claimed to have avoided the

contract through a conversation that occurred in late December 2005 or early January

2006 and argued that under the CISG it is not necessary for any more formality than

simple oral evidence. It further stressed that under Article 51 CISG, where the seller

delivers only part of the goods or if only part of the goods are in conformity with the

contract the buyer may, under Articles 46 to 50 of the Convention, declare the contract

avoided in its entirety if the failure amounts to a fundamental breach of contract

pursuant to Article 25 CISG.

Although acknowledging that the transaction was governed by the CISG, the Court

went on to consider whether the contractual relationship had been in fact terminated

by the purported deed of release. In order to establish if the deed was valid, the Court

needed to consider, among others, whether the deed was wholly or partly in writing. In

this regard, after noting that the deed was not wholly in writing, t he Court stated that

“[w]here a contract is partly written and partly oral, the terms of the contract are to be

ascertained from the whole of the circumstances…”. The Court thus made its factual

decision based on which witnesses were reliable, the parties’ intentions, the

circumstances leading to the necessity of the purported deed and the degree of

formality that it had and applied domestic law to rule that the deed was a binding and

legally enforceable contract.

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Case 1632: CISG 1(1)(a); 6; 19; 92; 97(4); 100

Denmark: Sø og Handelsretten (Maritime and Commercial Court)

No. SH2015.H-20-14

Blohm + Voss Oil Tools GmbH v. C.C. Jensen A/S

15 September 2015

Original in Danish

Available at: http://domstol.fe1.tangora.com

Abstract prepared by Joseph Lookofsky, National Correspondent

In 2009, a German company (B), which had been commissioned to restore a historic

yacht, engaged a Danish company (S) to replace the yacht’s portholes. Claiming that

the portholes subsequently supplied by S were defective, B sued S in the Maritime and

Commercial Court in Denmark.

Although the parties agreed that their dispute regarding the conformity of the

portholes was governed by “Danish law” (as opposed to German law), they disagreed

as to whether or not the CISG, which is part of Danish law, applied in this case, and

their disagreement on this applicable law issue was rooted in a classic “battle of

forms”. In the offer which S originally submitted to B, as well as on several

subsequent occasions, S referred to “ECE 188”, the well-known standard form which

designates “the law of the Vendor’s country” as the applicable law. In its reply to that

original offer, however, as well as on several subsequent occasions, B referred to its

own standard terms which expressly excluded the CISG, even when it would

otherwise apply by default.

On the applicable law issue, the Danish court held in favour of B, ruling that the CISG

did not apply in this case. In this connection the court emphasized that S, in its

final revised invoice to B, had simply referred to B’s final revised order, which

included B’s standard terms, i.e. on this particular occasion, S had not, as previously,

referred to its own standard (ECE 188) terms. In holding in favour of the party who

got in the “last shot”, the court did not state whether it based that decision on Danish

domestic law or on CISG Part II on Contract Formation. But since neither party’s

lawyers had argued on the basis of CISG Article 19 or any other CISG rules, the

court’s decision regarding the applicable law was surely grounded in Danish domestic

contract formation rules. Notably in this regard, although the Article 92 declaration

made by Denmark when it ratified the CISG had been withdrawn pursuant to

Article 97(4) before this particular case was decided, that declaration nonetheless

continued to exclude the application of CISG Part II in this situation, since the

‘proposal for concluding the contract’ between the parties in this case was made

before the declaration was withdrawn, cf. Article 100.

Ultimately, on the merits, the court held in favour of the Danish defendant (S), in

that B, who bore the burden of proof, failed to convince the court that the portholes

were in fact defective. As noted by the court in this connection, neither party had

argued as to whether the outcome on this conformity issue might have been different if

the case had been decided under the conformity rules in CISG Part III.

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Case 1633: CISG 39; 39(2)

France: Court of Cassation, Commercial Division

Appeal No. 14-25359

Caterpillar Energy Solutions GmbH v. Allianz IARD SA, Electricité Industrielle JP

Fauche SA and CirclePrinters Europe SA

21 June 2016

Original in French

Published in French: Bulletin of Judgments of the Court of Cassation (forthcoming);

Légifrance: www.legifrance.gouv.fr; CISG-France database: www.cisg-france.org,

No. 272; CISG-online database: www.cisg-online.ch, No. 2742.

