Data

Date:: 03-04-2002
Country:: Canada
Number:: 2370
Court:: Saskatchewan Court of Queen's Bench
Parties:: Beechy Stock Farm (1996) Ltd. v. Managro Harvestore Systems (1977) Ltd and big Dutchman International GmbH

Keywords

EXCLUSION OF CISG (ART. 6 CISG) – CHOICE OF LAW CLAUSE IN FAVOR OF LAW OF A CONTRACTING STATE, EXPRESSLY EXCLUDING APPLICATION OF THE CONVENTION

Abstract

A Canadian buyer entered into a contract with a Canadian seller to purchase and install a liquid feeding system produced by a German manufacturer; the seller was an authorized distributor of the German manufacturer. The buyer was not satisfied with the installation of the feeding system and therefore commenced an action against the seller, in December 1997, alleging negligent representation and breach of contract. On November 2001, the seller notified the buyer that it was bringing a third party claim against the German manufacturer.

The German party requested the court to strike or stay the proceedings based on a distribution agreement between the German manufacturer and seller, expressly excluding the application of CISG and designating German law as the law governing the contract.

Ultimately, the Court granted the German manufacturer's request to stay the third party proocedings, as it found that the main action should not be further delayed.

Fulltext

JUDGMENT:

[1] Wimmer, J.: Big Dutchmen Pig Equipment GmbH, formerly named Big Dutchman GmbH, and hereafter referred to simply as Big Dutchman, seeks to stay or strike a third party claim brought against it by the defendant. The argument is that Saskatchewan courts are without jurisdiction in the matter. The defendant, of course, contends otherwise. The plaintiff, wishing to move its case along to trial, would like to see the third party claim, if not struck out, at least severed from the main action and left to be tried separately at some later time should it be necessary. It has applied for an order directing the registrar to fix a pre-trial conference date. The underlying facts are reasonably straightforward.

[2] The plaintiff, a Saskatchewan corporation, is in the hog production business. The defendant deals in livestock feeding systems and, in 1990, became an authorized distributor of products manufactured by Big Dutchman, a corporation [*2] headquartered in Germany. The plaintiff contracted with the defendant for the supply and installation of a Big Dutchman liquid feeding system at a finishing farm near Outlook, Saskatchewan. The work was completed in late 1994, but not to the satisfaction of the plaintiff. This action, commenced in December, 1997, is founded upon allegations of negligent representation and breach of contract. The damages claimed are substantial. A statement of defence was filed in August 1998 and examinations-for-discovery completed in July 2000. It was not until November, 2001 that the defendant gave notice of its third party claim.

[3] The distribution agreement between the defendant and Big Dutchman dated July 24, 1990, con-tained this provision:

18) Law applicable

The contract shall be governed by German law. Any disputes shall be settled by the court having jurisdiction over BD's place of business. However, if BD is plaintiff it shall also be entitled to sue the DISTRIBUTOR before the court having jurisdiction over the place of business of the latter.

The general contract conditions included the following:

Article 11 - Applicable Law and Competent Court

The application of the Vienna Convention [*3] on Contracts for the International Sale of Goods (CISG) is excluded. Instead, German law is agreed upon to be the basis of this contract as far as not these General Conditions of Sale stipulate anything different. All disputes in connection with agreements or contracts to which the present General Conditions apply in full or in part, as well as in connection with any further agreement or contract resulting therefrom shall be settled by the judge who is competent for the domicile of the Seller. The Seller may, however, if he desires so, submit the dispute to the judge who is competent for the Buyers domicile.

[4] Later, in October, 1994, after a restructuring of the Big Dutchman group of companies, the par-ties agreed to a new general contract condition regarding applicable law and jurisdiction:

IX. General Basis of the Contract

. . . . .

5. The local and international exclusive jurisdiction of the courts having jurisdiction for Vechta is agreed for all contractual and non-contractual disputes arising from contracts to which these CoS apply. In particular, this jurisdiction also excludes every other jurisdiction which is provided for by law as a result of a personal or factual link. Nor is the Customer entitled to bring a counter-claim, set-off, third party proceedings or a right of retention before any court other than the one with exclusive jurisdiction in Vechta. In individual cases, however, BD has the right also to bring a claim at the principal place of business of the Customer or before other courts which are competent on the grounds of national or foreign law. [Emphasis added]

These provisions are clear and expressly apply to all present and subsequent contracts between the parties. Mr. Scherman says that the jurisdiction of Saskatchewan courts has been altogether ousted by their agreement to defer to the German court.

[5] The judgment in E.K. Motors Limited v. Volkswagon Canada Ltd., [1973] 1 W.W.R. 466 (Sask. C.A.), sets out the law as it applies to contract provisions of this sort in Saskatchewan. In brief, it holds that parties to a contract can oust the jurisdiction of Saskatchewan courts if they do so in spe-cific and definite terms. That is exactly what the parties did in this case. They conferred exclusive jurisdiction upon the court in Vechta, Germany and Big Dutchman is entitled to expect that this Court will give effect to that intention.

[6] In his argument, Mr. Thompson suggested that the E.K. Motors case was incorrectly decided, that the reasons expressed by the Chief Justice were obiter, and that the decision should not now be followed. That is a course not open to me. The judgment has been consistently applied in this prov-ince and authorities from other jurisdictions that may differ are not helpful. I am bound by the Court of Appeal.

[7] It follows that the application is allowed with costs. A stay of the third party proceeding is granted. If I had decided otherwise I would nevertheless have ordered that those issues be tried separately. The plaintiff has already encountered considerable delays and it should not be further frustrated in getting the case to trial.

[8] Another question arising on the application was whether the defendant was entitled to serve its third party claim in Germany without first obtaining leave. In view of my overall conclusion I have not found it necessary to deal with those arguments.

[9] Finally, there will be an order directing the local registrar to set a date for a pre-trial conference. The costs of that application will be in the cause.}}

Source

Original in English:
- available at the CISG Canada website, http://www.yorku.ca}}