International sale of goods between private business: the applicable law is the Vienna Convention of 1980

The Convention, by establishing uniform substantial rules governing the international sale of goods, prevails over the private international law rules of the contracting States

In case of an international sale of goods, if the contracting parties are located in Countries that have signed the Vienna Convention of 1980, it prevails over the rules of domestic private international law, as it establishes a uniform substantive discipline conferring the character of speciality; this is what the Court of Cassation, Second Civil Section, has ruled in its judgement no. 1867 , 25th January 2018. The case brought to the attention of the Court of Cassation involved the company Alfa, which applied to the Court of Busto Arsizio for an injunction against Caius, the owner of a sole proprietorship under the same name, seeking payment of the price for the supply of goods correctly delivered ; the Court granted the injunction, ordering Caius to pay the sum of 19,087.56. The defendant challenged the injunction on the ground that it had never requested nor received the goods in question and that, in any event, the orders had been placed by the other Gamma company;Alfa, on the other hand, argued that the orders were in all respects attributable to the sole proprietorship of Caius, since Caius, over time, had confusingly placed cumulative orders for both companies, using both his own and Gamma′s tax identification number; however, it observed that the orders referred to in the injunction he is challenging were always placed under the tax identification number of the sole proprietorship Caius. The Court of First Instance rejected the objection and upheld the injunction and Caio challenged the judgment before the Court of Appeal. He submitted, inter alia, new documentation relating to the supplies from which, according to Caius, it should have been clear that Gamma had been incorporated in Germany and that, therefore, pursuant to Italian Law 218/1995, the applicable law was the national law of the place where the company was incorporated, i.e. the German law; alternatively, on the basis of the lex contractus, it also held that the applicable law was nonetheless the German law, since the purchase orders bore the words "Es gilt das Recht der BRD", i.e.: the applicable law is the law of the Federal Republic of Germany. The Court of Appeal rejected the appeal, on the grounds that the new documentation was not permitted pursuant to Article 345 of the Code of Civil Procedure, and that the allegation as to the applicable law was extremely general; in any event, the debt referred to in the contested injunction was pertaining to the sole proprietorship of Caio. Therefore, the appellant appealed to the Court of Cassation. Insofar as it is of our concern hereto, the relevance of the appellant′s complaint is that the court of merit failed to identify the applicable law, given that the criteria set out in Law 218/1995, and in particular Article 14 thereof, according to the appellant, should have led to the application of the German Commercial Code. In fact, the appellant claimed that since the case at hand had elements of internationality, the trial judge was obliged to apply the Italian Private International Law n. 218/1995, according to which the contractual relationship in question should have been governed by the German Commercial Code. Thus the trial judge infringed the rule of interpretation provided for by German law, whose correct application would certainly have led to the conclusion that the contract had been entered into with Gamma and not with the sole proprietorship Caius. In that regard, the Court of Cassation considers that the judgment of the Court of Appeal, while being correct on the merits in rejecting the appeal, must be modified in respect of the statement of reasons, which it does not endorse in so far as it held inadmissible the objection relating to the law governing the contract in the absence of a specific indication of the applicable foreign provisions. The Court of Cassation remarks that it is the judges obligation to search for the sources of law ex officio and that this obligation is also to be referred to the laws of foreign legal systems, identified, if necessary, with the instruments set forth in Law No. 218 of 1995, art. 14. It is a duty of the judge to use any means for the acquisition of such laws, without there being any burden of indication or documentary allegation on the party invoking them. Besides, the precise identification of the applicable law is not subject to any estoppel as the judge is obligated to determine the relevant law ex officio by virtue of the principle iura novit curia. Well, in relation to the applicable law, the Court of Cassation also points out the error of the appellant himself, since rules of substantive law should take precedence over provisions of private international law in determining the law that governs the contractual relationship. The case before the Court involves clear elements of internationality, given that it concerns a dispute over the supply of movable goods between a company in Italy and another economic entity established in Germany. In this regard, the Court notes that even prima facie the law governing the disputed contracts appears to be based on a source of uniform substantive law, namely the United Nations Convention on Contracts for the International Sale of Goods of 1980 (the so-called CISG), ratified by Law No. 765 of 11 December 1985 and entered into force on 1 January 1988. The Court states that the preference for the United Nations Convention over the rules of private international law "is essentially based on a judgment of the prevalence of uniform substantive law over the latter rules.... ...Uniform substantive law, in fact, has by definition the character of speciality, since it solves the problem of the regulation of the case directly, that is, it avoids the double step of first identifying the applicable law and then applying it, as necessarily has to happen when the rules of private international law are used. As a matter of fact, the present case has its origin in a contract for the sale of movable goods falling within the type defined by the Convention and concluded between two economic operators established in two different States, both of them contracting to the Convention. Thus, the Court notes, all the elements of the present case lead to the application of the 1980 United Nations Convention on Contracts for the International Sale of Goods. Nevertheless, it must be observed that Article 6 of that Convention allows the parties to the contract to exclude its application and that both Italian and foreign case-law have long recognised the possibility of such exclusion also tacitly, i.e. by stating in the contract significant elements of the will to make it subject to a different legal regime. As correctly pointed out by the case-law, however, such elements must clearly and unequivocally reveal that the parties had a conscious intention to exclude the application of the Convention. In view of these principles, the Court of Cassation analyses the wording on the purchase forms "Es gilt das Recht der BRD" (literally: the applicable law is the law of the Federal Republic of Germany), considering it inadequate to demonstrate the conscious intention to exclude the application of the CISG by virtue of the fact that the International Convention also forms an intrinsic part of the German legal system, as well as of the Italian one. Moreover, the courts unanimously hold that the mere indication of the national law is not sufficient for the application of solely domestic law. The Court of Cassation′s application of these principles leads it in its judgment No. 1867 of 25/01/2018 to reject the appeal brought by Caius, which, basically, was aimed at demonstrating that the contractual relationship under dispute should be governed by the German Commercial Code. Nevertheless, the motivation of the judgment of the appellate court, while being correct on the merits, has to be modified such as to show that the source regulating the relationship sub iudice is undoubtedly to be found in the so-called CISG. Incidentally, the Supreme Court also did not fail to point out that Art. Article 79(1) of the Convention, which provides that "A party is not liable for a failure to perform any of its obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences", sets out a general criterion on the allocation of the burden of proof, in accordance with the rule that onus probandi incumbit ei qui dicit and that the judge on the merits correctly appreciated and assessed the evidence given by the appellant. In conclusion, is drawn from Cass. , sec. II, 25/01/2018 no. 1867, the following principle of law: "Where an obligation arising out of an international sale is brought before the court, the parties to the contract must refer to the Vienna Convention on the Sale of Goods of 11 April 1980 (made enforceable by Law 765/1985). No. 765 of 1985), which, in laying down a uniform substantive discipline, applies irrespective of the rules of private international law of the contracting States, as the uniform substantive law has the character of speciality, since it resolves directly the problem of the regulation of the case, avoiding the double step of identifying the applicable law and then applying it in accordance with the rules of private international law (In the present case, the S. C. held that the reference to the application of German law made by the parties to the purchase orders was not capable of excluding the applicability of the Convention, which is an integral part of the law of the Federal Republic of Germany)". 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