Abstract prepared by Claude Witz, National Correspondent.

In August 1999, a company based in Germany delivered two generators to a company

based in France. The generators were damaged in December 2001. In January 2003, the

French company brought legal proceedings against the German seller before the

Commercial Court of Meaux in order to obtain compensation for the damage suffered. In

its judgment of 27 June 2014, the Court of Appeal of Paris upheld the ruling under which

the buyer’s claim had been accepted, even though the seller had argued that the claim was

time-barred under German law.1 In that regard, the Court of Appeal of Paris ruled that the

United Nations Convention on Contracts for the International Sale of Goods (1980), which

was applicable to the case, “incorporates the New York Convention of 14 June 1974 on the

limitation period in the international sale of goods”2 and that that Convention “provides

that the limitation period is four years and may be extended to a maximum of ten years”.

Upon an appeal brought by the seller, the Court of Cassation rightly overturned the

judgment delivered by the Court of Appeal of Paris on two grounds.

Firstly, the Court of Cassation observed that neither France nor Germany had signed

the Convention on the Limitation Period in the International Sale of Goods. In light of

that fact, the Court of Cassation concluded that the Court of Appeal of Par is had

violated Article 55 of the French Constitution and Article 3 of the Convention on the

Law Applicable to International Sales of Goods of 15 June 1955.

Under Article 55 of the French Constitution, “treaties or agreements that are duly

ratified or approved shall, as of their publication, have precedence over national

legislation, subject in each case, to their implementation by the other parties.”

According to Article 3, first paragraph, of the Convention on the Law Applicable to

International Sales of Goods, “In default of a law declared applicable by the parties

[…], a sale shall be governed by the domestic law of the country in which the vendor

has his habitual residence at the time when he receives the order.”

Secondly, the seller had argued unsuccessfully before the Court of Appeal that the claim

made against it was inadmissible under Article 39 of the United Nations Sales Convention.

The Court of Appeal had nevertheless declared the claim admissible on the grounds that

it was not time-barred, thereby misconstruing the nature of the two-year period provided

for by Article 39, paragraph 2, of the United Nations Sales Convention. The Court

of Cassation overturned the judgment on the grounds that it violated Article 39 of

the United Nations Sales Convention and Article 3 of the Convention on the Law

Applicable to International Sales of Goods, ruling that “the period of two years

provided for by Article 39 of the United Nations Sales Convention is the period within

which the buyer must give notice to the seller of a lack of conformity rather than the

period within which the buyer must claim compensation for any damage” .3

__________________

1 See CISG France No. 12/00436.

2 Convention on the Limitation Period in the International Sale of Goods, 1974 (New York).

3 See Court of Cassation, 3 February 2009, No. 07/21827, CLOUT case No. 1027; CISG Digest,

art. 39, No. 29, note 344.

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Case 1634: CISG 1(1)(a); 58; 59

Mexico: Tribunal de Apelación de Baja California (Superior Court of Baja California)4

Banks Hardwoods California LLP v. Jorge Ángel Kyriakides García

24 March 2006

Original in Spanish

The dispute arose from a contract for the supply of wood between a United States

seller and a Mexican buyer. The buyer failed to comply with the payment of t he goods

received and the seller commenced a lawsuit in Mexico.

In court, the buyer acknowledged having received the goods but argued that between

the buyer and the seller there was a mutual agreement according to which the seller

would grant credit to the buyer to purchase the merchandise. Consequently, the

invoices were always payable after delivery of the goods. The buyer further argued

that this was a previously convened practice between the parties, which was the reason

why their commercial relationship continued even after the supposed deadline of the

last allegedly unpaid invoice had expired, and the buyer continued purchasing

merchandise from the seller for long after. In the buyer ’s view, Article 58 CISG was

thus not applicable because the simultaneous exchange of goods and price established

as a default rule in that article was not the usual practice between the parties.

