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Pace essay submission

Geographic sphere of application of the United Nations Convention
on Contracts for the International Sale of Goods

Bojidara Borisova [*]
September 2002

I. Introduction
II. Temporal Sphere of Application
III. Material Sphere of Application
      1. Positive criteria
      2. Negative criteria
IV. Geographic Sphere of Application
      1. Historical review
      2. The rule of article 1(1)
           (a) "Internationality" as defined by ULIS
           (b) "Internationality as defined by CISG
                - Concept of place of business
                - Multiple places of business
                - Absent a place of business
           (c) Defining the "apparent internationality"
                - Nature of the "apparent internationality"
                - Estimated impact of the "apparent internationality"
      3. The rule of article 1(1)(a)
           (a) Defining the term "Contracting States"
           (b) Limitations upon article 1(1)(a)
                - Article 92 reservation
                - Estimated impact of this reservation
                - Article 93 and Article 94 reservations
                - Estimated impact of these reservations
      4. The rule of article 1(1)(b)
           (a) Approach adopted by ULIS
           (b) Approach adopted by CISG
           (c) The term "law of the Contracting State"
           (d) Estimated impact of article 1(1)(b) rule
           (e) Limitations upon article 1(1)(b)
                - Article 95 reservation
                - Estimated impact of this reservation
V. Conclusion

I. INTRODUCTION

Merchants were probably the first "diplomats" entrusted with the difficult task to draw together different states, nations and people. Knowing that at its dawn, human civilization had been very suspicious and even intolerant to every distinctive custom, behavior, religious believing, attitude to life, etc., trade relations has been the human activity that lifted the veil of the unknown and made the different cultures more and more familiar with each other. Despite the intimacy that trade brings to different cultures, it is well known that this is a lucrative occupation, which definitely requires certain stability.

Attempts to create a uniform set of rules regulating the international commerce have many years duration. First, we encountered bilateral contracts; just recently from an historical point of view attention was drawn to collective efforts to create such documents. The First and the Second World War accelerated this process; 1964 was the year when the two Hague Conventions appeared: the Uniform Law on the International Sale of Goods (ULIS) and the Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF). These conventions had been a result of a long effort, starting in 1931 when the International Institute for the Unification of Private Law (UNIDROIT) set up a Special Commission to prepare a draft Uniform Law, passing through several versions and updating of the initial text (1935, 1951, 1956, 1962), which had been examined and commented on by the Governments of a number of countries, and finishing with the acceptance of the final text of the two Hague Conventions. However, the success of this conventions was moderate. The two conventions came into force only in nine countries - mostly highly industrialized, in no socialist country and only in one developing country. It was obvious that the efforts of the international community must be directed towards the creation of an international convention acceptable to large number of countries notwithstanding their political, economical, geographical, historical, religious and cultural differences.

In 1966 the United Nations Commission on International Trade Law (UNCITRAL) was constituted with the task to attempt a revision of the Hague Conventions, to create a better uniform set of rules for international commerce. It soon become apparent that substantial changes must be made. This led to the creation of a Working Group, which come forward with several drafts, the last of which was dated 1978. The next step was the convening of a diplomatic conference, held from March 10 to April 11, 1980 in Vienna, where the final text of the United Nations Convention on Contracts for the International Sale of Goods was approved and opened for signature. Since that date 61 States have adopted the CISG, which is an indisputable proof for the success of this Convention.

This essay examines the texts of the CISG that define its geographic sphere of application.

The CISG's sphere of application has three dimensions: temporal, material and geographic. In general, the temporal sphere of application delimits the initial moment, from which a given piece of legislation becomes effective, and consequently will regulate a certain sphere of legal relationships, and also determines the final moment of operation of a statute. The material sphere of application defines the legal relationships falling into the scope of a statute. The territory upon which a regulation will spread out its effect is outlined by the geographic sphere of application.

II. TEMPORAL SPHERE OF APPLICATION

The temporal sphere of application probably poses the fewest problems and contradictions. No retroactivity - followed by both common law and civil law systems - is the leading principle when determining the temporal sphere of application. Initially coming from the penal law, that principle gradually extended to all other legal branches including international treaty practice. This wide workability is consequential to the stability and foreseeability that the principle provides, because when undertaking a certain behavior, one has to be familiar with the legislative rules and restrictions at that moment, but he is not obliged to predict future legislative amendments or additions, and try to behave according to such prospective and consequently uncertain regulations. Each principle has its exemptions, so has this one. The CISG also exploits the principle of no retroactivity, provided in article 100(1) and (2).[1] Going into deeper details is far from the main subject of the current essay, so the temporal sphere of application of the CISG will not be further examined.

III. MATERIAL SPHERE OF APPLICATION

Two principles are used in the CISG to describe its material sphere of application. The first is to specify the exact domain of human activity which the Convention will regulate, i.e., what is included in the coverage of the Convention; the second is to list explicitly the items falling out of its material sphere of regulation, i.e., what is excluded.

1. Positive criteria

The preamble to the CISG stipulates that the Convention embodies "uniform rules which govern contracts for the international sale of goods"; consequently, at this very first moment the material scope of application is already defined. Unfortunately, the Convention provides no express definition of the term "sale of goods", for the reason that the drafters of the CISG have considered the unification of this term impossible. Basically, it is generally viewed that the transfer of ownership over the item sold is the main purpose of a contract of sale [2], but the diversity of rules that exist in the different municipal law systems on this point makes the process of creation of a uniform rule truly difficult. However, there are scholars who maintain the opposite opinion and explain this lack of definition with the fact that the concept fof "sale of goods" is sufficiently clear, so explicit definitions in the text of the Convention are not necessary [3]. Although lack of direct definition may cause certain difficulties and discrepancies in the interpretation and application of the Convention, particular texts dealing with the parties rights and obligations may confirm that CISG sticks to the standard definition for this term used in the obligation law [4] . As for the first part of the discussed term - "international"- article 1(1) CISG bounds the international character of a sale of goods with the parties' "places of business"[5]. The meaning of this article, in particular the meaning of the phrase "place of business" will be further examined in this essay.

Apart from the theoretical discussions concerning the term "international sale of goods", from the text of the Convention it becomes clear that its subject matter is restricted to formation of contract and rights and duties of the buyer and seller arising from such a contract. However, matters like, for example, the validity [6] of the contract or the effect which the contract may have on the property of the goods sold for the most part fall out of the scope of the Convention and must be governed using not the uniform rules of CISG but the rules of private international law.[7]

To continue study the term "sale of goods" attention must be drawn to the expansion of the traditional scope of that term in CISG, including also future products. "Goods to be manufactured or produced" are encompassed by the CISG, article 3(1). [8] However, the Convention provides that the party who orders the goods must not be bound with the obligation to supply a substantial part of the materials necessary for such manufacture or production, otherwise such contracts will not be regarded as a sale of goods and will not fall within the sphere of application of the CISG. In addition, the second subsection of article 3 excludes from the Convention's scope contracts for labor or services where the preponderant part of the obligation of the party who furnishes the goods consist in the supply of labor or other services.[9]

2. Negative criteria

Article 2 CISG also provides several exclusions; sales of certain kind of goods will not be regulated by the Convention. There are different reasons and criteria used for determining the listed exclusions. The motivation for some of was the impossibility to determine for certain kind of sales if they are of a national or of an international character, also the possible conflict that may occur in respect of other international instruments, which also regulate the same objects as those falling into the scope of the CISG. Another reason is the fact that in many countries the sale of some or all of the items listed in article 2 is governed by special rules reflecting their special nature, determined either because of the purpose of the sale (goods bought for personal, family or household use), or the nature of the sale (sale by auction, on execution or otherwise by law) or the nature of the goods (stocks, shares, investment securities, negotiable instruments, money, ships, vessels, hovercraft, aircraft or electricity) etc.[10] A detailed picture of the reasons for the exclusions can be found through examining the traveaux préparatoires. In general, it may be pointed out that all of the exceptions in article 2 CISG are equivalent to the exceptions outlined in article 5(1) of the Uniform Law on International Sale of Goods (ULIS).[11] Some of the countries participating in the traveaux préparatoires of the CISG also proposed other exclusions from the material scope of the Convention, but the argument that the parties always have the possibility to exclude goods if they wish by choosing a different law under the provision of article 6 CISG, was opposed to these proposals. As a result, the exemptions in article 2 CISG remained similar to those stipulated in ULIS.

