German Supreme Court holds that Arts. 14–24 CISG may apply to conclusion of arbitration agreement

On 26 November 2020, the Bundesgerichtshof (German Supreme Court) issued its decision in the Ground mace case, a decision that will likely be regarded as a leading case concerning the applicability of the Sales Convention's contract formation rules (Art. 14-24 CISG) to the formation of arbitration agreements in sales transactions.

CISG-online currently provides the decision's original text (written in German) and an abstract in English written by Ulrich Schroeter. An English translation of the decision's full text is being prepared.

The transaction underlying the present case was a sale of ground mace (a spice) by a Dutch seller to a German buyer. When the delivered mace (allegedly) turned out to be contaminated, the German buyer initiated court proceedings in a German district court. The Dutch seller requested the case to be dismissed and argued that the parties had concluded an arbitration agreement (see Art. II(3) of the 1958 New York Convention).

In its present appellate decision, the German Supreme Court inter alia dealt with the question whether an arbitration clause contained in Conditions of the Netherlands Spice Trade Association (N.V.S.) had been validly agreed upon between the parties in the case at hand. In doing so, it had to decide which legal rules governed the formation of the arbitration agreement, and whether provisions of the CISG may apply in this context. The Supreme Court held with extensive reasoning that – at least in cases in which recourse is had to rules of domestic law in accordance with Art. VII(1) of the New York Convention – Arts. 14–24 CISG (rules on contract formation) may apply, but not Art. 11 CISG (freedom of form).