Moreover, since the provisions of the Convention did not apply, the buyer further

contended that the seller, in order to receive payment, if there was any to be made,

first had to make a formal request as provided under Article 2080 of the Mexican

Federal Civil Code, before commencing any lawsuit. However, the buyer did not

provide any evidence of payment of the invoices presented by the seller, so the lower

court found in favour of the seller and ordered the buyer to pay the amount due.

The buyer appealed this decision to the Superior Court of Baja California. The Court

held that the CISG was applicable (Article 1(1)(a) CISG) and on the basis of

Article 133 of the Mexican Constitution the Convention displaced the application of

domestic law. Accordingly, the Court stated that the dispute should be resolved on the

basis of Articles 58 and 59 CISG. As to Article 58 CISG, the Court no ted that since

there was no specified time for payment and no evidence of either a different

previously agreed upon payment date or of the payment itself, the buyer had to pay the

seller the full price of the goods when those were delivered and/or made ava ilable to

the buyer. The Court also held that pursuant to Article 59 CISG the seller had no

obligation to make any formal request for payment or comply with any other formality

in order to receive payment on the agreed date. In this regard, the Court state d that

notices regarding the shipment and/or delivery of the goods are not mandatory

requirements in order to receive payment but they are rather adequate means to

demand it. Therefore, the seller may make use of such notices without them

constituting a formal requirement before initiating legal proceedings. The Court thus

affirmed the decision of the Court of first instance and ordered the buyer to pay the

due amount to the seller.

Case 1635: CISG 35

Norway: Agder Appeals Court

LA-2012-186207

Gulvplassen AS v. Homburg Houtimport B.V

7 June 2013

Original in Norwegian

This case primarily deals with the burden of proof under Article 35 CISG.

The case arose from a dispute between a Dutch seller (seller) and a Norwegian buyer

(buyer) about payment for wooden floors. The wooden floors delivered by the seller to

__________________

4 This case is cited in the CISG Digest (2016 Edition), available at: www.uncitral.org.

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the buyer cracked after installation. The buyer held that the cracks arose because the

floors, upon delivery, contained a higher percentage of moisture than agreed. Based on

this, the buyer claimed that the goods were not in conformity with the contract and

thus refused to pay the full price and demanded damages.

Norway and the Netherlands are both parties to the CISG, and the contract in question

was a contract for the sale of goods. Hence, absent a choice of the parties to the

contrary, the contract was governed by the CISG. At this time, the CISG was

incorporated into Norwegian law through the Norwegian Sale of Goods Act (SGA),

which governed both domestic and international contracts for the sale of goods. Thus,

although not explicitly mentioned by the court, which came to its conclusion without

reference to either the CISG, the Norwegian SGA, case law or academic commentary,

this issue was resolved on the basis of the Norwegian SGA Article 17 (consistent with

Article 35 CISG).5

The key issues in this case were (a) which party had the burden to prove whether the

goods conformed to the contract, and (b) what was the evidentiary threshold to prove

non-conformity. The Court stated that the party asserting that the goods are

non-conforming bears the burden of proof; in this case, the buyer. With regard to

whether the buyer had presented sufficient evidence that the wooden floors were

non-conforming, the Court found that the buyer had not met the evidentiary threshold.

The evidence presented proved that the wooden floors had cracked, but it did not

establish what had caused the cracks. Thus, the buyer had not provided sufficient

evidence to satisfy that the cracks in the floors arose due to non -conformity upon

delivery from the seller.

Case 1636: CISG 1(1)(a); 25; [39]; 61(1); [62]

People’s Republic of China: Zhejiang High People’s Court

Zhe Shang Wai Zhong Zi No. 144 (2013)6

27 December 2013

Original in Chinese

Published in Chinese: Judicial Opinions of China

Available at: www.court.gov.cn

The buyer, a United States company, and the seller, a Chinese company, entered into

two machine purchase contracts in 2008, pursuant to which the seller undertook to

manufacture the machine according to the requirements specified in the plans attached

to the contracts. If the seller were to visit the buyer in order to train the buyer ’s

technicians or to test and service the machine, all hotel charges and air fares would be

borne by the buyer. The seller would provide a 12 -month conditional warranty service

for replacement of damaged parts free of charge.

