Sale of assets, jurisdiction and Incoterms (Wx-Works, FCA, CTP and CIF).
How the inclusion of an Inconterms clause (ex-works, FCA, CIF) may affect jurisdiction in the case of the sale of movable goods? A brief overview of European legislation and developments in Italian and European case law.
1. Jurisdiction, Sale and Incoterms: A Brief Overview of European Legislation
In the case of the sale of goods within Europe, the parties may agree in advance which courts will have jurisdiction to decide on any disputes that may arise between them. This principle of forum-shopping is governed by Article 25 of the Regulation EU 1215/2012,[1] which provides as a condition of validity that the agreement conferring jurisdiction has been:
- concluded in writing or evidenced in writing;[2]
- in a form permitted by the practices established between the parties; or
- in international trade, in a form permitted by a usage which the parties knew or ought to have known and which, in that context, is widely known and regularly observed by the parties to contracts of the same type in the trade concerned.
If the parties have not expressly made that choice, jurisdiction will be governed primarily by the following principles:
- the general principle of the defendant's forum (Art. 4 of the Regulation) and
- the principle of the''performance of the obligation in courto' (Art. 7 of the Regulation).
With specific regard to this second option, Article 7 of the Regulation provides that a person domiciled in one Member State may be sued in another Member State:
- in contractual matters, before the court of the place of performance of the sued obligation;[3]
- For the purposes of the application of this provision and unless otherwise agreed, the place of performance of the obligation in suit is: in the case of the sale of goodsthe place, located in a Member State, where the goods have been or should have been delivered according to contract. "[4]
Reading this provision, it is not fully understood what is to be understood by "place of delivery"That is to say, whether that place is to be regarded as the place where the physical delivery to the seller took place, or whether the place of delivery to the carrier can be regarded as sufficient.
To solve this dilemma, the Court of Justice came to the rescue,[5] stating that:
"Article 5(1)(b), first indent, of Regulation No. 44/2001[6] must be interpreted as meaning that, in the case of distance selling, the place where the goods were delivered or should have been delivered under the contract must be determined on the basis of the provisions of that contract.
If it is not possible determine the place of delivery on that basis, without reference to the substantive law applicable to the contract,[7] such a place is that of the material delivery of goods by which the purchaser obtained or should have obtained the power to dispose effectively of those goods at the final destination of the sale transaction. "
2. Sale of goods, jurisdiction and incoterms: the pronouncements of the United Sections and the Court of Justice.
Italian jurisprudence has adapted to this principle: the United Sections of the Supreme Court of Cassation have established that on the subject of the international sale of movable goods, when the contract concerns goods to be transported (unless otherwise agreed by the parties), the "place of delivery"must be identified in the place of final delivery of goodsi.e. where the goods become materially and not merely legally available to the purchaser, resulting in jurisdiction
"of the court of the [place of final delivery of the goods] with respect to all disputes mutually arising out of the contract, including disputes concerning payment for the goods sold."[8]
Having established this principle, in 2011 the Court of Justice[9] a new question was submitted, namely whether in the context of the examination of a contract, in order to determine the place of delivery, the court should also take into account the Incoterms. The Court ruled as follows:
'the national court seised must take into account all the relevant terms and clauses of that contract which are capable of clearly identifying that place, including generally recognised terms and clauses enshrined in the customs of international trade, such as Incoterms ('International Commercial Terms'), drawn up by the International Chamber of Commerce, in the version published in 2000."
In particular,
"with regard to Incoterm "Ex-Works, [...] this clause also includes [...] the provisions of paragraphs A4 and B4, entitled "Delivery" and "Taking delivery" respectively, which refer to the same place and thus make it possible to identify the place of delivery of the goods."
The EU Court therefore ruled that the Incoterms, may be an element enabling the court to understand whether or not the parties have agreed on a place of delivery different from the final place of delivery. In particular, with the parties' acceptance of the term "ex-works Iconterms", the parties agree that the physical delivery of the goods must take place at the seller's place of business and, therefore, in the event that the parties do not agree, the court having jurisdiction will be that of the seller's place of business.
