Incoterms 'Ex Works' Contractual Clause: Jurisdiction over the International Sale of Goods. Clarifications by the Supreme Court

In the recent judgment No. 11346/2023 of the italian Highest Court (Sezioni Unite della Corte di Cassazione), it has been defined the evidentiary content of "Ex Works (EXW)" or "Ex Works" Incoterms clauses for the purpose of establishing jurisdiction in intra-European disputes relating to the international sale of movable goods under EU Regulation No. 1215/2012 (the so-called "Brussels I bis"). In overturning of the jurisprudential orientation previously adopted by the aforementioned Court, the legal principle that emerges from the analysis of the judgment is precisely that of attributing to the Incoterms (International Commercial Terms) clause "Ex Works", present in an international sales contract, the capacity to identify both the place of delivery of the goods and the competent jurisdiction in the event of a legal dispute between the parties.

1. Concept of Incoterms and "Ex Works" Clause

Before analysing Court's groundbreaking judgment, it is necessary to briefly clarify what Incoterms are and, above all, given the case at hand, the essential characteristics that characterise the "EXW" clause. The International Commercial Terms are contractual terms, codified by the International Chamber of Commerce, which clearly identify the allocation between seller and buyer of the obligations, risks and expenses related to the delivery of the goods and also identify where and when the delivery of the goods takes place, the moment of the transfer of the risks of damage to the goods from the seller to the buyer and any other expenses related to the delivery of the goods. The latest update of these rules was issued in the second half of 2019 and came into force on 1 January 2020. The "Ex Works" clause, also called "Ex Works", according to the notion given by the International Chamber of Commerce is that clause according to which "the seller delivers by placing the goods at the disposal of the buyer at its premises or at another agreed place (factory, factory, warehouse, etc.). The seller is not obliged to load the goods on the collecting vehicle or to clear them for export, if such customs clearance is provided for". It is thus clear that the EXW clause entails the minimum level of obligations for the seller.

2. The proceedings

Going back to the examination of the recent judgment of the United Sections, the judicial case that resulted in the ruling arose from the opposition to the injunction decree, with recourse to the Court of Brescia, by a French company owed to an Italian company on the basis of a supply of goods previously carried out. The enjoined company lodged an objection claiming, as a preliminary matter, the lack of jurisdiction of the Italian court in favour of the French court, indicated as the court of the place of the buyer's registered office and of the final destination of the goods, pursuant to Articles 4(1) and 7(1)(b) of EU Regulation No. 1215/2012.

The opposing company concluded for the rejection of the objection raised by the other party, structuring its defence arguments by recalling the characteristics of the "Ex Works" clause, referred to in the international sale contract duly entered into between the parties, emphasising that the delivery of the goods had taken place within the premises of the warehouse owned by it, located in the district of the Court of Brescia and, therefore, with the consequent determination of the competent court in the person of the court seised.

The unsuccessful Italian company in the first instance appealed against the judgment of the Court of Brescia before the Court of Appeal of the same district, pointing to the obligation in question, i.e., the payment of the goods to be performed at its premises, as a further criterion for deciding the jurisdiction of the Italian court. The Court, in dismissing the appeal, pointed out that the "Ex Works" clause, being an instrument aimed at merely describing the rules concerning the transfer of the risk of loss of the goods between the seller and the buyer, was not capable of specifying with sufficient transparency the place of delivery of the goods and, therefore, of definitively resolving the doubt as to the jurisdiction of the court. In fact, the Court of Appeal of Brescia had confirmed this assumption arguing that, pursuant to Article 4 of EU Regulation No. 1215/2012, jurisdiction lay with the transalpine judge, the seat of the debtor company, because the Incoterms clause did not imply an automatic shifting of the material place of delivery of the goods "unless accompanied by elements confirming such choice with clarity".

The unsuccessful company then appealed to the Supreme Court challenging the erroneous interpretation and application of Article 7(1)(b) of Regulation (EU) No 1215/2012.

3. The pronouncement

The “Corte di Cassazione”, in its aforementioned Judgment No. 11346 of 2 May 2023, found the plea to be well-founded and upheld the appeal, dismissing it with reference and declaring the jurisdiction of the Italian court.

In particular, the Court of Appeal held that when examining a contract for the international sale of movable goods, in order to determine the place of delivery of the goods in accordance with the provisions of the Regulation, the national court must take into account all the relevant terms and clauses of that contract, which must also include the terms and clauses enshrined in the usages of international trade, such as Incoterms, provided that they are capable of enabling the place of delivery to be clearly identified.

The Court adopted its decision with the aid of two previous decisions of the Court of Justice: the "Electrosteel Europe SA" judgment and the "Granarolo" judgment. The so-called "Electrosteel Europe SA" judgment had clarified that the Incoterms clauses correspond to well-established international usages frequently used in commercial practice and, therefore, perfectly suited to identify the place of delivery established in the contract concluded by the parties. In the so-called "Granarolo" judgment, on the other hand, the Luxembourg Court had reaffirmed that Incoterms clauses are suitable for identifying the place of delivery of the goods unless further and different elements emerge from the contract that may lead to the conclusion that the parties intended to establish a different place.

Relying on the aforementioned principles, the “Corte di Cassazione” therefore affirmed Italian jurisdiction because the parties, through the inclusion of the 'Ex Works' clause in the contract, had stipulated that the obligation arising from the delivery of the goods was to be fulfilled at the premises of the Italian company, i.e., the seller, considering the clause in question as 'capable of regulating the relationship between the parties with binding effect'.