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| An Italian seller and a Finnish buyer concluded a contract for the sale of industrial machinery. After delivery the seller was declared bankrupt. In consideration of the fact that the buyer had paid only a part of the purchase price, the trustee in bankruptcy of the seller sued the buyer before an Italian Court, claiming the payment of the balance. The buyer denied that the Court had jurisdiction over the case, arguing that jurisdiction should be vested in a Finnish Court. The buyer also contested the claim on the merits, with particular reference to a subsequent agreement on payment of price concluded by the parties.
The First Instance Court affirmed its jurisdiction on the basis of Art. 6(1) of the Convention on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters (Lugano 1988) and granted the seller’s claim on the merits. The buyer appealed. The Appellate Court confirmed the First Instance Court's decision, stating that jurisdiction was vested in the Italian Court, but relying on a different ground. The Court pointed out that the action brought by the trustee of the seller for the full payment of price was to be qualified as an action in contract and not in bankruptcy, the trustee being in the same position as the seller. Consequently the Court applied Art. 5(1) of the Lugano Convention, according to which a person domiciled in a contracting State may be sued before the Court of the place of performance of the disputed obligation. As to the applicable law to determine the place of performance of that obligation, the Court held that, as both parties had their places of business in contracting States, CISG had to be applied, except for its provisions on contract formation as Finland had declared that it did not accept Part II of CISG (Art. 92 CISG). The Court further pointed out that the dispute was not related to the formation of contract but to the execution of the subsequent agreement made by the parties, concerning the terms of payment of purchase price. Since the parties in this agreement did not determine the place of payment, the Court applied Art. 57(1)(a) CISG, according to which if the buyer is not bound to pay the price at any particular place, it must pay it at the seller’s place of business (in the case at hand, Italy). Thus, the first instance decision was confirmed as to the question of jurisdiction and the buyer was condemned to pay the balance of the price. |