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Reproduced with permission of 17 Journal of Law and Commerce (1998) 263-299

The Sales Convention in Europe: From Problems in Drafting to Problems in Practice

Professor Dr. Volker Behr [*] [**]

Table of Contents

I.   Introduction

II.  Interest on Arrearages Under CISG

A. CISG Regulations on Interest
B. Decisions of European Courts on Interest

(1) Commentary on Interest in Case of Creditors'
(2) Commentary on Interest Without Proof of Damages
C. European Legal Literature on Interest

III. How Europe Strives for the Goal of Uniformity

A. The Goal of Uniformity
B. Ways to Achieve Uniformity
C. External Examples: Uniform Law of Bills of Exchange and Warsaw Convention on International Transportation by Air

IV.  European Court Decisions and Legal Literature Regarding Promotion and Uniformity

V.   European Court Decisions and Legal Literature Regarding Apllicable Law as to Rate of Interest

A. Gap Within the Convention or Outside of It?
B. General Principles Approach, Private International Law Approach within Article 7(2) CISG or Totally Independent Approach?
C. Applicable Law by Virtue of Private International Law
D. Related Problems

I. Introduction

Since its adoption a decade ago, the 1980 United Nations Convention on the International Sale of Goods (CISG),[1] prepared by the United Nations Commission on International Trade Law (UNCITRAL),[2] has been broadly accepted. To date, at least 49 countries have adopted CISG.[3] Additionally, Case Law on UNCITRAL Texts (CLOUT) [4] now lists 158 court decisions on CISG, not to mention the number of cases decided but not reported in CLOUT.[5] The worldwide acknowledgment and increasing significance given to CISG by courts may lead some to believe, or at least hope, that the Convention is on its way to becoming a true uniform law for governing the international sale of goods. From the point of view of legislation as well as from the point of view of practical application, the Convention seems to be a success. Moreover, this success may fuel further uniformity as it is already influencing other fields of international trade law.[6]

However, there remain two disappointing facts: First, two of the world's major trading nations have not yet accepted the Convention. England and Japan, although they have signed the Convention, have not yet [page 264] set CISG into force. And second, despite the significant number of cases under CISG, businessmen as well as legal advisors still seem to avoid the Convention.[7] Parties to international sales transactions do not generally accept the Convention voluntarily. A review of the cases will demonstrate that the Convention has almost never been applied by voluntary and deliberate choice of the parties. Instead, in a significant number of cases, CISG has been applied by default. Parties did not recognize the international dimension of their transaction, and thus, did not realize that if parties were located in Contracting States, the Convention was applicable by virtue of CISG Article l(l)(a). In other cases, CISG became applicable because private international law led to the application of the law of a Contracting State of the Convention. And occasionally, the parties agreed generally upon the law of a Contracting State, which in Europe generally is not regarded by the courts as an exclusion of the Convention by virtue of CISG Article 6. In these cases, the consequence is application of CISG, because it is the special international sales law of the country.[8]

Both of these unfavorable developments are, or at least may be, influenced by countries and parties fearing the unpredictability of a legal system not yet sufficiently proven in the courts.[9] This hesitance, by important trade nations and businessmen alike, demonstrates that the development of a clear and consistent body of court decisions is mandatory for the future success of a uniform body of law. The standardization achieved by the adoption of the Convention initially is but a formality. Only responsible practice and application in the courts can transform formal uniformity into a living reality.[10] Only by developing a convincing and uniform interpretation of the Convention, will there be acceptance by non-member States and by parties to international sales transactions.[11] If courts cannot accomplish this goal, CISG will be but a pitfall for the [page 265] unwary.[12]

This article will attempt to discover whether and how European courts and commentators are trying to develop sound interpretations and convincing uniform applications of CISG. However, to accomplish this lofty goal, the article focuses on one small area: the topic of interest in the application of CISG. There is good reason for this approach. First, from an economic point of view, interest is far from minor. The rate of legal interest in Europe ranges from invariable rates of 4% up to 52%. In some European countries there are variable interest rates based on the discount rate as high as 15% and more.[13] Second, a review of CISG decisions of the last decade clearly demonstrates that there are very few topics which have been of more than occasional practical importance, and among these, interest is one of the most important. Interest under CISG, is the issue most often treated by both courts and commentators. Within CISG's first 10 years, 37 of the 158 cases collected and published by CLOUT involved interest. Finally, a significant number of courts seem to apply CISG Article 78 incorrectly, supposing that there is only one way to apply it. Thus, it is a perfect vehicle for demonstrating how courts handle CISG, and one of the very few topics providing for analysis instead of speculation.

A look at some decisions will provide an impression of the different approaches taken by courts in handling the problem of interest under CISG -- and the different results achieved. Delchi Carrier, SpA, is the only U.S. case on interest under CISG at this time.[14] The very short notation on interest reads: "Delchi is entitled to prejudgment interest pursuant to UNCCISG Article 78. Because Article 78 does not specify the rate of interest to be applied, the court in its discretion awards Delchi prejudgment interest at the United States Treasury Bill rate as set forth in 28 U.S.C. § 1961(a)."[15] How this conforms with CISG is left unanswered. There is no hint as to whether the court tried to find out how courts in [page 266] other countries handle the problem of interest.[16] But this is far from being unique. According to an [Argentinian court], it is "international usage" to fix the rate of interest according to the prime rate if the debt was in U.S. dollars.[17] Moreover, compare this with a 1990 German court's decision: "The claim for damages can be based on Articles 59, 78, 74 . . .[;] [a]ccording to Article 78 CISG the legal rate of interest of the Italian Codice Civile of 5% is applicable."[18] This court, like the court in Delchi, does not explain how Article 78 leads to Italian law. Again, there is no hint as to whether the court has tried to find out how the problem of interest is handled abroad.

There are, however, examples of totally different and more elaborate approaches as well. Compare the cases above with another German court's decision: [19]

"The general obligation of defendant to pay interest arises from Article 78 CISG, because defendant according to Article 58 CISG was in arrears with the price since September 15, 1988. . . .

"The rate of interest due under Article 78 CISG must be taken from Article 1284 § 1 Codice Civile, and legal interest under this Article is 5%.

"Article 1284 § 1 Codice Civile is applicable as to rate of interest, deliberately not regulated in Article 78 CISG, because the rate is to be taken from the national law applicable according to the rules of private international law.[20] This is Italian law according to Article 32 § 1(3) EGBGB. There is no argument for the application of German law being the law of the country of the debtor."[21]

Here, the court at least tried to find an argument for the application of Italian law. Moreover, it tried to find out from German and foreign literature, how the problem should be handled.[page 267]

Part II of this article provides an overview of European courts' decisions and European scholarly writings on the problem of interest. Part III attempts to define uniformity and how it can be achieved. Part IV evaluates the different approaches to promoting uniformity. Finally, Part V attempts to resolve the problem of choice of law in determining the rate of interest.

 

II. Interest on Arrearages Under CISG

A. CISG Regulations on Interest

Regulations on interest under CISG are at the same time very clear and very unsatisfactory. Article 78 states: "if a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under Article 74."[22] Article 84(1) further states: "if the seller is bound to refund the price, he must also pay interest on it, from the date on which the price was paid."[23]

These regulations make it clear that interest is to be paid. It is also clear that interest can be recovered with or without demonstration of actual damages. Moreover, from Article 74, it is clear that breach of contract damages cover the loss suffered by the party as a foreseen or foreseeable consequence of the breach, including lost profits.[24] Thus, in general, there is no problem in awarding interest under the heading of damages.

However, regulations on interest independent from damages do not fix the rate of interest. The drafting notes of the Convention explain why it was impossible to fix the rate of interest.[25] That discussion is beyond the scope of this article, but suffice it to say that the consequence of this fact has been confusion and uncertainty.

B. Decisions of European Courts on Interest

Several problems must be overcome in order to learn how European courts handle the problem of interest. Obviously, there is the problem of availability of the decisions; not all of them are published. Sometimes [page 268] only outlines of cases or second-hand information is available.[26] Compiled below are case abstracts arranged by date of decision. However, it should be noted that some of the information provided here is second-hand, and there is the further problem of translation. Wherever possible, a translation of the segments concerning interest has been provided.

1. Abstract 1, Decision Dated August 31, 1989 [27]

In a German-Italian sale of 48 pairs of shoes at 5.208000 LIT, CISG was applicable by virtue of Article 1(1)(b) and German private international law. The German buyer failed to pay the price or give timely notice of nonconformity. The Italian seller sought the price plus interest. The court ordered the buyer to pay the price plus interest. It emphasized that the claim for interest might be justified under Article 74 CISG, because the Italian seller had raised bank credit in Italy at high rates.

"Based on Article 74 CISG, plaintiff can recover under the title of damages for what he lost by not being able to use the money that was in arrears by defendant.

"This article generally orders that the debtor is obliged to pay interest in case of being in arrears. The rate of interest, however, is not fixed and remains under discussion. It is suitable to rely on the law of the creditor, especially since the consequences of nonfulfillment of the obligation to pay arise there, and because the price was to be paid in Italian currency. Thus, the debtor runs the risk of paying interest in foreign currency and according to foreign rates."[28]

2. Abstract 2, Decision Dated November 24, 1989 [29]

In a sale of goods between an Italian seller and a Swiss buyer, interest was awarded at the Italian statutory interest rate without referring to CISG. [page 269]

3. Abstract 3, Decision Dated April 24, 1990 [30]

In a German-Italian sale of clothes at a price of 4,583 German Marks, CISG was applicable. German private international law made Italian law applicable, and thus CISG because Italy had already adopted CISG. The Italian seller claimed the price plus interest from the German buyer. The court ordered the buyer to pay interest of 12% based on Articles 74 and 78 of CISG.

"The claim for damages can be based on Article 59, 78, 74 CISG. . . . According to Article 78 of CISG, the legal rate of interest of the Italian Codices Civil of 5% is applicable.[31]

"The claim for additional interest is justified as well. It follows from Article 78 CISG. According to this article, the seller can claim additional interest under the heading of damages. Such damages may arise either because the seller is unable to get interest from the use of the capital or because the seller has to raise a loan as a consequence of nonpayment. The prerequisites of a claim for damages are demonstrated in the statement of claim."

4. Abstract 4, Decision Dated September 26, 1990 [32]

In a German-Italian sale of clothes at a price of 94,893 German Marks, CISG was applicable by way of German private international law. German law made Italian law applicable. Because Italy had already adopted CISG, CISG was applied. The German buyer was in arrears with the payment of the price, and the Seller claimed the price plus interest.

Based on Article 78 CISG, the court ordered the buyer to pay interest at the rate of 5% according to Italian law. Furthermore, based on Article 74 CISG, the court ordered the buyer to pay additional interest of 8%, thus fully compensating the seller for damages suffered.