Finally, one last exception from the material scope of the Convention is provided in article 5; product liability, i.e., liability for death or personal injury caused by the goods, is not regulated by the CISG. As regards all the other kind of damages which parties may cause each other, the Convention applies. In many of the countries of the European Union and also in other countries common standards on product liability have been created. By not including this matter in the scope of applicability of CISG, its drafters meant to prevent any possible conflicts. [12]

Bearing in mind that the subject of the current essay is different, going into deeper details is not necessary.

IV. GEOGRAPHIC SPHERE OF APPLICATION

Many factors determine the success of an international convention. Some are related with its process of preparation, such as number of participating parties, number of signatory States, number and extent of the political compromises made in order to reach a consensus, text of the regulations that have been finally accepted, and so on. Others appear in the process of application of the convention; ways of interpretation of the different measures, contradictory questions that appear in the process of their application by courts of different countries, etc.

But one very important feature that largely determines the future success of a piece of legislation is its sphere of application. The methods used to describe a bill's scope of application may diminish to such an extent its applicability and finally make the act inapplicable and consequently useless. At the opposite, if the sphere of application is carefully outlined, such as to give the possibility of wider application of the act, and at the same time to provide a certain security to the signatory States, the legislation in question may successfully fulfill its role. That very question was one of the few troubling the drafters of CISG and also the drafters of other conventions prior to this one.

1. Historical review

As mentioned, CISG is not the first convention trying to set forth uniform rules regulating international commerce. Many attempts had been made to create a uniform law which, on the one hand, consists of well formulated measures, reflecting the common consensus of the Contracting States leaving little room for controversy and, on the other hand, regulates a certain sphere of relations in a manner as far as possible detailed and comprehensive. Prior to the CISG we had ULIS, a step further towards the achievement of a better uniform law regulating international commerce. The approach ULIS adopted to describe its geographical sphere of application is fundamentally different from the approach adopted under the CISG, although at first sight the difference might not be readily apparent.

The ULIS uses one and the same criterion for defining its sphere of application, i.e., its geographical scope and its material sphere of application, that is, internationality of sale of goods. As long as certain sale of goods satisfies both elements for internationality described in ULIS -- the subjective and the objective one -- no further elements are required for the convention to be applicable.[13] Such wide scope of applicability was criticized and caused certain difficulties, being a new legal approach in the law of international conventions. Till that moment, the dominant opinion had been that a country can apply an international convention to another country only if both countries had ratified or accessed the respective convention. This statement follows one of the main principles of public international law according, to which each country being a sovereign can choose to ratify one or another convention precisely because it wants to apply it to itself and to other countries that had also ratified the convention in question. Consequently, a foreign convention cannot be forced upon a non-acceding country, nor can its benefits be conferred on a non-signatory.[14] However, according to the provisions of ULIS, that convention is said to be applicable in all cases of international sale of goods even when the contractual relationships had been developed outside from the territory of a signatory State, independently from the application of private international law rules. For this reason, a number of signatory States made reservations and thus limited the scope of application of ULIS, while other countries refrained from iratifying this convention. A consequence was ULIS was not as successful in the field of international commerce as it was intended to be.

This led to the need to create a new convention, better able to answer the needs of international commerce. It was vitally important to the drafters of the new convention (CISG) to adopt another approach in defining its sphere of geographic application, a more precise approach providing more certainty.

2. The rule of article 1(1)

Article 1(1) CISG provides two alternative hypothesis that make the Convention applicable from a territorial point of view. Common for both is the element of internationality, which has to be present so that a given sale of goods falls within the sphere of application of the Convention. The scheme is, a State that has ratified CISG will have two sets of rules for sales. The first, the domestic set, will regulate those sales classified as purely domestic; another set of rules will be applicable to a particular subgroup of sales, international sales.[15]

(a) The term "internationality" as defined by ULIS

Describing the term "internationality", the drafters of the CISG use partly the method exercised in ULIS. In the context of the present paper a brief historical review of the term "internationality" will help clarify the approach adopted in the CISG;at the same time, the arguments for the establishment of the new method this Convention used to describe its sphere of geographical application will be better realized. ULIS' definition of "internationality" that ULIS is based on two joined and simultaneously existing elements. The subjective element is related to the contracting parties; the objective element refers to certain aspects of the contractual relationship.

When explaining the subjective element, the leading consideration is not the nationality of the parties but their places of business; the Convention will be applied to sales of goods concluded between parties whose places of business are in different States. It became a tradition in modern commercial practice to prefer place of business over nationality. Such an approach is much more convenient when concerning relationship between juristic persons, because the main purpose for the establishment of a juristic person of any kind is to be active in a chosen field and to develop its business within certain territory. Nationality became more and more thrust to the background in international economic life. This trend was confirmed by the fact that "merchants" appear as natural persons only on rare occasions and the corporation has taken their place in international economic relations. Both Conventions -- ULIS and CISG -- appropriately ignore the nationality of the contracting parties and respectively replace it with the principle of "place of business".[16] More, if the principle of nationality had not been applied in the regulation of international commercial relations because this was the adopted approach of international trade usages, with the entrance into force of the CISG this principle became also a legal one, as article 1(3) CISG expressly stipulates that: "the nationality of the parties ... is [not] to be taken into consideration in determining the application of this Convention.". Of course, this is a rule that cannot be applied for all relations in the field of international commerce but it is clearly applicable to international sales of goods, regulated by the CISG.

Taking into consideration the objective element of internationality, ULIS requires one of the three situations, listed in article 1(1) to be present. This means that either cross-border transportation of the goods subject to the contract must have taken place, or the offer and acceptance must have occurred in different States, or the delivery of the goods must have taken place in a State different from the one in which the offer and acceptance occurred. For ULIS, the existence of both subjective and objective elements of internationality is satisfactory; no other requirements have to be present for the application of this Convention. As mentioned, such a broad approach caused certain problems and led to the need to simplify of the term "internationality" and also the need of extra elements to sharpen the description of the geographical sphere of application in future conventions regulating international commerce.

(b) The term "internationality" as defined by CISG

In respect of the criteria for "internationality" accepted in the CISG, it may be concluded that the desired simplicity and clarity is largely achieved. The drafters of the CISG decided to accept only the subjective element for description of that term, i.e., a sale of goods will be regarded as international if the contract is concluded between parties having their places of business in different States.

Concept of "place of business"

As "place of business" is important for the understanding of the term "internationality". it has to be examined in detail. Unfortunately, the CISG once again, not unlike its predecessor, does not provide a legal definition.[17] A possible explanation for this gap can be the lack of unanimity on the definition of the term "place of business" among the delegates to the Vienna Diplomatic Conference. Except for the attempts that the different authors make in their works to define this term, arguments that can facilitate the creation of a largely accepted and workable definition may be derived from the relevant case law practice, including the court decisions on ULIS. Despite the lack of statutory definition, and probably because of the numerous number of cases dealing with that problem, the concept of place of business is not so controversial. As a general rule it was accepted that the place of business is where the contracting party has its stable business organization. Consequently, this is the place where the company has its establishment of some duration with certain authorized powers. On the other hand, commercial management of the enterprise is not necessary, since the Convention does not require the place of business to be the main office.[18] At the opposite, "place of business" cannot be consider places of temporary sojourn, such as conference centers of exhibitions, hotels or rented offices at exhibitions.[19] The characteristic "stable" has to be present in order to conclude that the part of space, most closely connected with the commercial activities of a contracting party is its "place of business".

Multiple places of business

A problem that is more controversial among scholars and practitioners and that may cause certain difficulties, arises in the situation when the contracting party or both parties have two or more place of business. Before coming to the conclusion that CISG is applicable, we have to answer the questions: what is the relevant place of business of the Contracting States (if they have more than one) and where their places of business are situated? Actually this was not a new problem for the drafters of the CISG, it existed in regard to the application of ULIS, as that convention did not contain an explicit regulation on this subject. Solution to that problem was found in the case law practice; priority was given to the concept of the "closest relationship [with the contract]" instead of the "principal place of business".

The drafters of CISG tried to solve the problem as stipulating explicitly in article 10 of the Convention, that in case of more than one place of business, the relevant place will be the that which has the closest relationship to the contract and its performance; and, if a party does not have a place of business, reference is to be made to his habitual residence.[20]

This is a definition that at first sight poses no questions and seems to regulate the matter thoroughly, not leaving any problems unsettled or unclear. The statement would be true if the drafters of CISG had continued and had also included into the text of the Convention a legal explanation for the phrase "closest relationship to the contract". Such definition does not exist and once again the case law practice will be used for explaining the controversial matter.