In October 2009, the buyer paid the entire cost of the machine and the machine was

delivered to the buyer in March of the following year. Later on, the seller visited the

buyer twice for testing and servicing the machine. In December 2012, the buyer

concluded that there was a serious defect in the machine and filed a lawsuit,

requesting the court to allow avoidance of the contract and to order the seller to return

the payment for the machine. The seller counterclaimed requesting the buyer to pay

the round-trip air tickets for its visit to the buyer to adjust and test the machine.

The Court held that the case constituted a dispute over a contract for the international

sale of goods and the Convention would apply pursuant to Article 1(1)(a) CISG, in

__________________

5 In November 2014, after this decision was rendered, the CISG was incorporated into Norwegian

law through a reference to the original CISG text instead of through the Norwegian SGA.

Consequently, this case should now be resolved through direct application of the CISG.

6 This case is cited in the CISG Digest (2016 Edition), available at: www.uncitral.org.

A/CN.9/SER.C/ABSTRACTS/176

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accordance with Article 142, Paragraph 2, of the General Principles of Civil Law of

the People’s Republic of China. Moreover, the Court noted that the application of the

Convention had not been excluded by the parties.

The plaintiff claimed it had expressly indicated that it would not agree to repair the

machine and insisted on avoidance of the contract and the return of all sums paid for

the machine. Whether such a claim should be supported was subject to a fundamental

breach of contract by the seller as defined in Article 25 CISG. The central point of the

dispute was whether the machine was defective and could not be repaired, as a result

of which the purposes of the contract would be unachievable. The Court held that

since the buyer had paid the full cost of the machine and had accepted delivery, this

would constitute preliminary recognition by the buyer of the conformity of the

machine to the contract. Further, the seller had twice sent its representatives to the

United States for the purposes of adjusting and servicing the machine, that action

falling within the scope of normal after-sales maintenance and repair. Thirdly,

according to the provisions of Article 39 CISG, the buyer loses the right to rely on a

lack of conformity of the goods if it does not give notice to the seller specifying the

nature of the lack of conformity within a reasonable time after it has discovered it or

ought to have discovered it. Two years had passed between the time of actual receipt

of the machine and the filing of the lawsuit, and the buyer had not provided evidence

that it had given the seller notice of a serious quality defect in the machine in question.

The buyer should therefore be deemed to have lost its right to claim for the machine ’s

defect. Therefore, the plaintiff ’s claim for avoidance of the contract and the return of

all sums paid for the machine could not be established.

With regard to the counterclaim of the defendant, according to Article 61(1) CISG, the

matter was whether the seller visited the buyer in order to train technicians and to test

and adjust the machine. The court held that the main purpose of the two visits by the

seller’s representatives was to test the machine and train personnel, and that that fact

supported the seller’s request for payment by the buyer of the air tickets purchased for

those visits.

The Court thus ruled against the plaintiff and supported the counterclaim of the

defendant. The plaintiff appealed, however the Court of second instance ruled that

there was no error in the judgment of the lower court and dismissed the appeal,

affirming that judgment.

Case 1637: CISG 1(1)(a)

People’s Republic of China: Supreme People’s Court

Min Shen Zi No. 1402 (2012)7

24 December 2012

Original in Chinese

Published in Chinese: Judicial Opinions of China

Available at: www.court.gov.cn

The plaintiff, an Egyptian company, sued the defendant for loss of goods. The Court of

second instance ruled that the evidence provided by the plaintiff was not sufficient to

determine that the defendant was the counterparty to the sales contract, and decided

against the plaintiff. The plaintiff petitioned for retrial, alleging that the Court of

second instance lacked evidence to prove the basic facts that it had determined, and

had erred in the application of the law. It requested that the judgment of the Court of

second instance be overruled and that its claim be upheld.

