|A French buyer ordered marzipan from a German seller. The seller confirmed the order by fax, stating that the purchase price was to be considered as: frei Haus, unverzollt, unversteuert (franco domicile, custom duty unpaid, untaxed). After delivery of the goods the buyer brought an action against the seller before a French Court alleging that the goods were defective and claimed damages for lack of conformity. The seller pleaded lack of jurisdiction of the French Court and denied any claim for damages. Shortly afterwards it filed a declaratory action with a German Court.
The case was decided only on the jurisdiction matter with an interim judgment. In order to assess the jurisdiction of the German courts, the lower Courts applied Art. 5(1) of the EC Convention on Jurisdiction and the Enforcement of Decisions in Civil and Commercial Matters (1968 Brussels Convention), according to which a person domiciled in a Contracting State (the seller) may be sued in the Court of the place of performance of the main obligation in question, which in the case at hand was the place of delivery of the goods by the seller (Germany). Both the Court of first instance and the appellate Court found that they had jurisdiction. The Supreme Court confirmed the decisions of the lower Courts.
The Supreme Court applied Art. 31 CISG to determine the place of delivery of the goods, referring to the factual reasoning of the lower Courts. In order to understand the correct meaning of the delivery clause (franco domicile, custom duty unpaid, untaxed) used by the seller in its letter of confirmation, the Supreme Court referred to Art. 8(1) and 8(3) CISG interpreting the clause according to the buyer's understanding of the buyer in the circumstances of the case, including the negotiations and practices which the parties have established between themselves. It was found that the clause did not imply an agreement about a particular place of delivery, as the parties did neither during negotiations, nor after the conclusion of the contract talk about the place of delivery. According to Art. 31 CISG, therefore, the place of delivery was the seller's place of business (Germany) and the jurisdiction of the German Court was confirmed.