But in cases, where the parties have agreed upon the question: which will be the place of business considered relevant to their contractual relationship, there will be no need to define the term "closest relationship to the contract" since the agreement of the parties is to be taken into account in determining the relevant place of business.[21] This approach was not a new invention of CISG but also existed in the texts of previous conventions such as the Convention of 1955, where article 25(1) of the Preliminary Provisions, states that "the intent of the contracting parties as a leading criterion of connection, and recognizes that this intent can manifest itself explicitly or implicitly." and was confirmed also by the court decisions in respect with the application of ULIS.[22]

The problem for the definition of the "closest relationship with the contract and its performance'' can arise again with new strength if there is no agreement concerning the relevant place of business.

To facilitate resolution of the issue, article 10(a) of the Convention outlines several conditions that have to be taken into account when trying to determine "closest relationship to the contract". First of all, the contracting parties must take into consideration the elements present before or at the moment of the conclusion of the contract, that guide towards either to one or to the other place of business, so that the closest one can be correctly determined. Although it may seems like stipulating an initial time limit fixing the period of time in which the elements that has to be taken into account may become apparent, some scholars, instead, consider that article 10 provides for a deadline after the expiration of which no new elements can be considered.[23] The parties cannot count on facts that have occurred after the contract has been concluded, such facts are regarded irrelevant to the determination of the "closest relationship". This approach seems to be a reasonable solution, as the moment of the conclusion of the contract is the time when both parties would be doubtlessly aware of their places of business, which are most closely connected with their contractual relationship. While at moments, subsequent to the conclusion of the contract, parties are not obliged to follow eventual changes and even if such [changes] take place they would certainly be unrelated to the contract in question, because the elements that have to be taken into consideration must be classified, as such influencing the formation of the contract.

In respect with the concept of "closest relationship " exists still another discussed and also controversial approach. It has been suggested that the principle of in dubio pro conventione ought to be applied where one of a party's two places of business is located in the same Contracting State as that of the other party. Consequently, practitioners accepted that that party's place of business situated in the other Contracting State should prima facie be regarded as the relevant place of business to the contract, regardless of whether it was the place of conclusion or performance of the contract. The text of Article l0(a) suggests still an other version for defining the term "place of business", which is relevant in cases where the buyer knows that the contract is performed at a place of business of the seller different than the one involved in the conclusion of the contract. For situations like this, the seller's place of business where the performance takes place is the relevant place.

Absent a place of business

Except for the outlined variant (when the contracting parties have more than one place of business), the commercial practice may offer still an other problem, which requires to be solved: how will the relevant place of business be defined when a party does not have one? Article l0(b) CISG provides that in such cases one has to resort to the party's habitual residence [24], as the criterion for the determination of the term "place of business" and respectively for detecting the international character of sale of goods. The concept of "habitual residence" is not a new one in the field of international treaties and as a matter of fact it has often been used in private international conventions [25], although the use of the "habitual residence" of a party as an alternative to "place of business" will rarely be applied to legal transactions governed by this Convention.[26]

There are scholars [27] who maintain the attitude that the applicability of article 10(b) is quite limited, bearing in mind the fact that this measure is mostly connected with consumer sales, which are excluded from the sphere of application of the CISG.

(c) Defining the "apparent internationality"

For the applicability of ULIS it was sufficient the sale of goods to be considered "international"; no other elements was required. However, in respect with the term "international", CISG demands still another characteristic to be present, for it to be applicable, namely the internationality must be apparent.[28] Consequently, both of the contracting parties [29] must be conscious that the contract is not merely domestic.

Nature of the "apparent internationality"

The criterion for the determination of the "apparent internationality" of the contract is given in article 1(2) [30], where several objective elements [31] are listed. What makes true the conclusion about the objective character of these elements is the fact that all of them are concerned with the contract as a final written or oral agreement regulating certain relations between two contracting parties. The contract can be also regarded as the objective element of the contractual relationship, starting with the negotiation process, as a preparatory period towards the final content of the contractual clauses and ending with the conclusion of the contract. Article 1(2) does not refer to any of the characteristics of the counterparts, as the subjective element of the contractual relationship relevant to the conclusion of the contract.

Proceeding from the assumption of the objective character, some scholars [32] conclude that the knowledge of the parties about the internationality of the contract is irrelevant in regards to the application of CISG. Irrelevant, because the objectiveness makes the process of identification of the internationality not dependent of any other subjective and consequently uncertain elements. Others, claim that, as the reason for the creation of article 1(2) CISG is to avoid the application of the Convention to contracts which appear to be merely domestic [33], the internationality might be evident, but not necessarily conscious.[34]

Of course, there are also scholars that maintain the opposite opinion [35], stating that the counterparts must know that they have concluded a contract which is to be considered an international one under the CISG. Perhaps some will disagree, because the court practice since the disputes concerning the application of the 1964 Hague Conventions [36] adopted that for the applicability of the CISG it is irrelevant whether the parties know that it is applicable or that it even exists. Per argument e contrario, if the parties are not required to be conscious of the applicability or existence of the CISG, do they have to be required to be aware of the internationality of a contract? Or may it be sufficient for both parties to realize that the contract is not merely domestic one and for the internationality to be conspicuous but not necessarily intentional.

Estimated impact of the "apparent internationality"

Thinking about the impact of this "apparent internationality" on the geographical sphere of application of CISG, widely spread among the scholars is the opinion that this requirement limits the scope of applicability of the Convention [37] and can be regarded as one of the barriers to the application of para. (a) and (b) of article 1 [38]. The fact is that the estimation of the existence of the "apparent internationality" notwithstanding the objective elements listed in article 1(2) for its determination, is a process partly subjective (being a mental activity of an individual), and this may cause certain problems as regards the application of this article. What makes the creation of this article grounded is its purpose to protect the parties' reliance upon the applicability of "domestic" law [39], because it is obvious that the contracting parties (when being both domestic) will be more certain when their relationship is regulated by a piece of legislation, as their "domestic" law, familiar to both of them. Thus CISG will be used only for the regulation of contractual relations which prove to be apparently international, and in this situation the Convention will bring clarity and confidence in respect to the applicable law toward relations between countries belonging to different legal systems. When there exists the opportunity to use a uniform law in the field of international commerce, instead of applying different national (domestic) law for each particular case, through the rules of private international law, the achievement of the desired stability in the sphere of international commerce is perhaps one step closer.

3. The rule of article 1(1)(a)

After the term "internationality" was examined, let us go back to article 1(1), where the two hypothesis for the applicability of CISG are included. The first, known as the theory of "direct" application [40], in contrast to ULIS, where the international character of a sales contract was sufficient, requires still one extra element to be present for the contract to be governed by the Convention. The contracting parties not only must have their place of business situated in different States, but they must also be a Contracting States, even when they are not aware that the States where their places of business are located are Contracting States. For the application of CISG according to article 1(1)(a) it is sufficient that contracting parties' places of business are actually located in different Contracting States; it is not necessary for the contracting parties to be conscious of that fact. Thus independently from solutions provided by the rules of private international law, when the following three circumstances exist simultaneously: the contracting parties have not excluded the CISG; lex fori is the law of a Contracting State; and the requirement of "apparent internationality" exists, the Convention will be applicable.

(a) Defining the term "Contracting State"

Despite the lack of legal definition of the term "Contracting State" and the fact that article 1(1)(a) provides a new approach compared to previous conventions in the field of international commerce, no substantial problems exist in relation with its application. Some of the participants in the Vienna Diplomatic Conference, later on scholars studying the Convention and also practitioners feared that accepting this concept instead of the descriptive approach of its predecessor - ULIS - would radically diminish the geographical sphere of application of CISG. But can we say that the scope of application of the CISG narrower than ULIS as a result of the abandonment of these conditions?. One of the opinions on that point supports the view that the "Contracting State" concept neither narrows nor widens the scope of application of the CISG. The new concept replaces an extremely complex rule used in ULIS with another that is more precise and simpler, and emphasizes the term "international sale of goods" instead of the term "international" [41]. In the subsequent articles (all the texts of the two conventions regulating their scope of applicability) of both ULIS and the CISG must be found the answer to the above question.[42] Basically, the process of becoming a Contracting State, which is described in the Convention compensates for the lack of definition.

