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The CISG’s attempt to unify international sales law. An assessment of its successfulness

Term Paper 2015 14 Pages

Law - European and International Law, Intellectual Properties

Excerpt

Table of Contents

List of Abbreviations

Bibliography

A. Introduction

B. The successfulness of the CISG regime
I. Acceptance in the international community
II. Influence on legislation and initiatives
III. The CISG’s approach to uniformity
1. Scope of application
2. Uniform interpretation and application

C. Conclusion

List of Abbreviations

illustration not visible in this excerpt

Bibliography

Andersen, Camilla Baasch: General Principles of the CISG - Generally Impenetrable? In: Camilla B. Andersen and Ulrich G. Schroeter (eds.), Sharing International Commercial Law across National Boundaries: Festschrift for Albert H. Kritzer on the Occasion of his Eightieth Birthday, Wildy, Simmonds & Hill Publishing (2008), pp. 13-33. Available at: http://cisgw3.law.pace.edu/cisg/biblio/andersen6.html#iii. Last checked: 11 May 2015.

Bonell, Michael Joachim: The CISG, European Contract Law and the Development of a World Contract Law. American Journal of Comparative Law, Vol. 54, No. 1, 2008, pp. 1-28.

Ferrari, Franco: What Sources of Law for Contracts for the International Sale of Goods? Why One Has to Look Beyond the CISG. International Review of Law and Economics, Vol. 25, 2005, pp. 314-341.

Flechtner, Harry M.: Uniformity and Politics: Interpreting and Filling Gaps in the CISG. University of Pittsburg Legal Studies Research Paper 2014-2016. Available at: http://ssrn.com/abstract=2426565. Last checked: 11 May 2015.

Gillette, Clayton P. and Robert E. Scott: The Political Economy of International Sales Law. NYU Law and Economics Research Paper No. 05-02. Available at: http://ssrn.com/abstract=709242. Last checked: 11 May 2015.

Komarov, Alexander S.: Internationality, Uniformity and Observance of Good Faith as Criteria in Interpretation of CISG: Some Remarks on Article 7(1). Journal of Law and Commerce, Vol. 25, 2005-2006, pp. 75-85.

Lando, Ole: CISG and its followers: A proposal to adopt some international principles of contract law. American Journal of Comparative Law, Vol. 53, No. 2, 2005, pp. 379-401.

Ramberg, Jan: CISG and UPICC as the Basis for an International Convention on International Commercial Contracts. Villanova Law Review, Vol. 58, 2013, pp. 681-690.

Schlechtriem, Peter: Basic Structures and General Concepts of the CISG as Models for a Harmonisation of the Law of Obligations. Juridica International, Vol. 10, 2005, pp. 27-34.

Schröter, Ulrich G.: Defining the Borders of Uniform International Contract Law: The CISG and Remedies for Innocent, Negligent, or Fraudulent Misrepresentation. Villanova Law Review, Vol. 58, 2013, pp. 553-587.

Schwenzer, Ingeborg and Pascal Hachem: The CISG - Successes and Pitfalls. American Journal of Comparative Law, Vol. 57, No. 2, 2009, pp. 457-478.

Stephan, Paul B.: The Futility of Unification and Harmonization in International Commercial Law. University of Virginia School of Law, Legal Studies Working Paper No. 99-10. Available at: http://ssrn.com/abstract=169209. Last checked: 11 May 2015.

Veneziano, Anna: The Soft Law Approach to Unification of International Commercial Contract Law: Future Perspectives in Light of Unidroit's Experience. Villanova Law Review, Vol. 58, 2014, pp. 521-528.

A. Introduction

One of the main constraints on cross-border commerce has always been diverging national legal regimes. With the emergence of globalization starting in the last century it became evident that there is a need to approximate the existing rules to foster international trade. In theory, this should allow all participating actors to benefit more than ever leading in the long run to greater wealth for everyone.

In 1980, 42 countries agreed on the CISG[1] to address hindrances to the growing international trade by adopting a default uniform international framework for the sales of goods. The preamble specifies that “the adoption of uniform rules which govern contracts for the international sale of goods and take into account the different social, economic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade”. At the time of writing, the CISG has been in force for 27 years and it is time to evaluate whether the goals the drafters had in mind have been achieved.