The Court of retrial held that there was no error in determining the fact that the case

concerned a dispute over a contract for the international sale of goods. With regard to

__________________

7 This case is cited in the CISG Digest (2016 Edition), available at: www.uncitral.org.

A/CN.9/SER.C/ABSTRACTS/176

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the issue of application of the law, since the transaction involving the goods in

question was carried out by means of a pro forma invoice, neither the buyer nor the

seller had agreed, through the invoice or otherwise, on the applicable law. Meanwhile,

given that both China and Egypt were contracting States under the CISG, the rights

and obligations of both the seller and the buyer should be governed by that

Convention (Article 1(1)(a)). In the absence of prior agreement by the parties on the

law applicable to any disputes between them, the Court of second instance held that it

was inappropriate to decide on Chinese law as the applicable law on the basis of the

principle of proximate connection. Moreover, a party’s objection to the application of

the Convention cannot amount to an exclusion of the CISG. However, since the

evidence submitted by the Egyptian company was insufficient to identify the

counterparty to the sales contract, the issue of the law to be applied did not affect the

outcome of the decision of the Court of second instance.

In conclusion, the application by the Egyptian company for retrial was rejected by the

Court.

Case 1638: CISG 1(1)(a); 47(1); 49; 80

Russian Federation: The International Commercial Arbitration Court at the Russian

Federation Chamber of Commerce and Industry

Arbitral award in case No. 14/20148

3 December 2014

Original in Russian

The issues before the court concerned the meaning of “non-delivery” under

Article 49(1)(b) CISG and what is to be considered “a reasonable length of time” in

light of Article 47(1) CISG.

A contract for the purchase of goods was concluded between a Dutch seller and a

Russian buyer. After making an advance payment, in accordance with the terms of the

contract, the buyer argued that the seller had not fulf illed its obligation to deliver the

goods, as the seller had not informed the buyer that the goods were placed at the

buyer’s disposal. The buyer sent a request to the seller to deliver the goods according

to the contract but it did not receive any reply. The buyer thus filed a lawsuit in court

to declare the contract avoided pursuant to Article 49(1)(b) CISG and recover the

advance payment since the seller had failed to deliver the goods even within the

additional period of time fixed by the buyer in accordance with Article 47(1) CISG.

The seller counterclaimed to receive compensation for the losses incurred as a result

of the buyer’s non-compliance with its obligation to accept delivery of the goods and

to receive the outstanding amount of the purchase price. The seller argued that it had

sent an official request to the buyer to receive those sums before action was brought to

court. The seller also stated that it had never received from the buyer any notice of

avoidance of the contract because of its alleged failure to deliver the goods.

The Court held that since the contract was concluded between parties whose

place of business was in two different Contracting States and the parties had

made reference to the Convention in their contract, the Convention was applicable

(Article 1(1)(a) CISG).

The Court further noted that the conduct of the seller did not constitute non -delivery in

the sense of Article 49(1) CISG, since the buyer did not prove that the seller had

committed a fundamental breach of its obligations (Article 25 CISG) and that the

seller had not delivered the goods within the additional period of time fixed by the

buyer pursuant to Article 47(1) CISG. Furthermore, the Court found that the additional

period of time of ten days fixed by the buyer to deliver the goods was not of

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8 This case is cited in the CISG Digest (2016 edition), available at: www.uncitral.org.

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reasonable length in light of the eight months production time of the goods sold. For

these reasons, the Court quashed the claim of the buyer.

Referring to the counterclaim of the seller, the Court noted that the seller had not

provided evidence that it had sent the buyer notice that the goods were at the buyer ’s

disposal according to the practice that they had established. Referring to Article 80

CISG, the Court thus stated that the seller may not rely on the buyer ’s failure to

perform to the extent that such failure was caused by the seller ’s omission.

Case 1639: CISG 9(2)

United States: Bankruptcy Court for the Eastern District of Pennsylvania (decision

affirmed by the U.S. District Court for the Eastern District of Pennsylvania, United

States, 19 January 2016 (2016 WL 215229))

511 B.R. 738 (Bankr. E.D. Pa., 18 June 2014)

In re World Imports, Ltd.

