Swedish Supreme Court rules on the burden and standard of proof under Art. 35 CISG

On 10 June 2016, the Swedish Supreme Court rendered a decision in N.K. v. P.K.S. The decision’s full text, originally written in Swedish, has now been translated into English by Jake Lowther, Associate at the law firm Magnusson in Stockholm. We are very grateful for his translation that can now be accessed via the case presentation about CISG-online 4088 (below).

The dispute underlying the decision arose from a CIF contract for the sale of 50 tons of copper against USD 250,000.00, to be paid in instalments. The goods were to be loaded into two containers and shipped from the port of loading in Dar Es Salaam (Tanzania) to the port of destination in Istanbul (Turkey). After contract conclusion, the Turkish buyer issued two payments in the amount of USD 175’000.00. When the containers arrived in Istanbul and were opened by the buyer, it found to them to contain stones and not copper. Thus, it initiated legal proceedings against the seller and demanded repayment of what it had already paid.

In its decision the Supreme Court mainly focused on the questions which of the parties has the burden of proof that the containers contained copper at the time of passing of risk and which standard of proof applies. The Court held that the CISG governs the burden of proof based on Arts. 79 and 7(1) CISG, despite the omission of an express rule regarding the non-conformity of goods. After discussing various approaches, the Court decided that the following rules shall apply: As a starting point, the seller bears the burden of proof for the conformity of the goods at the time of passing of risk. If the buyer immediately after receiving the goods notifies the seller that it considers them to be non-conforming, the burden of proof remains on the seller. But if the buyer is delayed in the notification, the burden of proof shifts to it. In addition, the Court concluded that the standard of proof is also governed by the Convention and that a standard of reasonableness shall apply. The Court concluded that the burden of proof was on the seller in the case at hand since the buyer immediately objected to the lack of conformity after it received the goods. Based on the evidence presented, the Court found that the seller has not made it reasonably clear that the goods were conforming at the time of passing of risk.

Therefore, it upheld the decision of the Court of Appeal and ordered the seller to repay the amount it had already received from the buyer. In addition, it held that the seller was not entitled to any further payment and ordered it to bear the costs of the proceedings.