"The plaintiff can recover 13% interest under Article 78 CISG, Article 1284 § 1 Codice Civile, and Article 74 CISG. According to Article 32 § 1 subsection 3 EGBGB (Introductory Act to the German Civil Code - German private international law) Italian law is applicable as to interest, Italian law being the law of the contract, and the obligation to pay interest being the consequence of nonperformance of the [page 270] obligation to pay the price.[33] According to Italian law -- as mentioned above -- CISG is initially applicable. Otherwise, Italian domestic law applies.

"The claim is justified for up to 5% of interest under Article 78 CISG and Article 1284 § 1 Italian Codice Civile.

"The general obligation of defendant to pay interest, arises from Article 78 CISG because defendant according to Article 58 CISG was in arrears with the price since September 15, 1988. . . .

"The rate of interest due under Article 78 CISG must be taken from Article 1284 § 1 Italian Codice Civile, and legal interest under this article is 5%. Article 1284 § 1 Italian Codice Civile is applicable as to rate of interest, deliberately not regulated in Article 78 CISG, because the rate is to be taken from the national law applicable according to the rules of private international law.[34] This is Italian law according to Article 32 § 1(3) EGBGB. There is no argument for the application of German law, being the law of the country of the debtor.[35]

"The claim for interest of more than 5% is justified, according to Article 78 CISG, by Article 74 CISG.[36] The plaintiff had to bear losses of 13% from the nonperformance of the obligation to pay the price. The court appraises the damages from loss of interest according to Article 287 ZPO (German Code of Civil Procedure).

"Appraisal of damages according to Article 287 ZPO is available in order to fix the rate of interest. Being a procedural rule, Article 287 ZPO as part of the lex fori is applicable, even if foreign law is the lex causae."

5. Abstract 5, Decision Dated June 13, 1991 [37]

In a German-French sale of clothes, CISG was applicable by way of Art. 1(l)(b). Germany, having the closest connection, allowed for application of its private international law, which in turn made French law applicable, France already having adopted CISG at the time. The French seller claimed the price plus 5% interest. The court relied on Article 78 CISG:

"The claim for interest basically is founded on Article 78 CISG. According to this article, the party being in arrears with the payment of the price or any other sum has to pay interest.[38] [page 271]

"As the rate of interest has been left open in Article 78 CISG, according to German private international law, French law is applicable to this question, governing not only the question of the price but also the question of interest. The rate of interest in the place of the seller is applicable under Article 73 CISG."[39]

6. Abstract 6, Decision Dated September 16, 1991 [40]

In a German-Italian sale of shoes at a price of 4,710,000 LIT, ClSG was applicable by way of Article 1(1)(b) and German private international law (closest connection). The Italian seller claimed the price plus 15% interest.

"Plaintiff is entitled to 5% interest from May 16, 1990, and 10% from December 16, 1991.

"According to Article 78 CISG, a party is entitled to interest if the other party does not pay the price. lt is sufficient that the due amount is not timely paid. There is no need for 'delay' in the sense of German law.[41]

"The shoes were billed March 16, with 60 days for payment. The obligation was thus due May 16, 1990.

"The rate of interest is not fixed in Article 78 CISG. The rate of interest must be determined according to the national law of the creditor.[42]

"The rate of interest in Italy, according to Article 1284 § 1 Italian Codice Civile, is 5% up to December 15, 1990, then l0%.[43]

"Plaintiff is not entitled to additional interest under Article 74 CISG. Plaintiff did not offer evidence regarding the assertion of permanently working on bank credit at 15% interest. Plaintiff's statement that the rate of discount in Italy had been 13.5% and 15.5% respectively at the relevant time is of no significance. Contractual fixing of higher than legal interest would [page 272] have been valid only if in writing."[44]

7. Abstract 7, Decision Dated December 15, 1991 [45]

In a Swiss-French sale of goods at a price of 6,604.45 Swiss Francs, CISG was applicable by way of Swiss private international law designating the place of business of the seller. This led to French law, France already having adopted CISG at the time. The French seller claimed the price plus 6% interest.

"Article 78 of the Vienna Convention is the fruit of a compromise upon which the Contracting States agreed after long discussion. But it had not been possible to come to an accord as to the rate of interest.[46]

"By consequence, this regulation has to be taken from the applicable law (which is the French Code Civil), in case the Vienna Convention would not apply.

"By Article 1153 of the French Code Civil in the case of being in arrears, the rate of interest is the one denominated by Article 1907 Code Civil which relies on Law No. 75-l9 of July 11, 1975.

"According to Article 1 of this Law, the rate of legal interest for the duration of the civil year is equal to the discount rate practiced by the Bank of France on December 15 of the previous year.

"(Information was taken that the legal rate of interest was 9.25%. Plaintiff only having claimed 6% interest, the claim was affirmed.)"

8. Abstract 8, Decision Dated March 24, 1992 [47]

In a Hungarian-German sale of goods, CISG was applicable by way of Article 1(1)(a). The German seller claimed the price plus interest. Applying Article 78 CISG and German law, the court ordered the defendant to pay interest of 5%. As to Article 78 CISG and the application of German law, Vida[48] says:

"Like German courts the court was in trouble with the rate of interest. Article 78 CISG does not fix the rate of interest. Thus, as to this question national private international law was to be applied. According to the broad field of application of the lex obligations the court -- without citing (the [page 273] applicable) Article 30 of the Hungarian Statute of private international law -- applied to the question of interest the same law as to the main claim, thus German law. This is in accordance with scholarly writing. And it is similar to the German approach."

9. Abstract 9, Decision Dated April 27, 1992 [49]

In a Swiss-Italian sale of furniture at a price of 9,994,800 LIT, equal to 11,0435.60 Swiss Francs, CISG was applicable by way of Article 1(l)(b) and Swiss private international law. The parties had agreed upon Italian law, which was, in the opinion of the court, CISG, because of Article l(l)(b). The Italian seller claimed the price plus 5% interest. The court said simply: "5% interest is justified."[50]

10. Abstract 10, Decision Dated December 21, 1992 [51]

In a Swiss-Austrian sale of tissues at a price of 433,755 Francs, equal to 110,607.50 Swiss Francs, CISG was applicable by way of Swiss private international law (closest connection) leading to Austrian law, Austria already having adopted CISG at the time. The Austrian seller claimed the price plus interest of 9%.

"Plaintiff claims 9% interest from March 28, 1990. According to Article 78 CISG there is a claim for interest, if a party does not pay the price or any other sum due. It is proved that defendant was in arrears from March 28, 1990.

"The rate of interest is not fixed by CISG. By consequence it is taken from the national law determined by the applicable private international law. According to § 352 of the Austrian Commercial Code the rate of legal interest is 5%. This rate however only applies if there is no other rate contracted by the parties.[52] The general conditions of the contract of the plaintiff, printed on the back side of the affirmation of contract dated February 24, 1989 and presented by the defendant (in English with a reference to 'German translation' on 'previous page'), fix a rate of interest in case of being in arrears at 3.5% above the discount rate of the Austrian National Bank. According to Austrian scholarly writing, general conditions of contract can be introduced into an individual contract even when introduced in the affirmation of a contract.[53] Moreover, defendant does not say [page 274] that those general conditions of the contract of the plaintiff are not part of the contract. From the general situation of interest in Austria, it can be taken for granted that in 1989 the discount rate of the Austrian National Bank was 5.5% or more. By consequence, it can be stated that the interest of 9% as demanded by plaintiff is in accordance with the contract. Thus, the claim for interest is fully justified."

11. Abstract 11, Decision Dated September 12, 1992 [54]

This International Chamber of Commerce arbitration case involved an Austrian-Yugoslavian sale of construction materials. CISG was applicable by Article 13 III of the arbitration regulations and Article 1(l)(a). The Austrian seller claimed the price plus interest in the arbitral court.

"As the rate of interest under circumstances of a party being in arrears is not fixed in the contract, the claim of plaintiff relies on Article 78 of the Convention (CISG) according to which the seller is entitled to interest in case the buyer does not pay the price.

"On the other hand, the rate of interest is not fixed by the Convention. Thus it is necessary to rely on the national law applicable by private international law.[55] In the opinion of the arbitral court this is Tchecoslovakian law (law of the place of payment). . . .

"The new Tchecoslovakian Commercial Code does not expressly state the rate of interest.[56] Even by strong efforts the arbitral court could not get precise information on this question. Anyhow, the Tchecoslovakian embassy in Paris has given information that a minimum of 12% interest is usual. This conforms with the information plaintiff has given to the arbitral court. Thus 12% interest is awarded."

12. Abstract 12, Decision Dated September 1, 1993 [57]

In this Swiss-German sale of home appliances at a price of 30,171.70 German Marks, CISG was applied without discussion (Article 1(1)(a)?). An unidentified seller, probably German, because the price is fixed in German Marks, claimed the price plus 13.5% interest. The buyer counterclaimed for a reduction of price and only 6% interest. The court [page 275] decided: "The amount of damages of 13.5%, which is claimed by plaintiff, is unquestioned by defendant. Thus the claim is valid."[58]

13. Abstract 13, Decision Dated September 9, 1993 [59]

In a Swiss-Italian sale of furniture at a price of 12,050,000 LIT, equal to 15,062.50 Swiss Francs, CISG was applicable by way of Article 1(l)(a). The Italian seller claimed the price plus 6% interest. Regarding interest, the court said:

"If one party does not pay the price or any other sum due, the other party according to Article 78 CISG is entitled to interest. The rate of interest could not be fixed at the Vienna Conference because of numerous divergences of opinion. Especially it was discussed, whether there should be applied the discount rate of the country of the debtor or of the country of the creditor. Meanwhile, there has been formed a unanimous opinion that the details of interest are governed by the national law applicable by ways of private international law.[60] . . .

"Thus, in any case, Italian law is applicable as to the rate of interest and the date from which interest was to be paid.

"By Article 1219 Italian Codice Civile the debtor is in arrears either by demand (intimazione) or by written reminder (richiesta). Serving of a summary note to pay (precetto) leads to being in arrears as well.[61] According to Article 1224 Italian Codice Civile from the date of being in arrears the debtor has to pay legal interest at a rate of 5% except where a higher rate is owed otherwise. Plaintiff thinks a rate of 6% to be adequate. But plaintiff does not plead that such a rate was agreed upon. Thus, defendant is obliged to pay 5% interest."