18 June 2014

Original in English

Abstract prepared by Harry M. Flechtner, National Correspondent

Sellers in transactions governed by the CISG shipped goods to a United States buyer,

who took over the goods and then initiated bankruptcy proceedings under United

States federal bankruptcy law without having paid the price. The sellers filed claims

for the goods’ value in the buyer’s bankruptcy proceedings, and argued that their

claims were entitled to enhanced “administrative expense” priority over other creditor

claims. The sellers’ argument was based on a provision of the United States federal

Bankruptcy Code that grants administrative expense priority to claims for the value of

goods that were sold to a debtor-buyer in the ordinary course of its business, provided

the goods were “received” by the buyer within 20 days before bankruptcy proceedings

were initiated. The sellers’ sales were conceded to be “ordinary course”; the issue was

whether the buyer “received” the goods for purposes of the Bankruptcy Code

provision within 20 days of initiating bankruptcy proceedings. United States federal

Bankruptcy Code does not expressly address when a buyer is deemed to have

“received” goods.

The sellers had delivered the goods to carriers in their home country more than 20 days

before the buyer filed for bankruptcy, but the buyer took possession of the goods from

the carrier in the United States within 20 days of the buyer’s bankruptcy petition. The

bankruptcy court for the Eastern District of Pennsylvania, the court of first instance

for the sellers’ claims, noted that, in transactions governed by generally-prevailing

United States domestic sales law (Article 2 of the Uniform Commercial Code (“UCC”)9),

the time when a buyer “receives” goods for purposes of the federal Bankruptcy Code could

be determined by reference to the definition in UCC § 2-103(1)(c), which provides that a

buyer receives goods when it takes “physical possession” of them. Under this

approach, the buyer would be deemed to have received the goods when it received

possession from the carrier within 20 days of initiating bankruptcy proceedings, and

the sellers’ claims would be entitled to priority as administrative expenses.

The debtor and the representative of non-priority unsecured creditors, however,

pointed out that the sales transactions at issue were governed by the CISG rather than

the UCC. The CISG does not define when a buyer “receives” goods, but the bankruptcy

court noted that the parties’ sales contract provided for delivery “FOB” port of origin;

although the parties had not expressly incorporated the INCOTERMS rules on the

meaning of their FOB term, the court found that those rules are incorporated into the

CISG under Article 9(2) as internationally-accepted trade usages. The INCOTERMS

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9 UCC Article 2 is the statute governing sales of goods in all United States states except Louisiana.

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V.16-10249 12/13

2010 rules for the term “FOB” also do not provide a definition of when a buyer

“receives” goods, but the bankruptcy court noted that those rules provide that “once

the seller delivers the goods, the risk of loss or damage passes to the buyer ”; “[o]nce

delivered [to the carrier],” the court concluded, “the goods are perforce constructively

received by the Debtor.” The court therefore ruled that the buyer “received” the goods,

for purposes of the United States domestic federal bankruptcy rule, when the goods

were “delivered” at the port of origin; thus the buyer had “received” the goods more

than 20 days before it initiated bankruptcy proceedings, and the sellers’ claims were

not entitled to administrative expense priority.

The apparent result of this decision is that sellers whose claims would be entitled to

administrative expense priority if United States domestic sales law governed their

transactions may not be so entitled if the CISG is the applicable law. On the facts of the

World Import decision, for example, a change in the law governing the sales — with

no other change in facts — would produce different results.10

The sellers appealed the bankruptcy court decision to the federal district court for the

Eastern District of Pennsylvania — normally a trial court but, in this bankruptcy

context, functioning as an appeals court. The district court adopted the reasoning of

the bankruptcy court, and affirmed the decision.

Cases relating to the United Nations Convention on Contracts for the International

Sale of Goods (CISG) and to the Convention on the Limitation Period in the

International Sale of Goods (1980, amended text) (Limitation Convention)

Case 1640: CISG 3(1)(b); 8; 11; Limitation Convention (1980, amended text) [8];

9(1); 19

Poland: Warsaw Court of Appeals

I Aca 368/14

Company W. v. Company S.