In order to assess the successfulness of the CISG to promote a unified international sales law a multitude of factors can be taken into account. To not unduly exceed the limits of this paper the author determined three key criteria on whose basis the successfulness will be evaluated. Firstly, the acceptance of the CISG in the international community will be evaluated. Secondly, the influence of the CISG on subsequent international, regional and domestic legislation and initiatives relating to sales and contract law will be addressed. Lastly, after determining the scope of application the paper focuses on the CISG’s capacity to safeguard and foster its uniform application.

B. The successfulness of the CISG regime

I. Acceptance in the international community

As of September 2014, UNCITRAL reports that 83 States have adopted the CISG.[2] To not exceed the length of this paper the reasons for this wide acceptance cannot be addressed here, but have been dealt with extensively elsewhere.[3] Some authors point out that the number of Contracting States should not be overrated, because there are still around 110 non-Contracting States. In practice, this means that if a case is brought before a court of a non-Contracting State it is not bound to apply the CISG. Similarly, if private international law leads to the laws of a non-Contracting State its domestic law will govern the international transaction.[4]

Nevertheless, considering the data that has been collected by the WTO regarding the world trade development in 2013 the reach and significance of the CISG becomes overwhelming. Within the 15 leading exporting and importing countries in merchandise trade worldwide only the UK and Hong Kong are no Contracting States to the CISG. Those countries are majorly responsible for the total worldwide value of $18816 billion for exports and $18890 billion for imports. Within the EU, being responsible for 15.3% of all exports and 15.4% of all imports in merchandise trade worldwide, only the UK, Ireland, Malta and Portugal are no Contracting States. Except for India all other BRIC Countries, being generally considered as the most promising developing economies, are parties to the CISG.[5] Hence, taking the stance of the Contracting States into account the CISG has been successfully accepted by the majority of the most influential players in international trade.

II. Influence on legislation and initiatives

Bearing in mind its wide acceptance within the international community the CISG influenced in large part a majority of initiatives or legislative instruments that have been adopted in the last decades. It is worth mentioning that besides being only addressed to certain international sales of goods the CISG’s significant role as model is not limited to this field, but encompasses commercial and general contract law as well.

To exemplify, the UNIDROIT Principles of International Commercial Contracts[6] adopted in particular the systematic structure and the remedies system of the CISG.[7] Also, the Principles of European Contract Law[8] are composed closely to the CISG[9]. Moreover, the OHADA used the CISG as a foundation to draft its Uniform Act Relating to General Commercial Law, although only three of the 17 Member States are also Contracting States to the CISG. When drafting the Directive on Certain Aspects of the Sale of Consumer Goods and Associated Guarantees[10] the European legislator adopted the definition of conformity of goods pursuant to Art. 35 CISG. Given the obligation of Member States of the EU in Art. 288 TFEU to transpose directives into their domestic law this is of particular relevance for the unifying effect of the CISG. All current and future Member States will have to accept the respective definition with respect to all transactions that fall under the scope of said directive and, therefore, strengthening the influence of the CISG.[11]

Especially the Arts. 1-7 CISG dealing mainly with the scope of application have evolved to a form of standard clause for international treaties and initiatives, e.g. in the Convention on the Assignment of Receivables in International Trade[12] or the Convention on International Interests in Mobile Equipment[13]. In addition to these international and regional developments mentioned above the CISG has been chosen by various countries, namely Sweden, Finland, Norway and the Tokelau Islands, to not only deal with cross-border sales but also serve as a basis for domestic sales. After the breakdown of the Soviet Union many of the newly emerging independent states adopted the CISG and contemplated its principles and provisions when restructuring their legal systems. Furthermore, when revising their own laws of contractual obligations The Netherlands and Germany took the CISG into account and also the drafters of the New Code of Obligations of China admitted to relying on the CISG as a source of inspiration.[14]

To summarize, the CISG is not only widely used for, or at least affecting, both the international and domestic sales of goods but also the drafting of new legislation and reform of already existing codes. The proposition that the CISG has successfully established itself as the primary international basis for sales and general contract laws throughout the world can be confirmed.