14. Abstract 14, Decision Dated September 17, 1993 [62]

In a German-French sale of different types of goods at a total price of 1,665,238 French Francs, CISG was applicable by virtue of German [page 276] private international law. The parties had agreed upon French law, and CISG had already been adopted by France at that time. The French seller claimed the price plus 11% interest. At this time, no formal decision as to interest was available. However, the court has stated:

"Nonpayment of the price is breach of contract, which leads to a duty to pay damages. However, only damages foreseeable at the time of conclusion of the contract are to be paid.[63] But in case of postponed payment of the price, costs of credit higher than the rate of interest can be foreseeable damages.[64]

"As to the interest of 11% claimed by plaintiff, the case cannot yet be decided. The claim is generally justified under Article 78 CISG. If a party neglects to pay the due price, the other party is entitled to interest without prejudice to any claim for damages recoverable under Article 74 CISG. The rate of interest is not fixed in Article 78 CISG. It is to be fixed according to the applicable national law, in this case, French law.[65] The relevant rate of interest, fixed by French decree, has to be the basis for the claim for interest according to Article 78.[66]

"As to the French rate of interest since January 6, 1989, there must be additional research."

15. Abstract 15, Decision Dated December 30, 1993 [67]

In this Netherlands-German sale of live lambs, the court simply said that interest is to be paid according to Article 78 CISG. The question of the rate of interest is unsettled in CISG. German law applied by way of Netherlands private international law.

16. Abstract 16, Decision Dated 1993 [68]

A Syrian seller of steel sued the German buyer for the price. CISG applied by virtue of Article l(l)(b), as the parties had chosen French law and CISG was in force in France at the time. Although interest was not requested, the tribunal awarded interest based on French law,[69] measuring the rate of interest according to the London Interbank Offered Rate [page 277] (LIBOR).[70]

17. Abstract 17, Decision Dated January 18, 1994 [71]

In a German-Italian sale of shoes at an unidentified price, CISG was applicable by way of Article 1(1)(a). The Italian seller claimed the price plus 13.5% interest. Regarding interest, the court states:

"The claim for damages is justified only up to 10%.

"Basically, it is justified by Article 78 CISG. According to this Article, a party who fails to pay the price or any other sum due has to pay interest to the other party.[72]

"Defendant was in arrears before the date from which plaintiff claims interest.

"The rate of interest is not fixed under Article 78 CISG,[73] and according to the overwhelming opinion, it must be fixed according to the national law applicable by German private international law.[74]

"In this case, according to Article 28(2) EGBGB (i.e. German private international law), Italian law is applicable to the price and to the accompanying obligation to pay interest. The question of whether one should follow the unique opinion of Stoll,[75] by taking the rate of interest from the law of the residence of the debtor, was left undecided in the judgment of June 13, 1991. In that case, the claim was restricted to 5%, by both French and German law. Now, in this case, the question must be decided in accordance with the overwhelming opinion. The rate of interest was deliberately left undecided in the Convention, so the only solution is to apply private international law. Because there is no guidance from CISG, we cannot find a justification for using the law of the residence of debtor. The purpose of the duty to pay interest is to prevent the debtor from having the benefit of working with the withheld money instead of paying it to the creditor. Stoll's idea is not convincing either, because there is no assurance that the rate of legal interest of the residence of the debtor really can take all the advantages of nonpayment from the debtor [76] and a different way of calculation of interest would lead to interference with the claim for damages. The practical problem of being forced to research foreign law just for the [page 278] purposes of rate of interest has to be taken in the bargain, due to the partial defects of the Convention caused by the difference of opinions in its formation.[77] After all, it can be minimized by adequate publications.[78]

"The rate of interest according to Article 1284 Italian Codice Civile since December 16, 1990 is 10%.[79]

"The higher rate of 13.5%, claimed by plaintiff, cannot be given. Whereas Article 78 CISG does not exclude a claim for damages arising from working on credit with high rates, plaintiff could not prove the alleged damages arising from working on credit with high rates, plaintiff could not prove the alleged damages. The certificate of the Banca d'Italia concerning the Italian discount rate is not sufficient evidence."

18. Abstract 18, Decision Dated February 10, 1994 [80]

In a German-French sale of tissues at a price of 61,646.40 French Francs, CISG was applicable by way of German private international law, which calls for application of the law of the seller's state. This led to French law, because the seller was French, and France already had adopted CISG.

"Plaintiff is entitled to interest according to Article 78 CISG. The rate of interest has to be fixed by French law, applicable by the private international law contracts, thus by Law Nr. 89-421 of June 23, 1989 and Decree of January 4, 1990 (Journal Officiel, January 5, 1990), Decret of February 1, 1991 (Journal Officiel, February 3, 1991), and Decret of March 5, 1992 (Journal Officiel, March 7, 1992)."

19. Abstract 19, Decision Dated February 10, 1994 [81]

In a German-Italian sale of tissues at a price of 6,749.21 German Marks, CISG was applicable (probably by virtue of Article 1(1)(a)). The German buyer lost his right to avoid the contract under Article 82 CISG, and the Italian seller claimed the price plus interest. Landgericht, the court of first instance, had awarded 5% interest.

"5% interest awarded by Landsgericht and which is not attacked by buyer is justified under Article 78 CISG, § 352 HGB (German Commercial Code) and § 291 BGB (German Civil Code). Article 78 CISG states that seller is entitled to interest in case buyer does not pay the price. The rate of interest, however, is not fixed. This rate is to be fixed according to the respective [page 279] national law found by virtue of private international law.[82] By both parties pleading German law, they have impliedly chosen German law to be applicable law according to Article 27(1), (2) EGBGB. Thus, defendant owes commercial interest at a rate of 5%.[83] There would be no difference in case Italian law was applicable by way of Article 28(1), (2) EGBGB. According to Article 1282 and 1284 I Italian Codice Civile, the rate of legal interest is 5%, as well."

20. Abstract 20, Decision Dated March 2, 1994 [84]

In this German-Swedish sale of charcoal at a price of 116,535 German Marks, CISG was applicable by way of Article 1(1)(a). The Swedish seller's claim for the price and interest of 8% above the Swedish discount rate was successful in the first instance. This court affirmed.

"The claim for interest follows generally from Article 78 CISG, defendant not having paid the price due according to Article 58 CISG. The rate of interest is to be taken according to Article 28(2)(l) EGBGB from Swedish law, and plaintiff-seller owes the performance typical for this type of contract. It follows that plaintiff is entitled to interest of 8% above the discount rate of the Swedish National Bank.[85] An additional 8% is fixed. The lower interest rate mentioned by Fischer/Vogel,[86] thus, is not correct."

21. Abstract 21, Decision Dated April 20, 1994 [87]

In this German-Swiss sale of 1750 kg of mussels, CISG was applicable by way of Article 1(1)(a). The Swiss seller claimed the price plus interest and won in the first instance. Oberlandesgericht affirmed, saying: "There has to be paid interest on the price according to Article 78 CISG. It can be left undecided, whether by Article 28 EGBGB Swiss law is applicable or whether German law § 352 HGB applies. According to either law, the rate of legal interest is 5%."[88] [page 280]

22. Abstract 22, Decision Dated June 15, 1994 [89]

The arbitral court handled this German-Austrian sale of sheet steel at a price of 250,000 US dollars and 364,086 German Marks. CISG was applicable by way of Article l(1)(b). The Austrian seller claimed the price plus interest.

"By Article 78 CISG seller has in case of delay of payment of the price a claim for interest.

"Article 78 CISG does not say anything as to the rate of interest. In literature and in the court decisions up to now, it is questioned whether this is a question outside the Convention which automatically leads to the fixation of the rate of interest according to the national law applicable by virtue of private international law [90] or whether it is just a lacuna in the meaning of Article 7(2) CISG and thus the rate of interest eventually may be fixed according to general principles.[91] This second opinion is preferable, not the least because the automatic application of a certain national law in cases where the applicable law expressly forbids interest scarcely is in conformity with the general principle of Article 78 CISG. One of the general principles of the Convention is the principle of full compensation of the damages incurred. From that follows, that in the case of nonpayment of due sums, the creditor, who in commercial transactions typically works with bank credit, has a claim to interest common in his country.[92] According to information taken from the leading Austrian Banks, the average interest rate for prime borrowers in U.S. dollars and DM was 4.5% and 8% respectively. Interest has to be calculated according to this rate."

23. Abstract 23, Decision Dated June 29, 1994 [93]

In this Swiss-Italian sale of furniture at a price of 10,535.20 Swiss Francs, CISG was applicable by Article l(1)(b). The Italian seller claimed the price plus 11% interest.

"Article 78 CISG does not fix the rate of interest. Thus this rate is fixed by the law applicable by virtue of private international law.[94] [page 281]

"According to Article 117 IPRG (Swiss private international law), if there is no choice of law, a contract is governed by the law with which it is most closely connected. There is a presumption that the country with the most close connection is the country in which the party obliged to the characteristic performance has her residence. In contracts for the sale of goods the performance of the seller is the characteristic performance.[95]

"According to these rules of private international law, Italian law is applicable as to the rate of interest. Characteristic performance is the performance of delivering furniture, performance of the plaintiff having her place of business in Italy. According to Article 1284 of the Italian Codice Civile the rate of legal interest is 10%. Interest over and above this rate must be contracted to in writing. A contract of this kind is not presented; thus the rate of interest is 10%."

24. Abstract 24, Decision Dated December 20, 1994 [96]

In this Swiss-Italian sale of marble stones at a price of 8.070 Swiss Francs, CISG was applicable by virtue of Article 1(1)(a). The Italian seller claimed the price plus 8% interest. The court said that the line of argument was the same as in case C 118/94 (Abstract 23 herein), the only modification being that only 8% interest was claimed.

25. Abstract 25, Decision Dated February 8, 1995 [97]

In this German-Italian sale of socks, CISG was applicable by way of Article 1(l)(a). The case involved an Italian seller and a German buyer.

"The claim for interest is basically justified by Article 78 CISG. According to this article, the party who fails to pay the price or any other sum that is in arrears has to pay interest to the other party. The rate of interest, however, is not fixed. According to probably unanimous opinion,[98] hereby adopted by the court, it has to be fixed by the national law applicable by virtue of German private international law. This law is, by Article 28(2) EGBGB, Italian law. The rate of interest, according to Article 1284 Italian Codice Civile since December 16, 1990, is l0%.[99] Article 78 CISG does not prejudice any claim for damages higher than the interest rate by use of [page 282] bank credit at higher rates; however, plaintiff could not establish sufficient evidence of the 14% rate of interest allegedly paid by him."

26. Abstract 26, Decision Dated April 26, 1995 [100]

This case involved a French-Portuguese sale of a used warehouse at a price of 500.000 French Francs, including 118,800 French Francs for the cost of dismantling and delivering the warehouse. CISG was applicable by virtue of Article 1(1)(b). French private international law, under the Hague Convention of June 15, 1955, led to the law of the country of the place of business of seller: France. The court decided that interest was to be paid upon Article 78 CISG. Applicable law and rate of interest were not mentioned in CLOUT.

27. Abstract 27, Decision Dated March 29, 1995 [101]

In a French-Spanish sale of maize, CISG was applicable by way of Article l(1)(a). The court made an identical finding as in Abstract 26.