23 July 2015

Original in Polish

Abstract prepared by Małgorzata Pohl

In November 2004 the parties concluded a contract for the sale of machines and other

equipment. The contract was signed by the Dutch seller and the representatives of the

Polish buyer (the defendant). After the conclusion of the contract and after the first

invoice for the down-payment had been issued, the buyer asked the seller to amend

and redraft all of the invoices so that a different company (T.S.) would appear as “the

buyer”. The seller agreed and the invoices as well as the contract were redrafted

accordingly. This change was made, as the defendant explained, in order to take

advantage of more favourable payment conditions. In January 2007, the Dutch seller

assigned its claim for the outstanding purchase price to another co mpany

(Company W.). Later on, that company sued the Polish buyer before a Polish court

seeking the payment of the acquired claim. The payment was due since May 2005.

The Court of first instance dismissed the claim, holding that the Dutch seller and

Polish buyer had terminated the original contract of November 2004. The Court

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10

The parties to the transactions in World Imports provided for delivery of the goods “FOB” the port

of shipment. Because the transactions were governed by the CISG, the bankruptcy court concluded

that a buyer “receives” goods under that term at the port of shipment. UCC Article 2 contains its

own statutory definition of the term “FOB” in § 2-319, but with respect to the issues discussed by

the bankruptcy court it does not differ in substance from the INCOTERMS rules applied by the

court; nevertheless, when UCC Article 2 governs a sale, the bankruptcy court’s analysis of whe n a

buyer “receives” goods under an FOB term would apparently be pre-empted by the definition of the

term “receipt” in UCC § 2-103(1)(c).

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13/13 V.16-10249

explained that the defendant requesting the Dutch seller to modify the contract

replacing the defendant with a fictitious buyer (T.S.) had made an offer and the

redrafting of the contract and invoices amounted to an acceptance of such offer.

Therefore, a new contract had been concluded between the Dutch company and the

new buyer (T.S.) (according to Article 11 CISG no specific form is required to

conclude a contract). Furthermore, the Court found it irrelevant that the parties, in

January 2007, had redrafted the choice of law clause (indicating Polish law as

applicable) thus changing what was agreed in the sales contract of November 2004.

The Court of Appeals disagreed and reversed the decision. The defendant filed an

appeal to the Supreme Court, which quashed the decision of the Court of Appeals and

remanded the case to the court for further consideration.

When the case was reheard, the Court of Appeals pointed out that there was no

termination of contract between the Dutch seller and the Polish buyer. Although the

Polish buyer asked the seller to be replaced with another buyer in the contract and the

invoices, the Polish buyer clearly indicated that the new arrangement did not change

the previous arrangements between the parties. The buyer would remain the Polish

company and the purchase through a new buyer (T.S.) was done only for reasons of

financial convenience. Moreover, the goods in question were sent directly from the

Dutch seller to the premises of the Polish buyer, an arrangement accepted by the

defendant. Further, the new buyer (T.S.) did not take up an active role at any stage of

contract performance. It was the defendant that proactively finalized the contract and

had it enforced. As per the Supreme Court’s ruling, the parties’ conduct needs to be

interpreted in light of Article 8 CISG. In the case at hand, this resulted in the

conclusion that the defendant was the actual buyer and party to the contract, and that it

was obliged to pay the outstanding amount of the purchase price.

The Court of Appeals also dealt with the issue not previously examined in the

proceedings of whether or not the limitation period for the purchase price had expired.

There was no dispute that from the time of the conclusion of the contract until the

choice of Polish law in January 2007, the contract was governed by Dutch law (and by

the CISG). Since the Netherlands was not party to the “Limitation Convention”, Dutch

law was to be applied to determine whether the limitation period had expired.

However, since in January 2007 the parties had modified their choice of applicable

law opting for Polish law, the Limitation Convention would apply, as Poland is a

ratifying State of that Convention (Article 3(1)(b) Limitation Convention). Pursuant to

Article 9(1) Limitation Convention, the four years limitation period commences to run

on the date on which the claim accrues. However, in the case at hand, an application

for mediation had been filed with the Court in May 2007. In accordance with Article

19 Limitation Convention and with Polish law (Polish Civil Code, Article 123§1(1))

this action interrupted the running of the limitation period. The mediation, without any

settlement agreement, ended in July 2007, at which point a new limitation period of

four years had commenced (Article 19 Limitation Convention).

The Court thus found in favour of the plaintiff allowing also its claim for interest.