III. The CISG’s approach to uniformity

It is important to emphasize that the aim of the CISG is not uniformity by all means, but rather advancing the unification of international sales law by embodying particular default rules. In principle, uniform international law regimes can never be all-encompassing. Hence, the argumentation of some authors to degrade the CISG’s successfulness in promoting a unified international sales law, because it “neither governs all international sales transactions, nor […] does it deal with all issues that may arise in connection with these transactions”[15] has to be rejected. The fact that “other sources of law have to be taken into account”[16] when dealing with the international sale of goods is not a flaw of the CISG, but rather a logical consequence of the existence of international and domestic law. Frequent referrals to domestic law, e.g. in Art. 28 CISG on specific performance, undoubtedly prove that the drafters deliberately left out certain issues as being either too sensitive or too irrelevant for unification on international level. Thus, to successfully promote a uniform execution of its rules every legal regime has to fulfill primarily two requirements. Firstly, its scope must be broad enough to cover all, or even more, subject-matters which are supposed to be governed. Secondly, a legal regime has to ensure that the respective bodies are following a similar approach when applying and interpreting its rules.

1. Scope of application

To be able to achieve uniformity in international sales law to some degree the CISG has to be applied to as many contracts as possible. Art. 1 CISG restricts the territorial scope of application to situations in which the places of business of the parties are in two different Contracting States or when the rules of private international law lead to the application of the law of a Contracting State. The traditional approach predominantly used by scholars and courts to determine the substantial scope of application is to rely on Art. 4 CISG clearly asserting that the CISG shall only govern the formation of the contract of sale and the rights and obligations of the seller and buyer arising out of said contract. The provision excludes the validity of contracts, its respective provisions or any usage between the parties except if otherwise expressly provided for. Moreover, the CISG shall not be concerned with the effect which the respective contract may have on the property in the goods sold.

Although this article appears to be straightforwardly and narrowly determining the subject-matters governed neither the term “formation” nor the terms “rights and obligations” have been defined by the drafters. Hence, courts and tribunals have to interpret these legal concepts independently encompassing the competence to further broaden the substantive scope of application of the CISG. Furthermore, the wording of Art. 4 CISG, namely “except as otherwise expressly provided in this Convention”, allows for the possibility to include matters from the scope of application under certain circumstances notwithstanding their factual classification in Art. 4 CISG. These circumstances may comprise that an issue is regulated within the CISG itself, e.g. the modification of sales contracts in Art. 29 CISG, the obligations of Contracting States under public international law in Arts. 89-101 CISG, e.g. regarding reservations to Part II and Part III CISG, or that it can be governed by the CISG based on general principles as referred to in Art. 7(2) CISG. The phrase “in particular” also implies that the exceptions in Art. 4 CISG are not exclusive in nature. Lastly, Arts. 2 and 3 CISG exclude certain contracts from the application of the CISG.[17]

Literature suggests that the CISG potentially covers 75% to 80%[18] of all international sales of goods contracts given the large number of Contracting States and its broad scope of application. Due to the possibility for parties in Art. 6 CISG to opt out of its application for their respective contracts these figures can obviously only serve as presumptions. Some authors[19] argue that private parties tend to exclude the application of the CISG challenging its practical usefulness, but this cannot be held against the successfulness of the CISG’s unification efforts. It is submitted that the Convention shall be a non-mandatory default regime for the international sales of goods and the primary source of the rules governing international sales contracts is party autonomy. Hence, when parties decide to opt-out pursuant to Art. 6 CISG there are perfectly entitled to do so. The benchmark for the successful of the unification attempt has to be what has been and can be achieved within the limits set by the drafters of the Convention. In view of the CISG’s capacity to potentially cover a large quantity of international sales contract between parties from a multitude of countries it should be considered as successful if uniform interpretation of the respective provisions can be guaranteed when applied.

2. Uniform interpretation and application

Approaching uniform interpretation implies that it is necessary to agree not only on a common legal text, but also to ensure that the application of inconsistent domestic law will be precluded if not explicitly referred to. Otherwise, circumventing the CISG’s rules would be possible and the whole legal regime would be open for abuse. Diversity in interpretation by the respective authorities could lead to the situation where the choice of forum results in the application of non-uniform law which is contrary to the inherent aim of the CISG to promote uniformity and generates transaction costs, legal uncertainty and unpredictability in international trade.[20]

To remedy the potential development of domestic-oriented interpretation giving rise to conflicting and diverging approaches the drafters incorporated Art. 7 into the CISG. Art. 7(1) CISG lays down that when interpreting the CISG the international character, the need to promote uniformity in its application and the observance of good faith in international trade should be taken into account. Importantly, this wording stipulates that all factors are equally significant. Therefore, uniform interpretation is not the preponderant objective that should exclusively be achieved, but rather one factor besides the international character of the Convention and the need to observe good faith in international trade that must be regarded when construing a feasible interpretation of the CISG. It is submitted these three criteria have been widely accepted as being adequate to safeguard the accomplishment of the CISG’s aims.[21]

[...]