28. Abstract 28, Decision Dated December 5, 1995 [102]

In this Hungarian-Austrian sale of containers, CISG was applicable by way of private international law which led to the law of the country of the place of business of the Hungarian seller. The arbitral court, referring to Article 7(2) of CISG, held that the interest rate had to be adjusted, taking into account the currency to which the parties had agreed in the contract.

(1) Commentary on Interest in Case of Creditors' Damages

Interest as part of damages must be distinguished from legal interest. Interest is addressed by Article 78 while damages are governed by Article 74 CISG. Quite a significant number of the cases reviewed had to decide the question of interest under the heading of damages. This is because in many European countries legal interest rates are very low, and are independent from market developments. Thus, in Germany, the general rate of legal interest is 4%,[103] as compared to 5% when the parties [page 283] are businessmen and interest arises from commercial transactions.[104] The situation is now, or at least until recently, not much better in some other European countries.[105] Obviously, plaintiffs -- generally unpaid sellers -- want to recover interest at higher rates.

Claims of this type have been successful at times.[106] In a significant number of cases, however, interest under the heading of damages has been denied. In no case has this happened because the court misunderstood Article 78 of CISG. One questionable case involved an intermingling of Article 74 and Article 78.[107] In all the other cases, the courts correctly applied Article 78 of CISG.

Furthermore, it was correctly stated that Article 78 does not prejudice Article 74 claims for damages.[108] Several courts correctly stated that Article 78 and 74 of CISG allow claims for damages when a claimant incurs additional interest costs and when losses are incurred because capital is tied up in the transaction at issue.[109] As to promotion of uniformity, at least occasionally, courts rely on legal literature regarding CISG, even from foreign states.[110]

The reason most often given for not awarding damages was that plaintiffs either were unable or unwilling to prove damages arising from reliance on bank credit at higher interest rates. Why plaintiffs failed to prove these damages is open to speculation. Either, they in reality did not work on bank credit, which would call into question the argument some scholars have made that it is common practice to work on bank credit, or plaintiffs did not want to reveal financial information.

The practical problem of claiming interest by way of damages thus seems to be limited to the proof. Sometimes damages were uncontested.[111] Occasionally, courts tried to escape an appraisal of damages, as evidenced in some cases.[112] By this means, Landgericht Hamburg [page 284] awarded interest at the discount rate in the state of plaintiff's business (Italy). Taking account of the practice of evidence from national law is widely accepted in legal literature.[113] The decision is questionable, however, not because of deficiencies in the national practice of evidence, but because there is no appraisal of damages available if you can easily prove whether and at which rate you worked on bank credit. In other decisions, evidence of the discount rate in plaintiff's country was not held to be sufficient evidence of damages; this seems to be the better approach.[114]

(2) Commentary on Interest Without Proof of Damages

The problem more often discussed and more controversial is the question of interest independent from damages, covered by Article 78 of CISG. Practically all cases deal with this question, either exclusively or in addition to damages. A wide range of approaches have developed within the last decade. And still, at least for now, we are far from what one court recently called a "probably unanimous opinion."[115] On the contrary, the question still is under discussion.

We shall review the cases first in terms of which law was applied, and second according to what courts did to advance uniformity.

Unidentifiable Law

Some decisions leave open the question of which law was applied. Pretoria della giuridizione di Locarno-Campagna,[116] a Swiss decision, awarded 5% interest without explaining what law was used to determine the rate. Because both Switzerland and Italy applied the 5% rate at the time, one can only speculate as to whether this was seller's law, buyer's law, creditor's or debtor's law, or simply the law of the court. The same can be said of Oberlandesgericht Frankfurt am Main,[117] where 5% interest was awarded. The question of applicable law was left open, because 5% was justified under both Swiss and German law.[118] Handelsgericht [page 285] Zurich [119] awarded 13.5% interest without even mentioning the applicable law. But this is to be understood by the fact that the "amount of damages" was unquestioned by defendant. In Pretura circondariale di Parma [120] the Italian court awarded interest according to the Italian statutory rate, so we know Italian law was applied. But we do not know why the court applied Italian law. It could have been applied as the law of the court. However, it also could have been applied as the law of the claimant's place of business. Moreover, it could have been applied by virtue of private international law, because in Europe generally, the law of the seller's place of business applies if not otherwise agreed by contract. The same ambiguity as to applicable law occurred in Amtsgericht Oldenburg.[121] Italian law could have been applied because Italy was the claimant's place of business, or because German private international law led to Italian law. Not deciding on the applicable law is an approach taken by courts either when the interest rate is out of discussion, or in the very early decisions. This methodology has never been used since 1990.

Law of the Creditor

Occasionally, it is clear that the courts have applied the law of the creditor. This happened in Landgericht Stuttgart,[122] where the court started with Article 74 of CISG, then instead applied Article 78 of CISG. The same approach was taken in Landgericht Frankfurt am Main,[123] where the court specifically refers to Landgericht Stuttgart. Oberlandesgericht Frankfurt am Main [124] seems to have taken the same approach. Yet in reality, this is not an application of the law of the creditor. The court clearly relies on private international law which frequently leads to the law of the creditor's state. Again, this is an earlier approach, which has never been used since 1991.

Law Determined by Virtue of Private International Law of the Court

In the vast majority of cases, the rate of interest is fixed according to the national law applicable by virtue of private international law of the court.[125] This approach is used by courts in all of the European States [page 286] from which we have decisions concerning interest. While at first this approach was simply applied,[126] in later decisions it was occasionally referred to as "unanimous opinion."[127]

General Principles of CISG

At least two arbitral courts have applied what seem to be general CISG principles. The Austrian international arbitral court,[128] discussing the problem of rate of interest, did not apply private international law but instead clearly stated that fixing the rate of interest "according to general principles" was preferable. The Hungarian arbitration court [129] took a similar approach when it stated that the interest rate had to be fixed "taking into account the currency in which the contract price had been agreed."

Justification of Different Approaches to Fixing the Interest Rate

Little or no justification can be expected, nor is it provided by courts that simply state the rate of interest, without any discussion of the applicable law or the reasons for choosing it. Thus, the first group of cases cannot serve to further our understanding of courts' rationale.

On the other hand, one should expect justification for application of the creditor's law. Indeed, Landgericht Stuttgart,[130] on which Landgericht Frankfurt am Main [131] fully relies, tries to explain its approach. According to this decision, "it is suitable to rely on the law of the creditor, especially since the consequences of nonfullfillment of the obligation to pay arise there" [132] (i.e., in the country of the place of business of the creditor). Additionally, the court noted, "the price was to be paid in Italian currency" [133] (i.e., the currency of the place of business of the creditor). The argument seems to be borrowed from Stoll, who has published his support of the place of the creditor approach. [134]

As far as the private international law approach is concerned, early [page 287] decisions either took it for granted that this was the correct approach,[135] or simply stated that there is no argument for application of the law of the country of the debtor.[136] Later decisions refer back to prior decisions, occasionally adding that this approach conformed with the "overwhelming" majority [137] or is the "unanimous" opinion.[138] But they do not provide any argument for this approach.

Of the few arbitral court decisions applying general principles, only the Austrian arbitral court [139] tries to explain why its approach is "preferable" to the private international law approach. Automatic application of a national law could lead to the law of a country forbidding interest, and no interest at all scarcely conforms with the general principle of Article 78 of CISG. Achieving full compensation of damages incurred demands application of the law of the country of the creditor, because the creditor typically must rely on its own country's bank credit conditions.

Promoting Uniformity in the Application of CISG

The decisions reviewed include some in which the courts granted interest in CISG cases without even referring to CISG.[140] But this is the exception. Generally, the decisions refer to Article 78 of CISG, and often note that the rate of interest was intentionally not fixed by CISG.[141] Furthermore, courts note that Article 78 of CISG is the result of a compromise, agreed upon after long discussion.[142] This discussion included consideration of using the discount rate in the State of the debtor or creditor.[143] Courts also rely on precedents,[144] but never precedents from foreign jurisdictions, at least as far as interest is concerned.[145] Some courts refer to commentaries and law review articles, even from foreign countries.[146] However, never was express reference made to Article 7(1) and its call for uniformity in any of the decisions reviewed. [page 288]

C. European Legal Literature on Interest

The controversial issue of applicable law in determining the rate of interest also is raised in European legal literature concerning CISG. The fundamental question is whether the rate of interest can be settled according to the general principles on which the Convention itself is based, or whether it must be settled according to the law applicable by virtue of the rules of private international law.

In Germany, the majority of scholars holds that because there is no regulation as to the rate of interest, this question has to be decided according to the law applicable by virtue of private international law of the forum.[147] According to German private international law, the applicable law is initially determined by choice of the parties.[148] If there is neither express nor implied choice, the applicable law is ascertained according to the law of the country with which the contract is most closely connected. Such connections primarily are found in the country of residence or place of business of the party carrying the characteristic obligation, this being, in the case of a sale, the seller.[149] The question of rate of interest is considered to be part of the contract itself, thus it must be settled according to the same law as that of the contract itself.

However, another private international law approach suggests that it is better not to decide the rate of interest according to the law applicable to the contract but instead to define the applicable law independently.[150] The claim for interest is regarded as something like a loan, forced upon the creditor in the amount of the money in arrears. For this reason, it is suggested that the private international law regarding loans should be applied.[151] European private international law generally leads to the same results as does the private international law approach concerning sales, because Article 27 and 28 EGBGB, and Article 3 and 4 Rome Convention are applied in the same way to a sale and to a loan. But the outcome might be different if based on a different private international [page 289] law.[152] Also, the theoretical viability of this approach is questionable. There is no sensible reason to classify as a loan what in reality is part of a sale. Using this approach, every claim for money based on a contract not properly fulfilled must be treated as a loan.

Again, in the private international law context, it is said that usage prevails based on Article 9 of CISG, and that only in case of lack of established practices should applicable law be fixed according to private international law.[153]

A general principle which can be taken from CISG is that the law at the place of business of the debtor of interest should be applied. This is because it is the debtor who has the use of the money while he is in arrears to the seller. It has been suggested that the purpose of Article 78 is to deny the debtor these unjustified advantages.[154] However, there is strong opposition to this approach. Its detractors argue that the purpose of CISG is not taking advantages from the debtor but allowing the creditor to recover his costs by demonstrating damages.[155] Finally, it is suggested that based on the principle of autonomy, the rate of interest agreed upon by the parties should be applied.[156]

This controversial discussion continues in other European countries. In France, it is argued that the rate of interest is a lacuna in the Convention to be closed according to the general principles on which it is based. In the absence of such principles, it should be decided according to the law applicable by virtue of private international law.[157] Those authors who believe there are no general principles consequently say there is only private international law available,[158] while other authors prefer the general principles approach, either relying on the London Interbank Offered Rate (LIBOR) [159] or applying the usual rate of interest to short term [page 290] loans in the country of the debtor.[160] However, generally, courts rarely state the reasons they apply the law they choose to apply.[161]

The attitude of Swiss authors is quite similar to the French. One opinion, accepted by the courts, relies on the law applicable by virtue of private international law.[162] On the other hand, another writer has said the problem must be resolved according to general principles of the Convention.[163] According to the latter approach, Article 78 was not intended to cover damages, but instead was meant to deny unjustified advantages. Under Article 84 of CISG, the debtor in arrears should refund all advantages he received from withholding the money owed. Advantages are measured according to the rate of interest at his place of business.

