[2009] FCA 522
Federal Court of Australia
Olivaylle Pty Ltd v. Flottweg GmbH & Co KGAA




A German seller entered into a contract with an Australian buyer regarding the sale of machinery to be used in the processing of olive oil. A choice-of-law clause in the contract provided for the application of Australian law, with the exception of UNCITRAL law. The seller submitted that such a clause amounted to full exclusion of the CISG. The buyer opposed claiming that “UNCITRAL law” should be interpreted as referring only to laws that might affect issues relating to the transfer of ownership, as the clause followed a section of the contract relating to the seller's right to retain ownership until receipt of payment.

First of all, the Court found that CISG was applicable to the case at hand since both parties had their places of business in Contracting States and CISG has been incorporated into Australian law (Art. 1(1)(a) CISG). However, making reference to Art. 6 CISG, the Court held that the choice-of-law clause in the contract revealed the parties’ intention to exclude the application of the Convention. In so doing, the Court observed that since the buyer was aware of the counterparty's intention to sell its products at international level, the expression “UNCITRAL law” was to be construed as referring to the uniform law text endorsed by the UNCITRAL and purporting to govern international sales contracts, that is CISG. Moreover, since the choice-of-law clause was placed at the end of the contract, under a topic heading meant to designate generally applicable miscellaneous terms, the Court found it to govern all terms in the contract and completely to exclude the application of the CISG.



The Contract was one for the sale of goods between a party with its place of business in Victoria, Australia and a party with its place of business in Germany. The Sale of Goods (Vienna Convention) Act 1987 (Vic) (Sale of Goods (Vienna Convention) Act) adopts as part of the law of Victoria the United Nations Convention on Contracts for the International Sale of Goods: see s 5. That convention was made in Vienna in 1980; hence the reference to it as “the Vienna Convention”. The terms of that convention form a schedule to that Act. Article 6 of the Vienna Convention provides, materially, that “The parties may exclude the application of this Convention”.

The Contract provides, “Australian law applicable under exclusion of UNCITRAL law.” The Sale of Goods (Vienna Convention) Act, being a law of a State is an “Australian law”. The contractual reference to “UNCITRAL” is reference to the United Nations Commission on International Trade Law, the acronym for which is “UNCITRAL”. In my opinion, for reasons which follow, “UNCITRAL law” is a reference to the Vienna Convention. That the Vienna Convention is an adopted part of the relevant Australian law does not mean that the contractual statement “Australian law applicable under exclusion of UNCITRAL law” is to be construed as thereby rendering applicable a convention that the parties to it sought expressly to exclude. Rather, the Contract evidences an intention to exclude the Vienna Convention altogether from application. So much is permitted by “Australian law”; relevantly, that convention as applied in Victoria by the Sale of Goods (Vienna Convention) Act.

A conclusion that the Vienna Convention as a whole is excluded accords with the construction of the Contract for which Flottweg contended. Olivaylle took a different view, submitting that the “exclusion of UNCITRAL law” should be construed as referring only to “an exclusion of United Nations Commission for International Trade Law (UNCITRAL) so far as it may affect issues of title”. The inspiration for this submission was that the reference in the Contract to the exclusion immediately follows a sentence which reads: “Flottweg will retain ownership and title to the delivered goods and equipment until Flottweg has received payment of all amounts owned by the buyer under the contract.” Each of these sentences appear at the conclusion of the Contract under the heading “Other Dispositions”, as the excerpt reproduced below evidences.

UNCITRAL is an agency of the United Nations established by the General Assembly in 1966. It has as its mandate from the General Assembly the progressive harmonisation and unification of the law of international trade. It has fostered the development of a number of international conventions and model laws which range in subject from the international sale of goods through to cross-border insolvency and, as Ms Christensen’s article (supra) reminds, electronic commerce. When this fact and that the Vienna Convention “governs only the formation of the contract of sale and the rights and obligations of the seller and buyer arising from such contract; in particular [the Vienna Convention] is not concerned with the effect that the contract may have on the property to the goods sold” (Roder Zelt-Und Hallenkonstruktionen GMBH v Rosedown Park Pty Ltd & Eustace (1995) 57 FCR 216 at 222) are taken into account, it is an unlikely construction of the Contract that the sentence referring to “UNCITRAL law” is to take its meaning from the sentence which precedes it. Given the nature of the Contract, the fact that a party to it, Flottweg, was and was known by Olivaylle to be a company which sold its wares internationally and the reference to the exclusion of “UNCITRAL law” appearing at its conclusion under the heading “Other dispositions”, the more likely construction of “UNCITRAL law” is that it was intended to be a reference to the particular UNCITRAL convention that governed the international sale of goods, ie the Vienna Convention. “Other dispositions” looks to me to be a heading which describes miscellaneous, unrelated terms of general application to the goods sold. The positioning of the sentence at the end of the Contract further supports a construction that it was meant to govern all of its terms.



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