January 2012
Does the Vienna Convention apply to the international sale of goods.
The Supreme Court, Commercial Division (Cass. Com.), 13 September 2011
The Supreme Court has clarified important issues on the opt-out provisions of the Vienna Convention of 11 April 1980 on contracts for the international sale of goods (the CISG).
Bear in mind that the CISG governs the sale of goods between two parties located in different countries (the formation of the contract of sale and the effects of such a contract). The CISG has effectively led to the creation and availability to the parties of a uniform law for the international sale of goods.
It is now ratified by 77 countries.
Under its provisions, the CISG applies when the contract falls within its scope and the parties have not expressly waived it.
The CISG also applies to every contract for the international sale of goods, when the States in which the seller and buyer have their places of business are Contracting States or the rules of private international law lead to the application of the law of a Contracting State.
In a dispute between a French company and a Columbian company, the parties had submitted their contract « to French law ».
Therefore, the Court of Appeal of Aix-en-Provence applied French law.
The Supreme Court overturned the Court of Appeal’s decision, stating that the parties had not submitted the contract to domestic French sales law, but to substantive French law incorporating the CISG, that imposes a uniform law for international sale of goods.
From this decision, it can be seen that, as a result of the conflict of laws and with regard to an international sale of goods, the CISG is now French law.
In the light of the above, contractors wanting to submit an international sale of goods contract to French law should ensure that they expressly exclude the CISG.
The sudden termination of an established business relationship and international relations.
The Court of Appeal of Versailles, 29 September 2011
An exclusive French distributor had its business relations with a Spanish supplier terminated suddenly.
The distributor referred the French courts to Article L. 442-6 I 5° of the commercial code, by virtue of which : « The following acts committed by any producer, trader, manufacturer or person listed in the trade register render the perpetrator liable and entail the obligation to redress the prejudice caused: (...) Suddenly breaking off an established business relationship, even partially, without prior written notice commensurate with the duration of the business relationship and consistent with the minimum notice period determined by the multi-sector agreements in line with standard commercial practices».
The question that arose was whether the French courts had jurisdiction over the dispute arising from this sudden termination.
Although, since 2007, it is well established under domestic law that compensation for prejudice caused by the sudden termination of an established business relationship arise from liability in tort, it had to be established whether EU law agreed with this analysis.
The Spanish company alleged that as this case was essentially contractual, Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction, the recognition and enforcement of judgments in civil and commercial cases, applied and, therefore, that jurisdiction should be attributed to the courts in the place in which the obligation that was the basis of the claim was to be performed, namely Sabadell in Spain.
At first, the Court of Appeal of Versailles agreed with this analysis and dismissed the French company’s claim.
The Supreme Court then overturned that ruling and referred the parties back to the Court of Appeal of Versailles with a differently constituted bench.
The reviewing Court of Appeal of Versailles ruled that this case was tortious in nature and, therefore, that the courts of Nanterre had jurisdiction to recognise it, under the provisions of Regulation 44/2001, and applied the provisions of Article L. 442-6 I 5° of the commercial code.
Therefore, in the absence of an enforceable jurisdiction clause, a French company, the victim of the termination of a an established business relationship by a company whose place of business is in another member State, can bring a claim against it in the French courts to obtain compensation for prejudice suffered.