[1] United Nations Convention on Contracts for the International Sale of Goods (1980), available at: http://www.cisg.law.pace.edu/cisg/text/treaty.html. [Last checked: 11 May 2015]

[2] Pace Law School Institute of International Commercial Law, Table of Contracting States, available at: http://www.cisg.law.pace.edu/cisg/countries/cntries.html. [Last checked: 11 May 2015]

[3] cf. Schwenzer/Hachem, The CISG - Successes and Pitfalls, 57 American Journal of Comparative Law (2009) 2, 462 ff.

[4] cf. Ferrari, What Sources of Law for Contracts for the International Sale of Goods?, 25 International Review of Law and Economics (2005), 316 f.

[5] cf. WTO, World Trade Developments 2013 - List of Tables, available at: https://www.wto.org/english/res_e/statis_e/its2014_e/its14_world_trade_dev_e.pdf. [Last checked: 11 May 2015]

[6] UNIDROIT, UNIDROIT Principles of International Commercial Contracts 2010, available at: http://www.unidroit.org/english/principles/contracts/principles2010/integralversionprinciples2010-e.pdf. [Last checked: 11 May 2015]

[7] cf. Bonell, The CISG, European Contract Law and the Development of a World Contract Law, 54 American Journal of Comparative Law (2008) 1, 16f.

[8] Commission on European Contract Law, The Principles of European Contract Law 2002, available at: http://www.jus.uio.no/lm/eu.contract.principles.parts.1.to.3.2002. [Last checked: 11 May 2015]

[9] cf. Lando, CISG and its followers: A proposal to adopt some international principles of contract law, 53 American Journal of Comparative Law (2005) 2, 381.

[10] Directive 1999/44/EC, [1999] OJ L 171/12.

[11] cf. Schwenzer/Hachem, The CISG - Successes and Pitfalls, 57 American Journal of Comparative Law (2009) 2, 461f.

[12] UNCITRAL, United Nations Convention on the Assignment of Receivables in International Trade 2001, available at: http://www.uncitral.org/pdf/english/texts/payments/receivables/ctc-assignment-convention-e.pdf. [Last checked: 11 May 2015]

[13] UNIDROIT, Convention on International Interests in Mobile Equipment 2001, available at: http://www.unidroit.org/english/conventions/mobile-equipment/mobile-equipment.pdf. [Last checked: 11 May 2015]

[14] cf. Schlechtriem, Basic Structures and General Concepts of the CISG as Models for a Harmonisation of the Law of Obligations, 10 Juridica International (2005), 29f.

[15] cf. Ferrari, What Sources of Law for Contracts for the International Sale of Goods?, 25 International Review of Law and Economics (2005), 315.

[16] cf. ibid., 316.

[17] cf. Schröter, Defining the Borders of Uniform International Contract Law, 58 Villanova Law Review (2013), 556ff.

[18] cf. Flechtner, Uniformity and Politics , University of Pittsburg Legal Studies Research Paper 2014-2016, 193.

[19] e.g. Gillette/Scott, The Political Economy of International Sales Law, NYU Law and Economics Research Paper No. 05-02; Stephan, The Futility of Unification and Harmonization in International Commercial Law, University of Virginia School of Law, Legal Studies Working Paper No. 99-10.

[20] cf. Flechtner, Uniformity and Politics , University of Pittsburg Legal Studies Research Paper 2014-2016, 194.

[21] cf. Komarov, Internationality, Uniformity and Observance of Good Faith as Criteria in Interpretation of CISG, 25 Journal of Law and Commerce (2005-06), 76.

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Pages
14
Year
2015
ISBN (eBook)
9783668126275
ISBN (Book)
9783668126282
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648 KB
Language
English
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v313604
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Maastricht University
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Title: The CISG’s attempt to unify international sales law. An assessment of its successfulness