The CISG is open for accession by all countries which are not signatory States [43]. The Convention poses no limitations for countries that want to become a Contracting State as regard to their political, economical, social or religious characteristics. Each perspective Contracting State must pass through its national legislative procedures, being in the form of ratification, acceptance or approval and wait the required specific period of time, fixed by the CISG to expire [44], in order to make CISG part of its legislation and to become a Contracting State.[45] Although the second and the third subsection of article 91 uses four different terms with respect to the applicability of the convention, the difference between all of them is not substantial [46], since the consequences are equal - ratifying, accepting, approving and acceding States are treated alike, each can apply the Convention to its full extent.

The drafters of the CISG fixed separate moments, when the accession of Part II and Part III of the CISG has to be made, so that the commercial contract to be regulated according to the measures of these two parts; meaning that for one and the same contract the negotiation process (i.e., the formation of the contract) might be regulated according to the principles of private international law, while the content of the contract (i.e., the contractual rights and obligations of the parties) will be governed by the Convention. This scenario is not compulsory, possible also is the situation when the Convention as a whole will regulate the commercial contract.

With respect to the applicability of Part II (Formation of Contracts). a contract of sale may be regulated by the CISG if the contracting parties have their place of business in States that have ratified, accepted or approved the Convention before or at the moment when the offer for the conclusion of the contract was made.[47] Therefore, for the CISG to be applicable, it is not sufficient merely for the conclusion of the contract to occur after the accession to the Convention. If the parties want to regulate the formation process of their commercial contract according to CISG at the moment when the offer was made, their States have to be considered Contracting States.[48] To this effect the text of article 100(1) is indisputable that the offer, or to use the Convention's terminology the proposal, has to be made on or after the accession of the CISG; it is not enough for the acceptance to be dispatched after the Convention enters into force.[49] The whole formation process starting with the execution of the proposal, passing through the specification of substantive clauses of the contract, ending with the arrival of the acceptance must be accomplished after or at the accession of the relevant part of the CISG.

A similar approach is employed for the application of Part III of the CISG; for contractual rights and obligations to be regulated by this Part, the States of the parties must be considered Contracting States, i.e., the Convention must be enacted before or at the moment of conclusion of the contract.[50] This was also verified in different court decisions; for example, in a French decision, the Court of Grenoble applied article 1(1)(b) and not article 1(1)(a), because while when the matter in question was brought before the court both Spain and France were Contracting States, however, only France but not Spain had acceded to the CISG at the time of concluding the contract, as stipulated by article 100(2). This made imperative the use of article 1(1)(b) and not 1(1)(a). In another interesting arbitration decision between a German seller and a Spanish buyer, the arbitrator applied article 1(1)(a) to contracts made after August 1, 1991 and article 1(1)(b) to those made after January 1, 1991. Contracts made before January 1, 1991 had to be dealt with under German Civil Law (choice of law) as neither of the two countries had at that time ratified the CISG. These examples illustrate that the moment of conclusion of the contract and the moment of ratification of CISG must be precisely defined to guarantee the proper application of article 1(1)(a) with respect to article 100(2).

It is essential to bear in mind that different visions about the moment of conclusion of contract exist in obligation law theory with respect to different legal systems and as CISG does not provide a legal definition the theory that each country applies for its domestic sales will be adopted for its international ones. The most often used theories are the mail-box (postal) rule [51] and the receipt theory [52].

The mail-box rule and the receipt theory are less controversial and are not bound by subjective conditions, thus a large number of legal systems choose to apply either one or the other. If the decision of one legal system is to apply the mail-box rule with respect to formation of contract, CISG must be in force before or at the moment the acceptance was mailed. But when a country accepts the receipt theory for its domestic sales it is sufficient if the statement of acceptance had reached the offeror after the entry into force of the Convention, in order for Part III to be applicable. In this case, the fact whether the statement was mailed before or after the enactment of CISG is irrelevant, what is important is the moment of receipt.

(b) Limitations upon article 1(1)(a)

CISG does not consist of imperative measures, so even though a party has its place of business in Contracting State, it may decide for a particular relationship to exclude the application of the Convention either by express agreement or implicitly [53], and to choose a different applicable law; in other words, the CISG recognizes the principle of party autonomy as also does ULIS (article 3 which states the non-mandatory character of the Law)[54]. Thus, the Convention will not necessarily apply even if the requirements of article 1 are met.

Article 92 reservation

Each Contracting State may declare that it is not bound by Part II or Part III of the Convention [55] and thus limit its sphere of application [56] However, the provisions regulating the sphere of application and other general provisions (Part I, CISG) and also the final provisions on ratification and related matters (Part IV, CISG), are mandatory. Consequently, Contracting States cannot eliminate their applicability if they ratify the Convention. The article 92 reservation was included in the text of CISG to make available an alternative to the intention to make one Convention combining the subject matter of the two 1964 Hague Conventions.[57]

Estimated impact of the article 92 CISG reservation

The article 92(1) reservation [58] can have a serious impact on the "Contracting State" concept. On the one hand, a State that has ratified, accepted, approved or acceded to the Convention is considered a "Contracting State" and consequently will be able to apply the Convention for the regulation of international sales of goods. But if this country has also made use of the declaration provided in article 92(1), it will not be considered a "Contracting State" in respect with Part II or Part III (depends on which part of CISG is excluded). The applicable law for international sale of goods in this case will be partly the rules of the CISG and partly the rules of domestic law, even in respect to issues normally all governed by the CISG [59]. Consequently, the rules of Part II or Part III cannot be applied by virtue of par. (a) of Article 1(1), because par. (a) applies only when both States are "Contracting States" with regard to Part II or Part III. Just to mention even in this situation the rule in par. (b) will sometimes serve to activate CISG Part II, notwithstanding the fact that the par. (a) criterion is not met.[60] It is obvious that a reservation of any kind will influence the process of selection and application of the relevant rules of the governing law. Another result of an article 92(1) reservation is that the contents and scope of the governing law of the contract will differ between the Contracting States taking the reservation and those which have not.

Article 92(1) CISG is not the only provision that permits declarations that limit the scope of applicability of the Convention in respect with article 1(1)(a). Other similar provisions are article 93(1), article 94(1).

Article 93 and article 94 reservations

The text of article 93(1) [61] states that if a Contracting State has two or more territorial units it may declare that only one or more of these units will join the Convention.[62] While the text of this reservation possesses no significant problems the next reservation, that of article 94 [63] requires a thorough examination. According to the text of that reservation, if two or more Contracting States have closely related legal rules on matters ruled by CISG they may declare that the Convention does not apply to contracts between parties who have their places of business in those States.[64]

A similar provision existed also in ULIS. The text of paragraph 5 of ULIS states that for the case of countries which have identical or similar laws and which have made the declaration provided for in this regard by Article II, such States will not be considered to be "different States" as regards the place of business or habitual residence of the parties as long as this declaration remains in force. [65]

Estimated impact of the article 93 and article 94 reservations

The drafters of the CISG included the article 94 reservation to encourage countries that have already achieved uniform legal acts to ratify the Convention. They meant to assure these countries that they will be able to apply inter se their own uniform rules, instead of the uniform rules of the CISG. The effect of the reservations of article 93 and 94 is similar to the effect of the reservation of article 92, namely the "Contracting State" concept is influenced. In other words, if a contracting party has its place of business in a territory to which the CISG does not extend pursuant to the country's reservation under Article 93 or transaction occurs between contracting parties of countries that have made the reservation under article 94, the CISG will not be applied because, pursuant to these reservations, the contracting parties would not be from "Contracting States". Consequently, the reservations of article 93 and article 94 mainly influence the scope of applicability of the CISG pursuant to article 1(1)(a). When the texts of the Scandinavian reservations under article 94 is closely examined, it will be found that, that reservations extend not only to trade between parties located in the reservatory countries, but also to sales between any of those countries and Iceland. The second subsection of article 94 gives a Contracting State the opportunity to declare that it will not apply the convention in respect to relations with parties located in non-Contracting States with which the contracting party has closely related legal rules on maters ruled by the Convention. Thus the reservation under article 94 effects not only the application of CISG article 1(1)(a), but also the application of CISG Article 1(1)(b). In this respect, article 94(2) have the same effect as the reservation under article 95.[66]

4. The rule of article 1(1)(b)

The second hypothesis for the geographical scope of applicability of the Convention included in article 1 CISG provides the possibility of an international sale of goods to be regulated by the Convention even when one or both of the contracting parties cannot be considered as from Contracting States.[67] Both the rules of private international law of the lex fori combined with the rules of article 1(1)(a) for direct autonomous application of the Convention outline its scope of applicability.[68]

(a) The approach adopted by ULIS

From an historical point of view if we examine the convention (ULIS) most recent before CISG concerning international sale of goods, we will find out that the possibility the rules of private international law defining the applicability of the uniform law was handled differently. Article 2 ULIS declares that rules of private international law shall be excluded for the purposes of its application. This was a solution that had been recommended by the representatives of the Federal Republic of Germany at the Hague Conference of 1964 instead of the highly complex approach of earlier drafts prior to 1964. [69] Such an approach, considered to be more advisable for the drafters of ULIS in order to prevent theoretical and court discussions by declaring that the Convention will be simply and directly applicable in accordance with the criteria which it laid down.