 

II. How Europe Strives for the Goal of Uniformity

A. The Goal of Uniformity

The goal of uniformity in the application of the Convention is stated in Article 7(1) of CISG. While this goal is never denied in decisions, neither is it directly addressed as a determining factor for courts in ascertaining the law applicable to the rate of interest. While it is not up to the courts to explain how they apply the law, they must still correctly apply it. Yet, as far as the rate of interest is concerned, we are far from having a worldwide uniform system of application of CISG. Therefore, in light of Article 7(2) of CISG, the Convention is not correctly applied. It would be helpful to clarify that what the courts should be striving for is uniformity.

Similarly, the legal literature in general terms emphasizes the goal of uniformity in the application of the Convention.[164] However, when it comes to the rate of interest, again there is little reference to this goal. Instead, each author tries to establish his own "better" solution. Only occasionally do scholars and courts acknowledge the problem of contravening the intent of the conference.[165] [page 291]

B. Ways to Achieve Uniformity

One way of achieving uniformity in the application of the Convention is to disseminate foreign court decisions and foreign literature.[166] However, practical means are limited and could only be furthered by exchange of court decisions and publication of decisions by UNCITRAL.[167] The idea of formation of an editorial board to interpret decisions and make unofficial recommendations [168] is considered impractical and dangerous.[169] Such recommendations could not be binding on national courts, and being unofficial, they could lead to confusion in international commerce.

C. External Examples: Uniform Law of Bills of Exchange and
Warsaw Convention on International Transportation by Air

There are good examples of how uniformity can be achieved in the application of international conventions. Thus, before finally reviewing what is currently done and what should be done in the future, we should have a short look at examples of practices under guidelines similar to CISG.

Long before CISG went into effect, unification occurred in other areas of international legal transactions. Though not worldwide, the law of Bills of Exchange was unified in a large number of States based on the Hague conferences of 1910 and 1912, and the Geneva conference on Bills of Exchange of 1930. The result was the Uniform Law on Bills of Exchange, adopted in most parts of the European continent and South America. The Warsaw Convention on International Transportation by Air, which unified Air Transportation Law as early as 1929 is another good example of law unified by convention. These well-established examples of uniformity may serve as a model for a new convention. Here is what courts can do with regard to uniform application of convention law:

1. An early decision of the German Federal Court [170] stated: "Especially in the interest of . . . uniformity in the application of statutes forming an important link in transnational commerce, it is necessary with such international regulations to keep close to the clear wording of the [page 292] statute, otherwise the goal of such international regulations would be put in danger."

Thus, courts may, and eventually must, use methods of interpreting international conventions different from those used in purely domestic law. In Germany, word for word interpretation is used only as a starting point in domestic law. In the application of international conventions, adherence to this method becomes more significant. Additionally, national courts must not go beyond what was agreed between Contracting States in the interest of furthering trust between member States. The better the member States understand the Convention, the more difficult it will be for national courts to develop extravagant solutions.

2. The same court [171] stated: "It is evidence of the substantial support of this opinion, that it has been accepted in foreign countries such as Austria and Italy." Thus, in the application of conventions or convention-based statutes, courts heavily rely on foreign court decisions, not only in discussing them, but even in emphasizing uniformity.

3. In a later decision, heavily relying on the first decision, the court stated:[172] "In fact, Art. 69 of the Statute of Bills of Exchange from an international point of view is not understood in the sense given to it by modern (German) literature." Courts can and should expressly rely on foreign decisions and literature, thus demonstrating that they respect the need to promote uniformity.

The German courts' application of the Statute of Bills of Exchange is far from unique. One commentator, John O. Honnold,[173] in emphasizing respect for the Convention's legislative history, cites American and English court decisions using almost identical language. In regard to the Warsaw Convention on International Transportation by Air, the United States Supreme Court emphasized that "the weight of precedent in foreign and American courts" should be respected.[174] In the Fothergill Case,[175] the English House of Lords, again with respect to the Warsaw Convention, made a similar argument. Four out of five opinions emphasize that besides respect for the traveaux préparatoires "consideration should be given to foreign case law and scholarly writing." So we have models for what should be done to satisfy the Article 7(2) requirement of promoting uniformity. [page 293]

IV. European Court Decisions and Legal Literature Regarding Promotion of Uniformity

There is little evidence of progress in the first ten years of CISG as far as uniformity in the rate of interest is concerned. CISG is treated like any other domestic code or statute. Seldom is there reliance on foreign court decisions, even in decisions of recent years, despite the significant number of precedents.[176] Seldom is there reliance on foreign CISG literature, although scholarly writing occurred even before CISG was in force, and there is now a significant body of work on both CISG in general and the rate of interest in particular.

One cannot expect courts of first instance applying a new convention for the very first time to be able to handle it the same way the highest courts do. Courts of first instance have to handle new problems without the benefit of precedent and general discussion. These courts may be constrained by time, resources, and even access to information. It simply would be unfair to expect the same degree of elaboration in such circumstances. However, at least within a reasonable time, as information has become available, one should expect even first instance courts to recognize a problem, realize the applicable standards, and come to a sound solution, not by accident, but by using analytically sound approaches.

Taking the problem of interest as an example, there still seems to be a long way to go before the text of CISG is handled in the courts in a way acceptable to businessmen and practicing lawyers alike. CISG cannot be a solid foundation for international commercial transactions until courts apply it uniformly.

V. European Court Decisions and Legal Literature Regarding Applicable Law as to the Rate of Interest

We are far from what some German and Swiss courts have called a "unanimous opinion" as to the private international law approach. There is a strong tendency, at least among German and Swiss courts, to fix the applicable law according to the private international law of the court. However, up until recently, there have been arbitral awards and court decisions from more than one jurisdiction not applying this approach. Therefore, calling one approach "unanimous" is at least incorrect, if not willfully misleading. [page 294]

This does not mean the approach itself is substantially wrong. The mistake is a methodological one, not necessarily one in substance. While the question is open for further discussion, it should be remembered that there must be justification for deviating from the prevailing opinion. However, neither is it necessary to blindly adopt an opinion in order to promote international uniformity in the application of the Convention.

A four step approach, rarely found in court decisions may be applied to the problem. First, decide whether the matter is governed by CISG but not expressly settled in it, or whether the rate of interest is a question totally outside of the Convention. Second, if the matter is governed by the Convention, decide the Article 7(2) question of whether there are general principles of the Convention according to which the rate of interest may be fixed. Third, if general principles cannot be established and private international law must be relied upon, based on private international law of the forum, what law is applicable as to rate of interest. Fourth, decide any additional questions according to general principles applicable to special situations such as agreement on rate of interest, or usage.

In evaluating the wide range of approaches taken by courts and proposed by legal scholars, one basic fact becomes clearly evident: CISG is not applied in the complicated cases but in the everyday case. Everyday goods (tissues, clothes, shoes, socks, furniture, home appliances, live lambs, mussels) in everyday amounts (ranging from hundreds of U.S. dollars to thousands of U.S. dollars) are bought and sold in everyday contracts by everyday businessmen, most often unaware that CISG applies. In case of controversy, those everyday cases must be handled by either the parties themselves or by everyday lawyers, in everyday courts. Interpretation of CISG must allow those businessmen and lawyers and judges to come to clear and convincing decisions. It is only the big and complex deals which generally are prepared by the skilled and experienced lawyers, or in case of controversy, handled by trained and experienced arbitrators.

A. Gap Within the Convention or Outside of It?

The first question is to decide whether rate of interest is a problem within the Convention or outside of it.[177] This first step is indispensable, [page 295] because there is no field of application for general principles based on Article 7(2) in case CISG does not govern the matter of rate of interest at all. Until recently, this question was rarely raised. Discussions focused instead on the Article 7(2) distinction of general principles approach or private international law approach. Now, however, it seems clear that the first decision has to be applicability of CISG. This distinction has been made in the arbitral award of the Austrian Arbitral Court.[178]

It could easily be argued that rate of interest is a matter governed by the Convention though not expressly settled in it, the question of interest itself being settled in the Convention and the rate of interest being merely an addendum to it. However, there is also strong argument for the opposite position. The latter approach seems to be preferable, considering that the rate of interest deliberately was put aside at the conference and further considering that disregarding these facts could add to the hesitance of countries and parties to adhere to the Convention for fear of being surprised by unforeseen developments. Thus, there are good reasons to arrive directly at a private international law approach.

B. General Principles Approach, Private International Law Approach
within Article 7(2) of CISG, or Totally Independent Approach?

If the rate of interest is a matter generally governed by the Convention, then the question is raised of whether there are general principles regarding this rate. The mere fact that Art. 78 of CISG awards interest does not help to resolve the problem. As courts correctly state, the rate of interest is not fixed by Article 78 of CISG, and this was a deliberate omission.

Some European literature and at least the decisions of arbitral courts [179] consider the underlying rationale for interest to be damages without proof. Because the damages occur in the place of business of the creditor, the law of this place logically applies. Courts and commentators alike rely heavily on Honnold.[180] Others consider the rationale for interest to be compensating the creditor in the amount of profits taken by the debtor due to his arrearages. Because the profits occur in the place of [page 296] business of the debtor, the law of that place should apply.[181] Neither approach conforms with the idea of uniformity. Neither approach takes the rate of interest from CISG itself. Instead, both approaches presume that CISG contains a hidden private international law rule. But private international law is addressed in Article 7(2) of CISG. Both approaches presume an acceptable express solution regarding rate of interest was not achieved or achievable at the conference, but an implied solution was reached. Extending CISG beyond the scope agreed upon will not serve to encourage adherence by non-member states.

Giving interest "without prejudice to any claim for damages," Article 78 CISG demonstrates that according to the Convention flat (overall) interest is not considered to be a substitute for damages but is distinct from damages, which are awarded when incurred and proven. The fact that Article 78 is not part of the damages section but forms a separate section further indicates that flat interest is to be treated differently. Thus, there may be goals in CISG, even in Article 78, which may be based on underlying principles. But there is not one governing principle governing the rate of interest or the law applicable to the rate of interest. Consequently, even starting with the Article 7(2) approach, we ultimately have to rely on the general private international law approach.