National jurisprudence has accepted this orientation, specifying, however, that the general principle of physical delivery can only be derogated from if this is apparent on the basis of a "clear and explicit' contractual determination. The Supreme Court[10] therefore denied that it can "the unilateral ex Works wording on invoices issued by the selling party takes on value," since this method of delivery must have been agreed upon by the parties.
The Court of Cassation, held that these characteristics of clarity, do not result from all the terms in the Incotermsin order to be valid also for the purposes of determining jurisdiction and, therefore, to take precedence, it must be clear, explicit and unequivocal.
It was therefore denied that the CTP clauses,[11] CIF[12] and FCA[13] manifest a clear and unambiguous will of the parties to determine the place of delivery of the goodsas an exception to the factual criterion of final delivery, since such clauses are rather intended to regulate the passing of risk on to the buyer.[14]
[1] Regulation that replaced the previous EU Regulation 44/2001.
[2] With reference to the written form, it "includes any communication by electronic means that permits a durable record of the agreement conferring jurisdiction" under Art. 25.2 of Reg. The Court of Justice has clarified that the purpose of this article is "that of putting certain forms of electronic communication on an equal footing with the written form, with a view to simplifying the conclusion of contracts by electronic means, since the communication of information is accessible via a screen.
So that electronic communication can offer the same guarantees, in particular with regard to evidence, it is sufficient that it is 'possible' to save and print the information prior to the conclusion of the contract. " (CG EU 21.5.2015, CarsOnTheWeb.Deutschland GmbH). The Un. sec. of the Supreme Court 2009 No. 19447They also held that the written form required by Article 23.2 of Reg. 01/44 could be supplemented by the recording of the invoices issued by the other party on the company's internal electronic systems.
[3] European case law has held that where there are several obligations arising from the same contract "the court seised, in determining its jurisdiction, will be guided by the principle that the accessory follows the principal; in other words, it will be the principal obligation, among the various obligations in quesitone, that will determine jurisdiction'. CJ EU 15.1.1987, Shenavai; 15.6.2017 Saale Kareda.
[4] This clause, likewise, incorporates that of Art. 5(1)(b) of Regulation 44/2001. In particular, with this provision the Community legislature intended to break explicitly, for contracts of sale, with the past solution whereby the place of performance was determined, for each of the disputed obligations, in accordance with the private international law of the court seised.
By designating the place of performance, the EU legislator wished to centralise jurisdiction at the place of performance and to determine a single jurisdiction for all claims based on the contract of sale. On this subject see also CJEU 3.5.2008, Color Drack. On this point see Pirruccio, Contracts unusable if Incoterms clauses are not explicit, Law Guide, 35-36, 2019, Gruppo24Ore.)
[5] Judgment Car. Trim GmbH C-381/08.
[6] This provision was also taken up by Article 7(1)(b) of Regulation 1215/2012.
[7] According to doctrine (Pirruccio(op. cit.) for the purpose of identifying the "place of delivery" of the goods, it is not possible to refer to the definitions of national law (such as Art. 1510 of the Civil Code), the application of which would risk defeating the purpose of the Regulation. Attention (!), the latter provision, on the other hand, may be used (at least as a defence) in the event that the sale is non-EU in character and, therefore, the Regulation does not apply: see Cass. Civ. 1982 no. 7040.
[8] Cass. Civ. Sec. Un. 2009 no. 21191, Cass. Civ. 2014 no. 1134. Attention(!) in case of non-application of European law (e.g. for sales extra EU): contra Cass. Civ. sez. Un. 2011 no. 22883.
[9]Judgment Electrosteel Europe SA - Case C-87/10.
[10] Cass. Civ. Order No. 24279 of 2014.
[11] Court of Padua, 3.5.2012.
[12] Cass. Civ. 2018 No. 32362.
[13] Cass. Civ. 2019 no. 17566.
[14] On this subject, see also http://www.membrettilex.com/ruolo-degli-incoterms-2010-nella-determinazione-del-giudice-competente/.
