Data
- Date:
- 06-02-2019
- Country:
- Norway
- Number:
- HR-2019-231-A
- Court:
- Supreme Court
- Parties:
- Genfoor Inc. v. SchenkerOcean Ltd.
Keywords
APPLICATION OF CISG - CHOICE OF LAW OF TERRITORIAL UNIT OF A CONTRACTING STATE
SUSPENSION OF PERFORMANCE - STOPPAGE IN TRANSIT (ART. 71(2) CISG)
STOPPAGE IN TRANSIT (ART. 71(2) CISG) - NOTICE (ART. 71(3) CISG) - LEGAL CONSEQUENCES OF LACK OF NOTICE
LIABILITY OF CARRIER FOR NOT COMPLYING WITH SELLER'S ORDER TO STOP THE GOODS BEFORE DELIVERY - ISSUE NOT COVERED BY CISG
Abstract
A Canadian seller and two Chinese manufacturers concluded a distribution agreement for the supply of shoes. On the basis of the parties’ choice, the agreement was governed by the laws of Quebec. The shoes were to be resold to a Norwegian end buyer and delivered under a FOB clause to the port of Oslo. On the same day of the goods' arrival at the port of destination, the Norwegian buyer informed the seller that its bank had terminated the engagement and, as a result, it was not able to pay for the goods. Immediately thereafter, the seller instructed the carrier to retain the containers until further notice. The carrier disagreed with the seller's request and pressed the buyer for payment of the duty, VAT, port rents, and warehouse rents, threatening that, absent payment, it would have sold the goods to third parties. The buyer eventually paid for the claimed amount. and the carrier delivered the containers to it. A week later, the buyer entered bankruptcy proceedings and the seller sued the carrier for not having complied with the stoppage instructions.
The first instance and the Appellate Courts found for the seller. The carrier appealed to the Supreme Court.
First of all, the Court ruled that, since CISG applies both as state legislation in Quebec and as national legislation in Canada, the conditions for the exercise of the right of stoppage were to be determined under Art. 71 CISG.
As to merits, the Court rejected the carrier’s claim that the seller was not entitled to effect stoppage in transit because it was already aware of the buyer’s financial difficulties before the goods were shipped from China. Indeed, the buyer’s inability to pay became apparent to the seller only when it received notice that the bank had terminated the engagement.
Nor did the Court uphold the carrier’s argument that the goods had already been delivered to the buyer when the seller made its stoppage order, on the ground that the carrier’s Norwegian agent had acted as forwarding agent and buyer's representative from the time this latter had presented them with the bills of landing. In the Court’s view, even if it is true that an agent for the carrier may become, at a given time, a representative for the buyer, it is essential for this moment to be clearly identified as it affects the seller’s right to stoppage. In the present case, no circumstances existed suggesting that such a representation had been agreed upon; therefore, the carrier had remained in possession of the goods and it exercised its right of retention against the buyer.
As to the carrier’s argument that the right of stoppage was lost in any case, as no written notice had been given by the seller under Art. 71(3) CISG, the Court considered that the provision does not explicitly state the effect of a lack of notice, but failure to notify may lead to liability for the other party’s damages. Yet, the wording of the provision and the fact that the duty of notice is only placed in the third paragraph seems to suggest that a seller is not required to give notice before the stoppage had been completed. In reaching such a conclusion, the Court considered that case law on the matter, as presented by the carrier, was not conclusive as to the issue of whether a lack of notice would result in the loss of the party’s right to suspend a contract; furthermore, the legal doctrine is divided on the issue.
Having concluded that notice to the buyer was not a condition for the exercise of the right of stoppage and that the seller had validly exercised such a right, the Court then found that the issue as to whether the carrier was obliged to comply with the seller’s order was for the otherwise applicable law to be resolved (i.e., Norwegian law).
Fulltext
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Source
Original in Danish and English Translation:
- available at the Supreme Court of Norway website, https://www.domstol.no/no/hoyesterett/}}