The London Interbank Offered Rate (LIBOR),[182] applying a totally independent approach, does not conform to CISG or to private international law. This is a far from acceptable approach, because it precludes worldwide application in small everyday business transactions.

C. Applicable Law by Virtue of Private International Law

Determining the rate of interest from the law applicable by virtue of private international law leads to the private international law of the forum. This results in different outcomes based on different regulations in non-unified private international law.[183] While this might be considered deplorable, in no respect are these differences a violation of the principle of uniformity in application of the Convention. The lack of uniformity actually conforms to the standards of the Convention. Uniformity in the outcome of the case would obviously be preferable. This deficiency in [page 297] the Convention must be accepted. This is preferable to rewriting the Convention without benefit of a new conference and a renewed Convention.

However, even within the private international law approach, different methods are discussed. The majority of the decisions applying this approach [184] and the majority of European scholarly writing as well consider rate of interest to be part of the contract itself.[185] Thus, the law applicable to the sales contract, if there were no CISG, applies as well to the question of rate of interest. Generally, at least based on European private international law, this is the law of the seller.[186] But this is correct only if the parties neglect what should be kept in mind in every international transaction: a choice of law provision. Due to the vast range of rates of interest throughout Europe, it is obviously in the interest of parties to international sales contracts to agree not only on the applicable law as to rate of interest but even on the rate of interest itself. Occasionally, it is said that because the debtor benefits from working with the money withheld from the creditor, it is the law of the place of business of the debtor which should be applied.[187] On the other hand, it is argued that sums in arrears must be treated like a loan, albeit extorted, making applicable the rules of private international law of loans.[188]

Of all the approaches taken, only the one applying the law generally applicable to the contract of sale seems sound. The realities of contract are misinterpreted in separating the rate of interest from the contract out of which the interest must be paid. Any such attempt would cause confusion for the parties.[189] And divergent opinions on what law should be applied under this approach indicate that it would not be helpful in establishing uniformity.

D. Related Problems

Three issues remain which should be treated separately: first, fixing the rate of interest by parties' agreement; second, international usage under Article 9 of CISG; and, third, what to do when applicable law does not allow interest at all. [page 298]

Because of deviations in rate of interest in different countries and because of the unpredictability of courts, it has been suggested that parties agree upon the rate of interest.[190] I totally agree with this suggestion, which is clearly available under Article 6 of CISG.

As to the [Argentine] court's statement that there is international usage of fixing the rate of interest of debts calculated in U.S. dollars according to the prime rate, I simply can state that a usage of this kind is unknown to me, and it is definitely not common in Germany. Moreover, it should be noted that applicability of usage to which there is neither express agreement nor established practice depends on very clear cut prerequisites.

In case applicable law forbids interest, the first step should be to determine whether this law otherwise provides for compensation of the unpaid creditor. If there are no such provisions, no interest is owed under Article 78 CISG. This is a harsh result. On the other hand, interest without proof of damages scarcely is demanded by natural justice. And considering the wide range of rates of legal interest in the different countries, it seems arbitrary to try to apply some kind of "usual" rate of interest [191] or to allow recourse "to the level of interest generally applied in international commerce in the particular trade concerned."[192] If parties do not prepare for this scenario, they have to take the law as it is. Again, it should be noted that CISG obviously is far from perfect and must be developed by courts and scholars. But again, we should not replace CISG with what we consider better law. For it is fear of such a development that leads parties to avoid contracting under CISG and may induce countries not to adopt the Convention. [page 299]


FOOTNOTES

* Professor of Law, University of Augsburg, Germany.

** The Journal of Law and Commerce adheres to The Bluebook Uniform System of Citation, but the Journal of Law and Commerce has created uniform citations for certain sources not addressed by The Bluebook. Moreover, with respect to foreign languages sources for which the Journal of Law and Commerce was not provided an English translation, the editors have relied on the author of the veracity of statements drawn from such sources.

The bracket phrase page followed by a number is used to identify the page number of the original publication.

1. U.N. Convention on Contracts for the International Sale of Goods, Final Act, 1980, U.N. Doc. A/CONF.97/18 (1980), reprinted in S. Treaty Doc. No. 98-9, 98th Cong., 1st Sess. (1980), and in 19 I.L.M. 668 (1980) [hereinafter "CISG"]. The CISG entered into effect on January 1, 1988. For a detailed international bibliography see Kommentar zum Einheitlichen UN-Kaufrecht-CISG XXXILXXX (von Caemmerer/Schlechtriem eds., 2d ed. 1995); and in English, Peter Winship, The U.N. Sales Convention: A Bibliography of English-Language Publications, 28 Int. Law. 401-23 (1994).

2. See E. Allan Farnsworth, UNCITRAL: Why? What? How? When?, 20 Am. J. Comp. L. 314 (1972); Gerold Herrmann, The Contribution of UNCITRAL to the Development of International Trade Law, in 2 The Transnational Law of International Commercial Transactions 35 (Norbert Horn & Clive M. Schmitthoff eds., 1982); John O. Honnold, The United Nations Commission on International Trade Law: Mission and Methods, 27 Am. J. Comp. L. 201 (1979).

3. See Journal of Law and Commerce CISG Contracting States and Declarations Table, 16 J.L. & Com. 371 (1997): Argentina, Australia; Austria; Belarus; Belgium; Bosnia and Herzegovina; Bulgaria; Canada; Chile; China; Cuba; Czech Republic; Denmark; Ecuador; Egypt; Estonia; Finland; France; Georgia; Germany; Ghana; Guinea; Hungary; Iraq; Italy; Latvia; Lesotho; Lithuania; Luxembourg; Mexico; Netherlands; New Zealand; Norway; Poland; Republic of Moldova; Romania; Russian Federation; Singapore; Slovakia; Slovenia; Spain; Sweden; Switzerland; Syrian Arab Republic; Uganda; Ukraine; United States of America; Uzbekistan; Venezuela; Yugoslavia; Zambia.

4. Case Law on UNCITRAL Texts, ed. by United Nations Commission on International Trade Law.

5. There is a long list of additional cases for which no abstracts are to be prepared and another group of cases to be reported on listed at the end of CLOUT 8 of December 21, 1995. There are still other cases, not yet sent to CLOUT, some of which are reviewed in this article.

6. The Convention has become something like a model law in discussions regarding the formation of a uniform civil law in Europe. Additionally, the so-called Lando-Commission, which prepares general principles of contract law, closely follows the regulations of the Convention.

7. See Heinrich Honsell, Kommentar zum UN-Kaufrecht (1997), Preface.

8. The question of implied exclusion was broadly discussed at the European Sales Convention. Courts and commentators generally did not consider choice of law of a member state of the Convention to be an implied exclusion of the Convention. See, e.g., Oberlandesgericht Düsseldorf, Praxis des Interationalen Privat- und Verfahrensrechts 1993, 412, at 413; Arbitral Award of the International Chamber of Commerce Nr. 6653/93, Journal du Droit International 1993, 1040, 1042.

9. See Honsell, supra note 7.

10. See Franco Ferrari, Uniform Application and Interest Rates Under the 1980 Vienna Sales Convention, 24 Ga. J. Int'l & Comp. L. 467, 470 (1995) [hereinafter Ferrari, Uniform Application] ("in order to achieve uniformity in international trade law, however, it is not sufficient to enact uniform law conventions.").

11. See Michael J. Bonell, Article 7: Interpretation of Convention, in Commentary on the International Sales Law: The Vienna Sales Convention 74 (Cesare M. Bianca & Michael J. Bonell eds., 1987) ("It is equally important that its provisions . . . be interpreted in the same way.").

12. The economic background of the cases presented in Part II demonstrates that in almost all of the cases the transactions involved were everyday business transactions between everyday parties, presumably unaware of the applicability of CISG and its problems. Compared with the economic background of the U.S., the business involved was ordinary interstate business, which became international only because of the political structure of Europe.

13. See Hans Hermann Eberstein & Klaus Bacher, Art. 78 para. 33 (Ernst v. Caemmerer & Peter Schlechtriem eds.). See also Burghard Piltz, Internationales Kaufrecht, 1993, § 5 para. 415.

14. Delchi Carrier SpA. v. Rotorex Corp., WL 495787 (N.D.N.Y. 1994) (CLOUT Case No. 85). See also V. Susanne Cook, The U.N. Convention on Contracts for the International Sale of Goods: A Mandate to Abandon Legal Ethnocentricity, 16 J.L. & Com. 257 (1997).

15. Delchi, 1994 WL at *7.

16. Moreover, on appeal, the 2d Circuit observed that "there is virtually no caselaw under the convention." Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1028. See also Cook, supra note 14, at 262.

17. See Piltz, supra note 13, at § 2 para. 182 (citing Juzgado Nacional de Grand. Instancia en lo Comercial Nr. 10, Buenos Aires, October 23, 1991).

18. Amtsgericht Oldenburg 5 C 73/89, April 24, 1990, CLOUT Case 7, Praxis des Internationalen Privat- und Verfahrensrechts 1991, 336. See Article 1284 § 1 Codice Civile, Asam. Recht der internationale Wirtschaft 1989, 942, 945.

19. Landgericht Hamburg 5 O 543/88, September 26, 1990, Praxis des Internationalen Privat- und Verfahrensrechts 1990, 400.

20. See CISG, supra note 1, at Art. 78 para. 3; Bonell, supra note 11, at Anm. 2.1.

21. See Asam/Kindler, Ersatz des Zins- und Geldentwertungsschadens nach dem Wiener Kaufrechtsübereinkommen v. 11.4 1980 bei deutsch-italienischen Kaufverträge, RIW 1989, 841-842; a.A. Stoll, Internationalprivatrechtliche Fragen bei der landesrechtlichen Ergänzung des einheitlichen Kaufrechts, FS Ferid, 1988, S. 495, 510.

22. CISG, supra note 1, Art. 78.

23. Id. at Art. 84(1).

24. Id. at Art. 74.

25. See John O. Honnold, Uniform Law for International Sales 420 (2d ed. 1991) (referencing legislative history).

26. CLOUT abstracts are very helpful but they often do not give information on specific questions. Additionally, it must be realized that the current national reporting systems are far from perfect.

27. Germany Landgericht Stuttgart, 3 KfH O 97/89, August 31, 1989 [hereinafter "Abstract 1"]; CLOUT Case 4; Praxis des Internationalen Privat- und Verfahrensrechts 1990, 282. Except where indicated by brackets, all footnotes appearing in translated passages contain material that is part of the text of the original opinion being translated.