(b) The approach adopted by CISG

However, for the applicability of the CISG, the drafters decided to use the "classical solution"[70], i.e., the rules of private international law, so that the CISG can be applicable even when one or both of the contracting parties do not have their place(s) of business in a Contracting State where the rules of private international law lead to the application of the law of a Contracting State.[71] Consequently, the CISG will be applicable by means of article 1(1)(b) when the rules of private international law of the lex fori -- either by the parties' choice or if absent choice of law by the closest connection to the contract -- lead to the application of the law of a Contracting State. [72]

The principle of party autonomy in the sense of choice of law, as the first possibility for the application of article 1(1)(b) should not raise any substantial problems for the reason that it has been a concept universally recognized throughout private international law theory and practice and consequently can also be easily applied to international sale contracts. Despite this clarity and lack of ambiguity, some court decisions accepted the opposite approach by expressly stating that the rules of private international law to which Article 1(1)(b) refers, do not include the principle of party autonomy and, therefore, made the domestic sales law applicable to an international sales contract, even though the parties had expressly chosen the law of a Contracting State to be the law applicable to their contractual relationship [73]. For its obvious conflict with private international law principles, court decisions like this have been strongly criticized [74].

In court practice, decisions can also be found that have relied upon the parties choice of law to make the CISG applicable ex. article 1(1)(b).[75] The number of such decisions represents a substantial part of the case law practice in the field of international sales contracts. Worth mentioning is the tendency that some jurisdictions that acknowledge choice of law as a possibility for the application of article 1(1)(b), require that the law chosen by the parties have a "reasonable link" with the sales contract. For such courts, the "reasonable link" may take the form of a physical link or, if that is lacking, the connection between the sales contract and the country whose law has been chosen must not be too remote.[76] To summarize, when the contracting parties choose the law applicable to their contractual relationship and this is the law of a Contracting State, the CISG will be applied for the reason that the Convention is part of the domestic law of each country that has ratified it and also it is the lex specialis in connection with international sale of goods.

Certain problems appear when choice of law is absent.[77] In such cases, the usual principle for determining the applicable law is the principle of the closest to the contract law, which means that a contract for which the parties did not choose the applicable law will be governed by the law of the country with which the contract is most closely connected.[78] This private international law theory presumes that the country to which a contract is most closely connected is the one where the party who is to benefit the contract's characteristic performance has its place of business. The concept of the characteristic performance has been discussed in legal theory [79] and it has been accepted that the obligation to pay the money is not the characteristic performance [80]. Consequently, the characteristic performance is the obligation to deliver the goods and to transfer the property; thus the law applicable to international sale of goods is the law of the seller who executes the delivery. This is a solution not only supported by scholars [81] but also confirmed in number of court decisions [82] and in various arbitral awards[83].

Apart from the concept of the characteristic performance, which determines the closest connection to the contract law, one arbitral award offers two interesting and often discussed opportunities [84] for the application of the CISG, when a choice of law is absent.[85] According to one arbitral award, when the contract fails to contain a substantive choice of law clause the CISG still can be applied by arbitrators by the fact of the international character of the sale contract. Another occasion when the Convention has been found applicable is when the arbitrator uses "usages of trade" to define the applicable law. An arbitral decision has stated that in this situation the CISG is to be applied "not as controlling substantive law, but rather as the best available evidence of international usage of trade in sale of goods transactions". Many authors see in these two possibilities an opportunity for dramatic expansion of the application of the Convention.

(c) The term " law of the Contracting State"

In the theory as well as in practice, a problem appears in connection with the term "law of the Contracting State". This term is an important part of the text of the rule of article 1(1)(b). An often posed question is whether the expression "law" includes the rules of private international law of the applicable law or it merely refers only to the substantive law of a Contracting State. First, the answer to this question might be derived from the rules of private international law of the forum. Where the renvoi is excluded from the conflicts rules of the forum (as, for example, under the German Civil Code); the applicable law will be the substantive; on the other hand, where renvoi is admissible according to the conflicts rules of the forum, such as in Austria [86], it has been held that the applicable law must be inquired by the court through the State's rules of private international law. But the Official Records of the United Nations conference and the drafting history [87] confirm the first solution, i.e., the "law" referred to in article 1(1)(b) CISG is the substantive law, consequently the forum should apply the Convention if its own conflict rules lead to the law of a Contracting State.

When considering the term "law of a Contracting State", one must also determine which set of rules to take into account: those for internal or for international commercial operations? The arguments for the rules for the international commercial operations are numerous and can be found equally in the drafting history and in the scholarly writings. First, the Convention as being an international piece of legislation, passes through the same national procedures as the domestic sales laws before its entrance into force for a given country, which means that it is published and known. Second, the CISG is especially established for the regulation of international commercial affairs; a merchant dealing with international operations is supposed to be accustomed to their use. Thus the Convention appears to be a set of rules well known for contracting parties, providing highly specialized regulation for international sales contracts and also guaranteeing the equality between the contracting parties, giving them the possibility to choose the rules of the uniform law instead of the unknown and difficult to discover domestic rules of civil or commercial law.

Case law practice concerning both the ULIS and the CISG offers a similar approach to the above stated problem. The fact that ULIS regulates similar matters compared to the CISG makes possible the logic of applying ULIS cases with respect to problems that appear when defining the extent of the term "law of the Contracting State" under the CISG.. Consequently, if the contract provides for the application of the law of a given State, and the applicability of the law of that State implies the applicability of an international uniform convention, that means that for the international contractual relation in question, the rules of the uniform convention will govern, not the domestic rules of that State. [88] Furthermore, ignorance of the existence of the uniform law is no excuse; only the presence of an affirmative indication of the contracting parties ought to be regarded as an intent to displace the uniform law by applying another set of rules. This legal maxim, which is applicable to the civil law as well as the common law is often used reasoning in the case law practice concerning the application of the CISG.[89]

(d) Estimated impact of article 1(1)(b) rule

Due to article 1(1)(b), the drafters of the CISG managed to make its sphere of application wide enough, so that the Convention is able to fulfill successfully its role of uniform law for international sale of goods but without going as far as its predecessor (ULIS).[90] By including the rules of private international law as a method for determining the Convention's sphere of applicability, its drafters reasonably expanded its geographical sphere. The combination of the rules of private international law with the direct method of applicability of the Convention provided in article 1(1)(b) is considered to be advantageous according to some scholars [91] and many have welcomed this extension of the CISG [92]. But there are also other scholars that criticize this approach, regarding it as a regression with respect to the "progress made under the 1964 Hague Conventions ...".[93]

(e) Limitations upon article 1(1)(b)

Article 95 CISG reservation

At the Vienna Diplomatic Conference, criticism of article 1(1)(b) came from representatives of the so-called Socialist countries [94]. The reasons for the disapproval had been mainly political but not concerning the legal logic or the practical necessity of this provision.

On the one hand, at the time of the creation of the CISG the international trade between the Socialist countries had been regulated by a set of uniform rules called General Conditions [95], which proved to be successful in practice. Moreover, according to article 110 of the General Conditions. questions not regulated or not fully regulated by the Conditions must be ruled by the substantive law of the seller's country, consequently supplemental to the General Conditions were the internal civil codes of the Socialist countries.

On the other hand, in some of the Socialist countries like Czechoslovakia and the German Democratic Republic special legislation had been enacted to govern international trade transactions, while other countries like Poland and Romania had been in the process of preparing such measures. For these countries, the text of article 1(1)(b) will bar the application of a considerable part of their domestic legislation, in particular those areas of special legislation which rule international trade transactions. The representatives of the Socialist countries wanted to be sure that most of their relationships with foreign partners will be governed by the General Conditions or by their domestic statutes and the rule of the CISG will not be able to restrict excessively their local measures. In that context, a solution would be to limit the application of the CISG only to contracts concluded between parties having their places of business in different Contracting States, which later became the text of the article 95 reservation.

