An Italian seller and a Malaysian buyer concluded a contract for the sale and the installation at buyer's place of a plant for the processing of metal. The seller brought an action in an Italian Court requesting the Court to ascertain that the plant conformed to the terms of the contract. The buyer objected that the Italian Court had no jurisdiction to hear the case.
The Italian Supreme Court applied Art.5 (1) of the EC Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters (Brussels 1968,incorporated into the 1995 Italian Act on Private International Law, according to which a person be sued in the Court of the place of performance of the obligation in question. In order to determine the place of performance, the Court referred to CISG, applicable in the case at hand since the relevant Italian rules of private international law (Art. 3 of the 1955 Hague Convention on the law applicable to international sales contracts) led to the application of the law of a contracting State (Italy, where the seller had its place of business)(Art.1 (1) (b) CISG).
The Supreme Court held that the Italian Judge had no jurisdiction. In reaching this conclusion the Court argued that the place of performance of the seller's obligation was the buyer's factory in Malesia. Admittedly the contract provided for the delivery of the components of the plant "FOB-Northern Italian Port", but the same contract also provided that the components had to be assembled and installed at the buyer's factory in Malesia by seller's technicians. Consequently the place of performance of seller's obligations under the contract was not the place of handing over the goods to the first carrier according to Art. 31 CISG, but the factory of buyer in Malesia where the plant had to be installed by seller.
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