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| A Danish buyer ordered steel pipes from an Italian seller, as previously done. In the order buyer stated that the terms of delivery was “Franko Skanderborg”. According to Danish law this means that the seller must bear cost of freight and that place of delivery is at buyer's place. The seller confirmed the order stating that terms of delivery were “F.CO DOMIC. NON SDOG” (franco domicile non sdognato). According to Italian law this does not indicate the place where the goods must be delivered, but only that seller is to bear cost of freight. The goods were produced in Italy and transported to Denmark, and then resold and delivered to a buyer in Norway. As some of the pipes were defective, the buyer sued the seller before a Danish court for damages, equivalent to the claim the Norwegian buyer requested.
The case was decided only on the jurisdiction matter with an interim judgment, on appeal from the lower courts. In order to assess the jurisdiction of the Danish courts, the Supreme Court 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 may be sued in the Court of the place of performance of the main obligation in question. As the main obligation in question was the delivery of the goods, the question was whether the place of delivery was in Denmark or in Italy. The parties agreed, that Italian law governed the contract. The buyer argued that according to Art. 6 CISG, Art. 31(a) CISG was derogated by the order stating that delivery was to be at buyer's place in Skanderborg. This was not altered by the term “F.CO DOMIC. NON SDOG” since this was to be understood as the INCOTERM term DDU (Delivery Duty Unpaid), which was also used in the carrier's invoice to seller. Furthermore, this understanding was to be derived from the practice between the parties according to Art. 9 CISG, since seller previously had paid damages to buyer when ordered goods where damaged by a carrier. Finally, the term “Delivery: free Skanderborg, packing incl.” was used in a subsequent order from buyer, which was confirmed by seller's order of confirmation stating ”CONDITION AS USUAL”. The seller counter argued that the term “F.CO DOMIC. NON SDOG” according to Italian law did not alter the place of delivery, but simply placed the costs of freight on seller. Furthermore, the invoice from the carrier to seller was of no importance for the interpretation of the contractual relationship between seller and buyer. Finally, buyer did not prove the existence of a practice between the parties establishing the alleged place of delivery, and the payment of damages in previous orders was gratia payments. Therefore, place of delivery was in Italy, according to Art. 31(a) CISG. The lower court decided in favour of seller. In its decision, the court stated that the term “F.CO DOMIC. NON SDOG” was a part of the agreement, and that the term did not correspond to the INCOTERM “DDU”. Furthermore, a “Franco” clause in international sales contracts often only indicates cost of freight, but not place of delivery. The agreement between the carrier and seller was of no importance, and it was not substantiated that practice between the parties was of relevance. Therefore the place of delivery had to be decided according to Art. 31(a) CISG. Accordingly, the place of delivery was in Italy and therefore the court had no jurisdiction. The Supreme Court confirmed this decision stating that the parties' agreement did not indicate the place of delivery. The term DDU in the invoice from the carrier to seller did not derive from seller, and therefore this was not a decisive argument. Finally, buyer did not prove the existence of a practice in the parties' trade saying that buyer's place was the place of delivery, and therefore the place of delivery was in Italy according to Art. 31(a) CISG. Consequently, there was no venue in Denmark according to Art. 5(1) in the Brussels Convention. |