Other scholars find the reason for the criticism of the conflict-of-law application of the Convention because of poor knowledge of the principles of private international law by the governmental officials.[96] Consequential to such criticism was the acceptance of a reservation clause that provides the possibility for a restriction of the application of article 1(1)(b).[97] The reservation clause gives Contracting States the option not to enforce article 1(1)(b); consequently, a contracting party that has its place of business in a reservatory Contracting State will regulate its contractual relationship with a party having its place of business in a non-Contracting State not by the rules of the CISG but by the relevant domestic rules.

Estimated impact of the article 95 CISG reservation

The article 95 reservation has not been accepted extensively [98]; up till now only five countries have taken an article 95 reservation.[99] Even so, compared to the other reservations that concern the geographical sphere of application of the Convention, this one is probably having a greater impact. To estimate the influence of this measure one has to distinguish several lines of cases [100] and bear in mind that the "direct" application of the convention ex article 1(1)(a) is not influenced by this reservation; in other words, if both contracting parties have their places of business in a Contracting States even a reservatory States, their international sales contract will be governed by the CISG.

The first hypothesis that has to be discussed when assessing the impact of article 95 reservation is the following: one of the contracting parties or even both of them have their place(s) of business in a non-Contracting States; the forum is located in a reservatory State and its rules of private international law lead to the application of the law of a Contracting State (independently of whether reservatory or not). The question is: must the forum apply the CISG for the regulation of the international sales contract or it must ignore the rules of the Convention and apply the domestic rules of the State towards which the forum's conflict-of-law rules refer?

What makes the solution of such cases difficult is the fact that the forum is located in a reservatory State. Because of this, some authors state that the CISG will not be applicable since the Contracting Reservatory States are bound to apply the Convention only as regards to international sales contracts concluded between parties, both of whom have their places of business in Contracting States (reservatory or not) [101]. The conclusion that the CISG will not be applicable in such cases by virtue of article 1(1)(b) is true. However, the other conclusion, that the Convention cannot be applied in respect to similar relations is false. [102] The forum is not bound under the CISG to apply its rules but is obliged to determine the applicable law using the forum's own rules of private international law, and if those rules refer to the law of a Contracting State, the CISG must be applied because the Convention is part of the law of that country' the CISG is the lex specialis that governs the international sales contract. Consequently, even the forum of a reservatory Contracting State should apply the CISG for the regulation of international sales contracts concluded between non-Contracting States, not by virtue of article 1(1)(b) CISG, but as part of the law of the Contracting State to which the conflict of law rules lead.[103]

The second hypothesis that has to be discussed is the following: one of the contracting parties or even both of them have their places of business in non-Contracting State(s); the forum is located in a Contracting non-Reservatory State and its rules of private international law lead to the application of the law of a Contracting Reservatory State.

Again, there lack of unanimity. Some scholars state that in this situation if the forum after examining the facts of the case decides that the applicable law is that of the Contracting Reservatory State, it cannot select CISG as the law governing the contract but must select the domestic law of that State.[104] This view is also confirmed in some German court decisions [105], though it can not be regarded decisive for all similar cases that appear in other countries, for the reason that the German court is obliged and did not have the possibility to decide differently. This obligation of the German court is derived from a statute [106] that has been passed in Germany, according to which when the rules of private international law lead to the applicability of the law of a Contracting Reservatory State, the German court must apply the domestic statutes of that State, instead the rules of the CISG.

However the preferable opinion is the opposite one, i.e., the forum of a Contracting non-Reservatory State when its rules of private international law lead to the application of the law of a Contracting Reservatory State shall apply the CISG.[107] The first argument that confirms this solution is a principle of public international law, according to which each State is sovereign and cannot be bound by any treaties, conventions, reservations or other similar obligations made by another State. [108] The other argument comes from the text of the CISG itself: from the point of view of a Contracting, non-Reservatory, forum State all of the requirements of article 1(1)(b) are fulfilled -- the sale of goods is a international one and the rules of private international law lead to the application of the law of a Contracting State (independently whether reservatory or not) - consequently, the rules of the Convention must be applied.[109] The German court practice again can offer decisions in support of that solution and though such decisions were handed down with regard to the application of the Hague Conventions, they can be equally applied in the case of the CISG.[110]

The third hypothesis as regards to which also there is disagreement is the following: one of the contracting parties or even both of them are have their place(s) of business in non-Contracting States; the forum is located in a non-Contracting State and its rules of private international law lead to the application of the law of a Contracting Reservatory State.

The solution of this line of cases is similar to the first discussed group of case. The opinions of the scholars and the court decisions are divided into two diametrically opposed solutions. Some consider that in this hypothesis the CISG should not be applicable [111], while others suggest [112] that the rules of the Convention must be applied for the reason that CISG is part of the law of the Contracting Reservatory State toward which the principles of private international law of the forum lead [113]. Consequently, the CISG will govern the international sale contract not by virtue of article 1(1)(b), but by virtue of the forum's rules of private international law. This solution is also supported by number of court decisions [114].

Court practice, precisely practice before arbitral tribunals, offers still another hypothesis for the application of the CISG; some tribunals have applied the Convention for international sale contracts that fall outside its stated sphere of application.[115] A basic characteristic of cases of this kind is that the contracts in question had been concluded before the existence of the CISG. The arguments for appllying the Convention even in such cases were that "[t]here is no better source to determine the prevailing trade usages than the terms of the United Nations Convention on the International Sale of Goods of 11 April 1980 This is so even though neither the [country of the Buyer] nor the [country of the Seller] are parties to that Convention."[116]; other tribunal decisions state that CISG as being part of the "lex mercantoria" can be applied even for contracts concluded before the creation of the Convention.[117]. However, these approaches have been strongly criticized.[118] Some scholars support the opinion that the Convention as the result of a careful political compromise cannot be regarded as a reflection of uniform commercial practice and consequently cannot be applied for cases prior to its creation.[119] Others state that the CISG cannot be applied to contracts concluded before its coming into force, because an important principle which appears to be recognized by most developed legal systems is thus violated. The principle is that the law in force at the moment when a contract is concluded governs the contract even if that law is modified later on [120]. In conformity with this principle and in order to justify the reliance of the contracting parties that the contract concluded between them will be governed by the law in force of that moment, there is strong support for court decisions that hold the CISG to be inapplicable to operative facts that occurred before its coming into force in the countries involved.[121]

At present, as already mentioned, only five countries have decided to use the possibility provided in article 95, and respectively made the reservation that limits the scope of the applicability of the CISG.

Germany is another country that has made a declaration (but in its domestic law) that can impact on article 1(1)(b). However, the declaration of Germany has no reference to all the cases when one or both of the contracting parties do not have their places of business in a Contracting State but only in respect of a contracting party having its place of business in a State that had made an article 95 declaration. Consequently, pursuant to article 1(1)(b), the CISG will be applicable to all international sales contracts where one or both of the contracting parties are have their place(s) of business in a non-Contracting State when the rules of German private international law lead to the German national law or to the national law of any other Contracting non-Reservatory State. Though this kind of partial reservation seems eminently sensible, on the other hand, it is not one of the reservations authorized by the Convention; thus its legal status is unclear.

V. CONCLUSION

Apart from the theoretical discussions, scholars' criticism, lack of unanimity on the application and interpretation of the CISG, the truest reflection of the success of the Convention is the number of the countries that have ratified it and made it part of their lex specialis for the regulation of contracts for the international sale of goods. At this time, 61 countries have ratified the Convention, including most of the highly industrialized countries (Austria, Australia, Belgium, Canada, Denmark, France, Germany, Netherlands, Norway, Switzerland, Sweden, USA, etc.), plus most of the ex-socialist countries (Belarus, Bulgaria, Czech. Rep., Estonia, Hungary, Russian, Poland, Romania, Yugoslavia, etc.) and a great number of the developing countries (Burundi, Cuba, Peru, Uruguay, Zambia, Uganda, Syria, etc.) form the family of States that had accepted the Convention. Consequently, the desired variety (of the Contracting States) and the aimed wide applicability was accomplished. Still much must be done (this is especially true for my country, Bulgaria) for the principles and measures of the Convention, instead of an unwieldy set of rules, to become a habit and realized convenience.


FOOTNOTES

* Bojidara Borisova is a law student at Sofia University "ST.Kl.Oxridski", Bulgaria.