28. See Stoll in Schlechtriem, Einheitliches Kaufrecht und nationales Obligationenrecht, 1987, 279, 280, 291; Schlechtriem, Einheitliches UN-Kaufrecht, 1981, 93, 94. [The argument of the court is somewhat ambiguous. Regarding liquidation of damages, there was no need to rely on Italian law. The Convention states that the debtor, being in arrears with the price or any other sum, has to pay interest but the rate of interest is not fixed and is disputed. See Praxis des Internationalen Privat- und Verfahrensrechts 1990, at 317. The court obviously relied on Art. 78 CISG instead of Art. 74 CISG.]

29. Italy, Pretura circondariale di Parma 77/89, November 24, 1989 [hereinafter "Abstract 2"]; CLOUT Case 90; unpublished.

30. Germany, Amtsgericht, Oldenburg 5 C 73/89, April 24, 1990 [hereinafter "Abstract 3"]; CLOUT Case 7; Praxis des Internationalen Privat- und Verfahrensrechts 1991, 336.

31. See as to the application of Art. 1284 § 1 Italian Codice Civile Asam, Recht der Internationalen Wirtschaft 1989, 942, 945 f.f.

32. Germany, Langericht Hamburg 5 O 543/88, September 26, 1990 [hereinafter "Abstract 4"]; CLOUT Case 5, Praxis des Internationalen Privat- und Verfahrensrechts 1990, 400.

33. See Palandt/Heldrich, Art. 32 EBGBG, Anm. 2 a.cc.

34. See von Caemmerer/Schlechtriem/Eberstein, Kommentar zum Einheitlichen UN-Kaufrecht - CISG - 1990, Art. 78 Nr. 3; Bonell, supra note 11, at Anm. 2.1.

35. See Asam/Kindler, supra note 21.

36. See von Caemmerer/Schlechtriem/Stoll, op. cit. Art. 74 para. 39.

37. Germany Oberlandesgericht (OLG) Frankfurt am Main 5 U 261/90, June 13, 1991 [hereinafter "Abstract 5"]; CLOUT Case 1, RIW 1991, 591.

38. Schlechtriem/Eberstein, Art. 78 para. 9, 10; Herber/Czerwenka, Art. 78 para. 3; Asam, RIW 1989, 942, 945.

39. [The Court further states:] This is the overwhelming majority of opinion. See Herber/Czerwenka, Art. 78, Rdnr. 6; Asam/Kindler, RIW 1989, 841. In favor of fixing the rate of interest according to the national law of the creditor are as well Landgericht Stuttgart, RIW 1989, 984, 985; Schlechtriem/Eberstein, Art. 78 para. 11; Asam, RIW 1989, 942, 945; Magnus, RabelsZ 53 (1989), 116, 140, 141. A different approach is followed by Stoll Festschrift für Ferid, 1988, S. 495, 509 f., who wants to take the rate of interest from the place of residence of the debtor. According to him, the obligation to pay interest aims to prevent the debtor from keeping the money for profitable investment while the opposite opinion argues that Art. 78 only wants to guarantee to the creditor a minimum interest rate according to the law of the seller. See Asam/Kindler, RIW 1989, 841, 842. This issue need not be decided now, being without importance for the outcome of the decision. (i.e., German and French rates of legal interest under the relevant circumstances being 5% respectively).

40. Germany, Langericht Frankfurt am Main 3/11 O 3/91, September 16, 1991 [hereinafter "Abstract 6"]; CLOUT Case 6, RIW 1991, 952.

41. See Eberstein, Schlechtriem, Art. 78 para. 9.

42. See Landgericht Stuttgart, op. cit. 985 with references; Asam/Kindler, Ersatz des Zins-und Geldwertschadens nach dem Wiener Kaufrechtsübereinkommen, RIW 1989, 842; Eberstein, Schlechtriem, Art. 78 para. 11.

43. See Kindler, Zur Anhebung des gesetzlichen Zinssatzes in Italien, RIW 1991, 304 f.

44. See Art. 1284 § 3 Codice Civile.

45. Switzerland, Pretore della giuridizione di Locarno-Campagna, December 15, 1991 [hereinafter "Abstract 7"]; CLOUT Case 55, see Schweizerische Zeitschrift für Internationales und Europäisches Recht 1993, 665.

46. See Berner Tage für die Juristische Praxis 1990, Wiener Kaufrecht, p. 208.

47. Hungary, Hauptstadtgericht Budapest 12 G. 41.471/1991/21, March 24, 1992 [hereinafter "Abstract 8"]; CLOUT Case 52, Report and Annotation by Alexander Vida, Praxis des Internationalen Privat- und Verfahrensrechts 1993, 263.

48. Vida, supra note 47.

49. Switzerland, Pretore della giuridizione di Locarno-Campagna 6252, April 27, 1992 [hereinafter "Abstract 9"]; CLOUT Case 56.

50.Id.

51. Switzerland, Zivilgericht des Kantons Basel-Stadt P 4 1991/238, December 21, 1992; CLOUT Case 95.

52. See Straube, Kommentar zum HGB, N. 1 ff zu § 352.

53. See Handelsgesetzbuch, ed. Fritz Schönherr and Gunter Nitsche, Vienna 1981, p. 288, E. 1b.

54. International Chamber of Commerce, ICC Arbitral Award No. 7153/1992 [hereinafter "Abstract 11"]; CLOUT Case 26, Journal du Droit International 1992, 1006. For a similar arbitral award, see ICC Arbitral Award No. 7197/1993, CLOUT Case 104, Journal du Droit International 1993, 1028.

55. See Eberstein, von Caemmerer/Schlechtriem, Kommentar zum Einheitlichen Kaufrecht der Vereinten Nationen-CISG-1990, Art. 78 para. 3.

56. See Art. 735, 502 Commercial Code.

57. Switzerland, Handelsgericht des Kantons Zürich HG 92493 U/HG 92, September 1, 1993 [hereinafter "Abstract 12"].

58. See Art. 74; von Caemmerer/Schlechtriem, op. cit. N. 31, 39 at Art. 74 and N. 6, 18 at Art. 79. [It should be noted that this is a questionable decision as to the counterclaim, demanding reduction of the rate of interest to 6%.]

59. Switzerland, Handelsgericht des Kantons Zürich HG 930138/HG 92, September 9, 1993 [hereinafter "Abstract 13"].

60. See Gritli Ryfel, Die Schadensersatzhaftung des Verkäufers nach dem Wiener Übereinkommen über internationale Warenverträge vom 11. April 1980, Diss. Bern/Frankfurt/New York/Paris/Wien, 1992, S. 86; v. Caemmerer/Schlechtriem (Hrsg.), Kommentar zum Einheitlichen UN-Kaufrecht, München 1990, Art. 78 para. 4.

61. See Giorgio Cian/Alberto Trabucchi, Commentario breve al Codice Civile, 3. ediz. Padova 1988, Art. 1219, III. para. 11.

62. Germany, Oberlandesgericht Koblenz 2 U 1230/91, September 17, 1993 [hereinafter "Abstract 14"]; RIW 1993, 934.

63. See CISG, supra note 1, Art. 74.

64. See Herber/Czerwenka, Kommentar zum Internationalen Kaufrecht para. 12 of Art. 74.

65. See Herber/Czerwenka, op. cit. para. 6 at Art. 78.

66. See Oberlandesgericht Frankfurt, RIW 1991, 591; Asam/Kindler, RIW 1989, 841.

67. Netherlands, Rechtbank Arnhem 1992/1251, December 30, 1993; CLOUT Case 100, UNILEX D.93-26, Nederlands Internationaal Privatrecht 1994, 268.

68. International Chamber of Commerce, ICC Arbitral Award No. 6653; CLOUT Case 103, Journal du Droit International 1993, 1041.

69. Article 1153-1, French Code Civil.

70. LIBOR is "the rate of interest at which banks offer to lend money to one another in the so-called wholesale money markets in the City of London." Glossary entry for "LIBOR" http://www.moneyworld.co.uk/glossary/g100253.htm, visited August 6, 1998.

71. Germany, Oberlandesgericht Frankfurt am Main 5 U 15/93, January 18, 1994 [hereinafter "Abstract 17"]; CLOUT Case 79, RIW 1994, 240.

72. See von Caemmerer/Eberstein, Art. 78 Rn. 9, 10. Herber/Czerwenka, Art. 78 Rn. 3; Asam, RIW 1989, 942, 945.

73. Cf. Art. 83 EKG - meaning Law transforming the Convention Relating to the Uniform Law of International Sale of Goods, July 1, 1964, reprinted in 13 Am. J. Comp. L. 453 (1964).

74. See Judgment of June 13, 1991 - 5 U 261/90 - NJW 1991, 3102 - RIW 1991, 591.

75. See Festschrift für Ferid, 1988,. S. 495, 509 f; ähnlich v. Caemmerer/Leser, Art. 84 para. 13.

76. See § 352 HGB (giving but 5% interest).

77. See Herber/Czerwenka, Art. 78 para. 1.

78. See Piltz, § 5 para. 415.

79. See Law No. 353 of November 16, 1990; Piltz, § 5 para. 415; Kindler, RIW 1991, 304 f.

80. Germany, Oberlandesgericht Düsseldorf 6 U 32/93, February 10, 1994; RIW 1995, 53.

81. Germany, Oberlandesgericht Düsseldorf 6 U 119/93, February 10, 1994; CLOUT Case 82, Neue Juristische Wochenschrift-Rechtsprechungsreport Zivilrecht 1994, 506; RIW 1994, 1050.

82. See von Caemmerer/Schlechtriem, CISG, 1990, Art. 78 para. 3.

83. See § 352 HGB.

84. Germany, Oberlandesgericht München 7 U 4419/93, March 2, 1994; CLOUT Case 83, RIW 1994, 595.

85. See § 6 Räntelag (1975:635); Högland, Sveriges Rikes Lag, 1.1.1991, p. 530, 531.

86. See Schwedisches Handels-und Wirtschaftsrecht mit Verfahrensrecht, 3. Auflage 1978, p. 94.

87. Germany, Oberlandesgericht Frankfurt am Main 13 U 51/93, April 20, 1994 [hereinafter "Abstract 21"]; CLOUT Case 84, RIW 1994, 593.

88. Id.

89. Austria, Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft in Österreich, Sch-4366, June 15, 1994 [hereinafter "Abstract 22"]; CLOUT Case 93, UNILEX D.94-12, RIW 1995, 590.

90. See Herber/Czerwenka, Internationales Kaufrecht, 1991, 347; Oberlandesgericht Frankfurt 13. 6. 1991, in RIW 1991, 591.

91. See, e.g., Honnold, supra note 25; Deventer/Boston 1991, 525, 526; ICC Arbitral Award No. 6653 (1993), Clunet 1993, 1040.

92. See Art. 7.4.9. of the Principles of International Commercial Contracts of UNIDROIT, cf. M.J. Bonell, An International Restatement of Contract Law. The UNIDROIT Principles of International Commercial Contracts, Transnational Juris Publications, Irvington-N.Y., 1994, 114, 115.

