Data

Date:: 26-05-2020
Country:: Sweden
Number:: T-6032-16
Court:: Swedish Supreme Court
Parties:: CeDe Group AB v. KAN Sp. z o.o.

Keywords

SET-OFF - MATTER NOT EXPRESSLY REGULATED BY CISG (ART. 7(2)CISG) - TO BE DECIDED IN ACCORDANCE WITH GENERAL PRINCIPLES UNDERLYING CISG OR UNDER OTHERWISE APPLICABLE LAW DEPENDING ON THE TYPE OF SET-OFF

SET-OFF - REFERENCE TO CISG-AC OPINION No. 18

Abstract

A Swedish company entered into a purchase agreement with a Polish company. The contract included a choice-of-law clause designating Swedish law as applicable to the contract. After the seller entered bankruptcy, the bankruptcy estate claimed from the buyer payment for the delivered goods. The buyer contested the claim and objected that it had a counterclaim that would exceed by far the amount claimed by the bankruptcy administration and would, therefore, entirely set off the seller’s claim.

The District Court decided to address the issue of the law governing the right of set-off, i.e., the law applicable to the claim against which the right to set-off is asserted, in an interlocutory judgment, and ruled that Polish law was applicable. The Court of Appeal confirmed the decision, which was subsequently challenged before the Supreme Court.

The Supreme Court found that the choice of law in the contract led to the application of the Convention as part of the Swedish national law. In deciding whether set-off is a matter regulated by the Convention, the Court considered that there is no express rule in it on that point. As a result, prevalent case law and legal doctrine have traditionally maintained that set-off is not an issue covered by the Convention. However, the Court observed, Courts of certain CISG member states, which adhered in the past to the traditional approach, tend now to hold that CISG would regulate set-off where both the principal claim and the set-off claim arise from the same contractual relationship. The Court also added that the CISG Advisory Council has taken the position that monetary claims governed by the CISG, whether they arise out of the same contract or not, can be set off by either party in conformity with the general principles underlying the CISG.

Finally, the Court considered that, should it be found that the matter of set-off falls outside the scope of the CISG, the law applicable to the matter would be determined under the relevant rules of private international law, which for Sweden are those provided for by Rome I Regulation.

In conclusion, the Court found that the buyer’s right to set off its claim for damages against the seller's claim for payment was to be decided under Swedish law.

Fulltext

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Source

Original in Swedish:
- Published in Internationales Handelsrecht (IHR) (2021), 187–190

English Translation:
- available at https://cisg-online.org}}