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| An Austrian company (the buyer) was charged by a company of Panama with the purchase and carriage of liquors to Moscow. The company of Panama insisted on transportation by truck and the buyer accepted. Pursuant to this agreement the buyer bought liquors from the Swiss branch of a company with head place of business in Liechtenstein (the seller) which undertook to transport the goods to Moscow. The buyer paid a part of the price in advance but the goods were not delivered due to a dispute between the parties regarding the means of transportation agreed upon and the buyer's duty to open a letter of credit. The buyer commenced an action asking for refund of the price, whereas the seller counterclaimed damages deriving from the buyer's refusal to take delivery of the goods.
The Court held that the contract was governed by CISG although the head place of business of the seller was in Liechtenstein, a non Contracting State. According to Art. 10(a) CISG when a party has more than one place of business, the place to be taken into account is that which has the closest relationship to the contract and its performance. In the case at hand the Court found that the Swiss branch had the closest relationship to the contract, therefore CISG was applicable (Art. 1(1)(a) CISG). As to the substance of the dispute, the Court held that the question of the burden of proving an agreement concerning the means of transportation was covered but not expressly settled by CISG and had to be solved by recourse to the applicable domestic law, according to which the seller as plaintiff bore the burden of proof. Since the Court could not ascertain whether the parties had reached an agreement on the means of transportation, Art. 32(2) CISG was applied, whereby if the seller is bound to arrange for carriage of the goods, it is up to the seller to choose the means of transportation most appropriate in the circumstances. Therefore, the seller had not breached the contract by arranging for carriage partly by truck and partly by train. Neither was the buyer entitled to declare the contract avoided because the seller had not delivered within the time agreed upon. Absent an express agreement of the parties, delivery has to be done within the usual time that the means of transportation chosen by the seller take to reach the place of delivery. In the Court's opinion the goods would have arrived in time if they had actually been delivered, which however did not happen as a consequence of the buyer's failure to fulfil the prealable condition of the opening of a letter of credit. The Court found that refusing to open the letter of credit the buyer had breached its duty to comply with all formalities required by the contract for payment (Art. 54 CISG). Therefore, the seller was entitled to declare the contract avoided after fixing an additional time of performance and failing performance by the buyer within that time (Art. 63(1) CISG). As a consequence of the avoidance, both parties were liberated from their contractual obligations and had to make restitution of the performance already received (Art. 81 CISG). Therefore the buyer was entitled to the refund of the price paid in advance, plus interest on it from the date the price was paid (Art. 84 CISG) Absent any determination of the interest rate in CISG the Court referred to the law otherwise applicable to the contract, that is Swiss law. Finally the Court observed that while avoidance of the contract does not exclude the right to obtain damages (Art. 61 CISG), the seller did not provide evidence of damages suffered and therefore it was granted only recovery of the costs for correspondence and warehousing (Art. 74 CISG). As to the question of the calculation of damages not determined in their amount, the Court considered it a question excluded from CISG and governed by the applicable domestic law. |