93. Switzerland, Kantonsgericht Wallis C 188/94, June 29, 1994.

94. See CISG, supra note 1, Art. 7(2); Hermann, Berner Tage für die Juristische Praxis 1990, 98; Weber 208.

95. As to contracts for the sale of goods in Switzerland the Hague convention on the applicable law in contracts for sale is applicable, generally making applicable the law of the place of business of the seller at the time she receives the order.

96. Switzerland, Kantonsgericht Wallis C 323/94, December 20, 1994.

97. Germany Oberlandesgericht Hamm 11 U 206/93, February 8, 1995 [hereinafter "Abstract 25"]; Praxis des Internationalen Privat- und Verfahrensrechts 1996, 197.

98. See Piltz, § 5 para. 412; OLG Frankfurt, RIW 1994, 241.

99. See Piltz, § 5 para. 415; Kindler, RIW 1991, 304 f.

100. France, Cours d'Appel de Grenoble, April 26, 1995; CLOUT Case 152.

101. France, Cours d'appel de Grenoble, March 29, 1995; CLOUT Case 153.

102. Hungary, Arbitration Court attached to the Hungarian Chamber of Commerce and Industry VB./94131, December 5, 1995 [hereinafter "Abstract 28"]; CLOUT Case 164.

103. See Section 288 BGB (German Civil Code).

104. See Section 353 HGB (German Commercial Code).

105. The rate of legal interest in Austria, like in Germany, is still 4% in general, and 5% in cases where both parties are businessmen involved in a business transaction. See § 2 Statute of July 14, 1869, RGB1. S. 62. Italy only recently (Dec. 16, 1990) raised the rate up to 10%, Art. 1284 I Italian Codice Civile, See Kindler, Zur Anhebung des gesetzlichen Zinssatzes in Italien, RIW 1991, 634 ff.

106. See Abstract 3, supra note 30. These claims, however, are based on a weak argument, because it is not sufficient that damages are stated in the statement of claim; they have to either be admitted by the other party or proved in court.

107. See Abstract 1, supra note 27.

108. See Abstract 3, supra note 30; Abstract 4, supra note 32; Abstract 17, supra note 71.

109. See id.

110. See Abstract 12, supra note 57.

111. See id.

112. See Abstract 4, supra note 32, at 403 (applying § 287 ZPO (German Code of Civil Procedure)).

113. Rolf Herber & Beate Czerwenka, Internationales Kaufrecht, 1991, Art. 75 para. 13; Hans Stoll, in von Caemmerer/Schlechtriem (ed.) Art. 74 para. 45.

114. See Abstract 6, supra note 40; Abstract 17, supra note 71.

115. Abstract 25, supra note 97.

116. Abstract 9, supra note 49.

117. Abstract 21, supra note 87.

118. At least from a methodical point of view this question had to be decided, because only German law is open to review by the federal court while foreign (Swiss) law cannot be reviewed by the federal court. See § 594 ZPO (German Code of Civil Procedure).

119. Abstract 12, supra note 57.

120. Abstract 2, supra note 29.

121. Abstract 3, supra note 30.

122. Abstract 1, supra note 27.

123. Abstract 6, supra note 40.

124. Abstract 5, supra note 37. RIW 1991, 591.

125. Abstracts 4, 5, 7, 8, 10, 11, 13, 14, 15, 16, 17, 19, 20, 23, 24, 25 are based on the private international law approach.

126. See Abstract 4, supra note 32.

127. Abstract 13, supra note 59; Abstract 25, supra note 97..

128. See Abstract 22, supra note 89.

129. See Abstract 28, supra note 102.

130. Abstract 1, supra note 27.

131. Abstract 6, supra note 40. RIW 1991, 952.

132. Abstract 1, supra note 27.

133. Id.

134. See Abstract 1, supra note 27 (citing Hans Stoll in Schlechtriem, Einheitliches Kaufrecht und nationales Obligationenrecht, 1987, 279, 280, 281 and Peter Schlechtriem, Einheitliches UN-Kaufrecht, 1981, 93, 94).

135. See Abstract 7, supra note 45. Abstract 11, supra note 54, considers this to be "necessary."

136. See Abstract 4, supra note 32.

137. See Abstract 17, supra note 71.

138. See Abstract 13, supra note 59; Abstract 25, supra note 97.

139. See Abstract 22, supra note 89.

140. See, e.g. Abstract 2, supra note 29.

141. See Abstract 4, supra note 32.

142. See Abstract 9, supra note 49.

143. See Abstract 13, supra note 59.

144. See, e.g. Abstract 5, supra note 37; Abstract 14, supra note 62.

145. There is however, occasional reference to foreign precedents to resolve other questions.

146. See Abstract 4, supra note 32; Abstract 13, supra note 59.

147. See Herber & Czerwenka, supra note 113, Art. 78 para. 6. See also Asam/Kindler, RIW 1989, 841; Asam RIW 1989, 943; Martin Karollus, UN-Kaufrecht. Eine systematische Darstellung für Studium und Praxis (1991), 207.

148. See Art. 27 EGBGB and Art. 3 Rome Convention. See also Peter Kaye, The New Private International Law of Contract of the European Community (1993); Ole Lando, The EEC Convention on the Law Applicable to Contractual Obligations, 24 Common Mkt. L. Rev. 159 (1987); Patrick R. Williams, The EEC Convention on the Law Applicable to Contractual Obligations, 35 Int'l & Comp. L.Q. 1 (1986).

149. Art. 28 EGBGB and Art. 4 Rome Convention.

150. See Gert Reinhart, Praxis des Internationalen Privat- und Verfahrensrechts 1991, 376 at 378.

151. See id.

152. See id. at 379.

153. See Burghard Piltz, Neue Juristische Wochenschrift 1994, 1101, at 1105 [hereinafter "Piltz, Neue"] (mentioning that in Argentina for example there exists a usage to pay interest on sums in arrears payable in U.S. dollars at the prime rate). See Piltz, supra note 13, at § 2 para. 182 (citing Juzgado National de Grand Instancia en lo Comercial No. 10, Buenos Aires, October 23, 1991).

154. See Hans Stoll, Festschrift Ferid, 495, at 510.

155. See Ulrich Magnus, Rabels Zeitschrift für ausländisches und internationales Privatrecht (RabelsZ) 116, at 141 (1989).

156. See Kappus, Neue Juristische Wochenschrift 1994, S. 984; see also Piltz, Neue, supra note 153; Karl H. Neumayer, RIW 99, at 106, 108 (1994).

157. See Claude Witz, Recueil Dalloz Sirey Chronique, 143, at 146 (1995).

158. See Jean-Pierre Plantard, Un nouveau droit uniforme de la vente internationale: La Convention des Nations Unies du 11 avril 1980, Journal du Droit International 311 (1988).

159. See Philippe Kahn, Vente internationale Commerciale in J. -Cl. International, fasc. 565-A-5, no. 149; Bernard Audit, La vente internationale de marchandises - Convention des Nations unies du 11 avril 1980; LGDJ, coll. Droit des affaires 171 (1990).

160. See Vincent Heuzé, La vente internationale de marchandise, ed. GLN Joly 341 (1992).

161. See Witz, supra note 157 (discussing Cours d'Appel Paris, 22. April 1992, Juris-Data no. 24410).

162. See Rolf H. Weber, Berner Tage für die juristische Praxis S. 165, 208 (1990).

163. See Karl H. Neumayer & Catherine Ming, Convention den Vienne sur les contrats de vente internationale de marchandises, 513 (1993).

164. See Rolf Herber, in v. Caemmerer & Schlechtriem, Art. 7 para. 14.

165. See Eberstein & Bacher, supra note 13, Art. 78 para. 22.

166. See Herber & Czerwenka, supra note 113, Art. 7 para. 5.

167. See id.

168. See Report of the United Nations Commission on International Trade Law on the work of its twenty-first session, 11-22 April 1988, ch. X, sec. 98 ff, at 107, 108.

169. See Rolf Herber, Art. 7 para. 14.

170. BGH Wertpapier-Mitteilungen 1986, 902, 904 (quoting Bundesgerichtshof, BGHZ 10, 149, 155).

171. Bundesgerichtshof, BGHZ 10, 149, 155.

172. Bundesgerichtshof, Wertpapier-Mitteilungen 1986, 902, at 904.

173. Honnold, supra note 25, at 88.

174. Air France v. Saks, 470 U.S. 392, 400, 405 (1985).

175. 3 W.L.R. 209 (1980).

176. Although some Swiss CISG opinions rely on German decisions, that probably does not reflect any special effort to foster uniformity in applying CISG. At least in German language areas of Switzerland, courts routinely cite German cases in non-CISG matters.

177. See Franco Ferrari, Uniform Application, supra note 10, at 470 and Franco Ferrari, Specific Topics of the CISG in the Light of Judicial Application and Scholarly Writing, 15 J.L. & Com. 1, 120 (1995) [hereinafter Ferrari, Specific Topics] (emphasizing the difference between "gap praeter legem" and "gap intra legem," only in the first instance opening the way into Art. 7(2) CISG, but not definitely deciding it).

178. See Abstract 22, supra note 89.

179. See Abstract 16, ICC Arbitral Award 6653/1993, Journal du Droit International 1993, 1040, 1046.

180. See Honnold, supra note 25, at 421 (stating that 'the principle underlying [Art. 78 CISG] is like that of Art. 74 which provides for the recovery of "damages . . . equal to the loss . . . suffered as a consequence of the breach."').

181. See Neumayer/Ming, Art. 78 Anm. 2; Neumayer, Recht der Internationalen Wirtschaft 99, 106 (1994); Heuzé, La vente internationale de marchandise-Droit uniforme, 1992, Anm. 449.

182. See ICC Arbitral Award Nr. 6653 (1993), Journal du Droit International 1993, 1040; see also Abstract 16, supra note 68.

183. The problem does not exist among the member States of the 1980 EEC Convention on the Law Applicable to Contractual Obligations. See Rome Convention.

184. See e.g., Abstract 4, supra note 32; Abstract 5, supra note 37; Abstract 7, supra note 45; Abstract 8, supra note 47.

185. See generally Ferrari, Specific Topics, supra note 177, at 125.

186. See id.

187. See generally Stoll, supra note 155, at 510. This approach has not been accepted by the courts, however. See Abstract 17, supra note 71; Asam/Kindler, RIW 1989, 842.

188. See Reinhart, supra note 157, at 99.

189. See id. at 379.

190. See Reinhart, UN-Kaufrecht, 1991, Art. 78 para. 7.

191. See Eberstein & Bacher, supra note 13, Art. 78 para. 31 (suggesting that the court rely on the prime rate of the National Bank -- presumably of the country in which the court is placed).

192. Ferrari, Specific Topics, supra note 177, at 125.


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