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| A Spanish seller and a French buyer concluded a contract for the sale of two elephants to be used in a circus show. The buyer paid the full contract price on a seller's bank account at a French bank. When the French authorities refused the permission to import the elephants, the buyer avoided the contract and the seller refunded a part of the price paid. The buyer commenced a legal action before the Tribunal de Commerce de Paris claiming the refund of the balance of the price paid and damages for lost profit. The first instance court declined its jurisdiction in favor of the Spanish court of the seller's place of business (Tribunal de Commerce de Paris, 08-07-1997). The buyer appealed.
The Court of Appeals held that the contract was governed by CISG (Art. 1(1)(a) CISG) and stated that the spontaneous restitution by the seller of a large part of the contract price confirmed that the contract had been avoided, so that, according to Arts. 81(2) and 84 CISG relating to the effects of avoidance, the buyer was undoubtedly entitled to be refunded the entire price paid and to be awarded interest accruing from the date of payment. As to the matter of jurisdiction, the Court applied Art.5(1) of the EC Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels, 1968), which states that a person domiciled in a Contracting State may be sued in the Court for the place of performance of the obligation in question (in the case at hand: the obligation to refund the price paid as the prevailing obligation in question), to be ascertained according to the substantive law governing the contract (in the case at hand: CISG). The Court noted that CISG does not contain any specific provision on the place of performance of the seller's obligation to refund the price paid in case of avoidance of the contract, so that the question was to be settled by applying the interpretation provisions in Art. 7(2) CISG, which, in the case of a mere lacunae of the Convention, requires the court to decide in conformity with the general principles on which CISG is based. Thus the Court referred to Art. 57(1) CISG, according to which if the buyer is not bound to pay the price at any other particular place, it must pay it at the seller's place of business or, if the payment is to be made against the handing over of the goods or of documents, at the place where the handing over takes place. The Court held that this provision does not express a general principle on the place of payment, because in the cases it governs the seller and the creditor coincide. Therefore the obligation to pay at the seller's place of business may well correspond both to the principle of payment at the seller's place of business and to the principle of payment at the creditor's place of business. Therefore the question had to be settled in conformity with the law applicable to the contract by virtue of the rules of private international law, which the Court, applying Art. 3 of the 1955 Hague Convention on the law applicable to the sale of goods, found to be Spanish law according to which the place of payment was in Spain. The Court therefore held that the Spanish Courts had jurisdiction. |