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| Abstract | ||||||||||||||||||
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| In January 2002, an Italian company (Plaintiff) and a Scottish company (Defendant) entered into an agreement whereby the latter agreed, inter alia, to buy a certain number of pocket ash-trays from the former over the year. Since delivery of the goods was dependent upon the issue of a bank guarantee, a couple of months later the parties concluded a new agremeent involving another Italian company (distributor of Defendant’s products in Italy) which acted as guarantor. Subsequently, Plaintiff delivered to both Defendant and its distributor a certain number of items, which turned out to be defective and dangerous due to the excessive sharpness of the blades. Upon notice of the defects by Defendant, Plaintiff replaced all the blades; yet the subsequent sale of the goods was seriously prejudiced by their bad reputation on account of their dangerousness. Then the buyer filed a motion for arbitral proceedings claiming damages before the Chamber of Commerce, Industry and Handicraft of Canton Ticino which had jurisdiction over the case pursuant to a forum selection clause agreed upon by the parties.
The Arbitral Tribunal ordered Plaintiff to pay damages in favour of Defendant. In reaching this conclusion it found that the two agreements entered into by the parties resulted in a sole sales contract to which CISG was applicable (Art. 1(1)(a)) and that the first delivery of the goods amounted to a breach of contract by Plaintiff since the pocket ash-trays had turned out to be unsuitable for ordinary use (Arts. 35, 49 CISG). Plaintiff appealed and requested the Swiss Supreme Court to declare avoidance of the arbitral award on the ground of infringement of Swiss public order. Plaintiff argued, inter alia, that since the sales contract between the parties could not be deemed international and the parties had expressly chosen Swiss law as the law governing the contract, by applying CISG and the two-years cut-off period set forth in its Art. 39(2) for notice of lack of conformity (in contrast with the shorter period provided by Swiss law) the Arbitral Tribunal had violated public order and the pacta sunt servanda principle. Plaintiff's claim was dismissed. In doing so, the Swiss Supreme Court found that Plaintiff’s contention as to the international nature of the sales contract was untimely, while the Arbitral Tribunal had correctly considered as valid and binding the choice-of-law clause; consequently, the pacta sunt servanda principle had not been violated. Nor would a different solution by the Supreme Court with respect to the meaning of the choice-of-law clause and, as a result, to the length of the time-limit for notice of lack of conformity have amounted to an infringement of public order as, in order for this to happen, fundamental principles of Swiss legal system have to be violated. |