1. See Article 100 CISG:

"(1) This Convention applies to the formation of a contract only when the proposal for concluding the contract is made on or after the date when the Convention enters into force in respect of the Contracting States referred to in subparagraph (1)(a) or the Contracting State referred to in subparagraph (1)(b) of article 1.

"(2) This Convention applies only to contracts concluded on or after the date when the Convention enters into force in respect of the Contracting States referred to in subparagraph (1)(a) or the Contracting State referred to in subparagraph (1)(b) of article 1."

2. See, Italian Civil Code art. 1470; French Civil Code art. 1583; Swiss Code of Obligations art. 184; Bulgarian Obligations and Contract Act art.183.

3. See Rigaux, Le contract économique international 70 (1975), where is stated: "'Il a paru aux redacteurs . . . que le concept 'vente' etait suffisamment clair pour qu'il ne dut pas être defini dans l'acte international lui-même."

4. Article 30:

"The seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and this Convention."

Article 53:

"The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention."

Thus, under CISG a contract of "sale" is an agreement by virtue of which the seller is obliged to deliver the goods, transfer their ownership, and hand over all documents relating to them, while the buyer is obliged to pay the price and accept delivery of the goods. See Ferrari, Uniform Law of International Sales: Issues of Applicability and Private International Law (1995), p.163;

5. Article 1:

"(1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States: ..."

6. CISG does not exclude completely validity. Certain regulations concerning validity are comprised in article 29: "A contract may be modified or terminated by the mere agreement of the parties." This text complements Part II in that it deals with the common law doctrine of consideration in the situation of modification or termination of a pre-existing contract.

7. See Explanatory Note by the UNCITRAL Secretariat on the United Nations Convention on Contracts for the International Sale of Goods. This note had been prepared by the Secretariat of the United Nations Commission on International Trade Law for informational purposes; The note is not an official commentary on the Convention.

8. Article 3:

"(1) Contracts for the supply of goods to be manufactured or produced are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production."

9. Article 3:

"(2) This Convention does not apply to contracts in which the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labor or other services."

10. See Explanatory Note by the UNCITRAL Secretariat on the United Nations Convention on Contracts for the International Sale of Goods. This note had been prepared by the Secretariat of the United Nations Commission on International Trade Law for informational purposes; The note is not an official commentary on the Convention. See also, Loewe, The Sphere of Application of the UN Sales Convention (1989);

11. Matters excluded by ULIS and CISG are: intangibles though CISG is not restricted to tangibles; money; immovables; ships, vessels, aircraft and hovercraft, though under ULIS only those registered; fixtures when connected to the above mentioned sales; electricity; sales on executions or otherwise by authority of law; mixed sales, though under CISG only where the "buyer" provides a substantial part of the material required; and supply of services. See, Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods (1986), p. 28-31 <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem.html>.

12. See also Loewe, The Sphere of Application of the UN Sales Convention (1998) http://cisgw3.law.pace.edu/cisg/biblio/loewe.html

13. See Ferrari, Specific Topics of the CISG in the Light of Judicial Application and Scholarly Writing (1995) <http://cisgw3.law.pace.edu/cisg/text/franco3.html>.

14. See for more details Réczei, Area of Operation of the International Sales Conventions (1981) <http://cisgw3.law.pace.edu/cisg/biblio/Reczei.html>.

15. For a similar statement, see Garro, Reconciliation of Legal Traditions in the U.N. Convention on Contracts for the International Sale of Goods (1989) <http://cisgw3.law.pace.edu/cisg/biblio/garro1.html>.

16. See Réczei, Area of Operation of the International Sales Conventions (1981), supra note 14.

17. See Ferrari, Specific Topics of the CISG in the Light of Judicial Application and Scholarly Writing (1995), supra note 13.

18. See Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods (1986), supra note 11.

19. For this conclusion, see also Honnold, Uniform Law for International Sales under The 1980 United Nations Convention 53 (2d ed., Deventer 1991), stating that the concept of "place of business" "as used in Art. 1, should be construed to mean a permanent and regular place of transacting of general business, and would not include a temporary place of sojourn during ad hoc negotiations." See also Rosett, Critical Reflections on the United Nations Convention on Contracts for the International Sale of Goods, 45 OHIO ST. L.J. 265, 269 (1984) <http://cisgw3.law.pace.edu/cisg/biblio/rossett.html>, stating that in order to be able to consider a place as being a "place of business," "[n]either having a hotel room or a rented office in a city nor engaging in sales transactions on repeated occasions in the nation appear to suffice."

20. Article 10:

"For the purposes of this Convention:

(a) if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract;

(b) if a party does not have a place of business, reference is to be made to his habitual residence."

21. For this affirmation, see also Kritzer, Guide to Practical Applications of the United Nations Convention on Contracts for the International Sale of Goods 109 (1989);

22. See BGH, June 2, 1982, reprinted in Schlechtriem & Magnus, Internationale Rechtsprechung zu EKG und EAG. Eine Sammlung Belgischer, Deutscher, Italienischer und Niederlandischer Entscheidungen zu den Haager Einheitlichen Kaufgesetzen 89 (Baden-Baden 1987), where it is stated that the applicability of the [1964] Uniform Sales Law depends [among others] on the location of the places of business to which the parties wanted the contract to be linked. See also OLG Hamburg, December 19, 1980, partially reprinted in Schlechtriem & Magnus.

23. See also Ferretti, NUOVE LEGGI CIVILI COMMENTATE 43, 43 (1989).

24. For this definition of habitual residence, see Ferretti NUOVE LEGGI CIVILI COMMENTATE 43, 43 (1989); Piltz, INTERNATIONALES KAUFRECHT. DAS UN-KAUFRECHT (WIENER ÜBEREINKOMMEN VON 1980) in PRAXISORIENTIERTER DARSTELLUNG 8 (Munich 1993).)

25. For a list of such conventions, see Rajski, Commentary on the International Sales Law.

26. See Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods (1986), supra note 11.

27. See Peter Schlechtriem, Einheitliches UN-Kaufrecht 30 (Tübingen, 1981).

28. For some examples of information which makes a contract "appear" to be international, see Magnus, Wiener UN-Kaufrecht (CISG), in J. Von Staudingers Kommentar Zum Burgerlichen Gesetzbuch mit Einfuhrungesetz und Nebengesetzen 39 (Heinrich Honsell ed., 12th ed., Berlin 1994).

29. It is not sufficient for the internationality to be apparent to only one party; see, Magnus, Ulrich, Wiener UN-Kaufrecht (CISG), in J. Von Staudingers Kommentar Zum Burgerlichen Gesetzbuch mit Einfuhrungesetz und Nebengesetzen 39 (Heinrich Honsell ed., 12th ed., Berlin 1994).

30. "(2) The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract."

31. Scholars are frequently of the opinion that the elements on the basis of which the internationality of a contract is apparent are objective see, Beate Czerwenka, RECHTSANWENDUNGSPROBLEME IM INTERNATIONALEN KAUFRECHT 136 (Berlin/Munich, 1988); Herber, Kommentar Zum Einheitlichen UN-Kaufrech; Karollus, UN-Kaufrecht 11 (Vienna/New York 1991).

32. For this conclusion, see also Magnus, Ulrich, Wiener UN-Kaufrecht (CISG), in J. Von Staudingers Kommentar Zum Burgerlichen Gesetzbuch mit Einfuhrungesetz und Nebengesetzen 39 (Heinrich Honsell ed., 12th ed., Berlin 1994).

33. See also Karollus, UN-Kaufrecht 11 (Vienna/New York 1991).

34. See, Volken, The Vienna Convention: Scope, Interpretation, and Gap-Filling, in International Sale of Goods. Dubrovnik Lectures <http://www.cisg.law.pace.edu/cisg/biblio/volken.html>.

35. See, Audit, La Vente Internationale de Marchandises 47 (Paris 1990).

36. See, OLG Frankfurt, February 9, 1977, partially reprinted in Schlechtriem & Magnus, Internationale Rechtsprechung zu EKG und EAG. Eine Sammlung Belgischer, Deutscher Italienischer und Niederlandischer Entscheidungen zu Den Haager Einheitlichen Kaufgesetzen 89 (Baden-Baden 1987).

37. See Franco Ferrari, L'ambito di applicazione della convenzione di Vienna sulla vendita internazionale, RIVISTA TRIMESTRALE DI DIRITTO E PROCEDURA CIVILE 893, 905 (1994)

38. See László Réczei, Area of Operation of the International Sales Conventions (1981), supra note 14.

39. See Herber, Anwendungsbereich des Uncitral-Kaufrechtsübereinkommens, in DAS UNCITRAL-KAUFRECHT IM VERGLEICH ZUM ÖSTERREICHISCHEN RECHT 28, 37 (Peter Doralt ed., Vienna 1985).

40. See Article 1(1)(a) CISG:

"(1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States;"

41. The three objective conditions of ULIS define which contracts should be regarded as "international". The question of internationality is probably the less contested one in international judicial practice and the complex approach used to define it is more or less useless, and what is more the descriptive approach does not contribute to the explanation of the term "international sale of goods".

42. For more detailed study of the question, see László Réczei, Area of Operation of the International Sales Conventions (1981), supra note 14.

43. See Article 91(3) CISG: "This Convention is open for accession by all States which are not signatory States as from the date it is open for signature."

44. See Article 99(1) & (2) CISG:

"(1) This Convention enters into force, subject to the provision of paragraph (6) of this article, on the first day of the month following the expiration of twelve months after the date of deposit of the tenth instrument of ratification, acceptance, approval or accession, including an instrument which contains a declaration made under article 92.

"(2) When a State ratifies, accepts, approves or accedes to this Convention after the deposit of the tenth instrument of ratification, acceptance, approval or accession, this Convention, with the exception of the Part excluded, enters into force in respect to that State, subject to the provisions of paragraph (6) of this article, on the first day of the month following the expiration of twelve months after the date of the deposit of ratification, acceptance, approval or accession."

45. See Article 91(2) CISG: "This Convention is subject to ratification, acceptance or approval by the signatory States."

46. For a similar statement, see, Enderlein & Maskow, INTERNATIONAL SALES LAW 56 (1992) <http://www.cisg.law.pace.edu/cisg/biblio/enderlein.html>, stating that "no difference is made in assessing the importance of a signatory State [i.e., of those States ratifying, accepting or approving the Convention] and States which had acceded later."

47. See Article 100(1) CISG:

"This Convention applies to the formation of a contract only when the proposal for concluding the contract is made on or after the date when the Convention enters into force in respect of the Contracting States referred to in subparagraph 1(a) or the Contracting State referred to in 1(b) of Article 1."

48. For confirmation of this statement, see Italian Supreme Court decisions [Kretschmer GmbH & Co. KG v. Muratori Enzo, Corte di Cassazione 24 October 1988; Cass. civ., October 24, 1988, reprinted in GIUSTIZIA CIVILE 1888, 1889 (1989) <http://cisgw3.law.pace.edu/cases/881024i3.html>].

For other judicial affirmations of Article 100(1), see also:

- Rechtbank Arnhem, May 27, 1993, published in 12 NEDERLANDS INTERNATIONAAL PRIVAATRECHT 327, 328 (1994) <http://cisgw3.law.pace.edu/cases/930527n1.html> (relying upon Art. 100(1) to rightly exclude the applicability of the CISG to a contract concluded in 1990 between a Dutch seller and a German buyer);

- Rechtbank Arnhem, October 22, 1992, reprinted in 11 NEDERLANDS INTERNATIONAAL PRIVAATRECHT 185, 186 (1993) http://cisgw3.law.pace.edu/cases/921022n1.html (justifying the decision not to apply the CISG to an international sales contract concluded in 1991 between an English seller and a Dutch buyer by quoting Art. 100(1));

- Hof 's-Hertogenbosch, November 27, 1991, reported in 10 NEDERLANDS INTERNATIONAAL PRIVAATRECHT 337, 338 (1992) <http://cisgw3.law.pace.edu/cases/911127n1.html> (excluding ex Art. 100 -- and 99 -- the CISG's applicability to a contract concluded in 1989 between a German seller and a Dutch buyer).

49. For the opposite opinion, see Martin Karollus, Der Anwendungsbereich des UN-Kaufrechts im Überblick, JURISTISCHE SCHULUNG 378, 380 (1993).

50. See Article 100(2) CISG: "This Convention applies only to contracts concluded on or after the date when the Convention enters into force in respect of the Contracting States referred to in subparagraph 1(a) or the Contracting State referred to in subparagraph 1(b) of article 1."

51. For a more detailed discussion of the "mail-box-rule," as well as for its distribution, see Franco Ferrari, Formazione del contratto, in ATLANTE DI DIRITTO PRIVATO COMPARATO, supra note 8, 67 at 79 et seq.

52. For the distribution of the theory of reception in European countries, see Franco Ferrari, A Comparative Overview of Offer and Acceptance Inter Absentes, 10 BOSTON U. INT'L L.J. 171, 197 (1992);

53. Similar to ULIS, CISG also recognizes the principle of party autonomy. This is an opportunity given by article 6 CISG:

"The parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions."

For more detailed study see Franco Ferrari, Specific Topics of the CISG in the Light of Judicial Application and Scholarly Writing (1995), supra note 13; J. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 1st ed. Deventer 1982, 76; Schlechtriem, Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany, <http://cisgw3.law.pace.edu/cisg/biblio/schlech2.html>.

54. See André Tunc, Commentary on the Hague Conventions of the 1st of July 1964 on International Sale of Goods and the Formation of the Contract of Sale <http://www.cisg.law.pace.edu/cisg/biblio/tunc.html>.

55. See Article 92 CISG:

"(1) A Contracting State may declare at the time of signature, ratification, acceptance, approval or accession that it will not be bound by Part II of this Convention or that it will not be bound by Part III of this Convention.

"(2) A Contracting State which makes a declaration in accordance with the preceding paragraph in respect to Part II or Part III of this Convention is not to be considered a Contracting State within paragraph (1) of article 1 of this Convention in respect to the matters governed by the Part to which the declaration applies."

Up until now, Denmark, Finland, Norway and Sweden used the possibility provided by Article 92(1), and, more precisely, excluded Part II of the CISG, for the reason that their domestic rules on formation of contracts, since their are characterized by the so-called Löfte-theory, are not compatible with the rules set out in Part II of the Convention. For a short explanatory reference to the Löfte-theory, see 2 Konrad Zweigert & Hein Kötz, EINFÜHRUNG IN DIE RECHTS-VERGLEICHUNG. INSTITUTIONEN 43 (2d ed., Tübingen 1984).

For the reasoning of the Scandinavian countries to make the reservation under article 92 see, Joseph Lookofsky, Alive and Well in Scandinavia: CISG Part II <http://cisw3.law.pace.edu/cisg/biblio/lookofsky.html>.

No Contracting State has made a reservation with respect to Part III.

56. This effect has also been recognized by Franco Ginatta, Spunti sui criteri di collegamento e le riserve alla Convenzione, in LA VENDITA INTERNAZIONALE;

57. See Explanatory Note by the UNCITRAL Secretariat on the United Nations Convention on Contracts for the International Sale of Goods. This note had been prepared by the Secretariat of the United Nations Commission on International Trade Law for informational purposes; The note is not an official commentary on the Convention.

58. Denmark, Finland, Norway and Sweden have made declarations under Article 92 reserving out of the contract formation provisions (Part II) of the CISG. Consequently, when parties located in these countries are involved in a sale within the scope of the Convention, the contract formation rules applicable to the transaction will deptend on the law applicable under the rules of private international law.

59. See Judgment of May 21, 1996, Budapest fováros Birósága [Metropolitan Court of Budapest], UNILEX (Hung.) <http://cisgw3.law.pace.edu/cases/960521h1.html>; Judgment of July 27, 1995, OLG Rostock UNILEX (F.R.G.) <http://cisgw3.law.pace.edu/cases/950727g1.html>, where the court confirms that if the choice-of-law rules lead to the application of the law of a Contracting State, that has made an article 92 reservation, the domestic sales contract formation rules of that State will apply, instead of the respective rules of the CISG.

60. For more details, see Malcolm Evans, Final Provisions, in C. Bianca & M. Bonell, Commentary on the International Sales Law 643 (Dotta. Giuffré ed., 1987), J. Honnold, Uniform Law for International Sales 594 (2d ed. 1991); Joseph Lookofsky, Loose Ends and Contorts in International Sales: Problems in the Harmonization of Private Law Rules, 39 Am. J. Comp. L. 405 (1991); P. Schlechtriem, Commentary on the UN Convention on the International Sale of Goods - CISG 692 (Peter Schlechtriem ed. & Geoffrey Thomas trans., Clarenden Press, 1998) ("In such cases the courts of the [Art.92] reservation State should also be obliged to apply the excluded part of the Convention (contrary to the view expressed by the author in the previous German edition of this work) ..."); see also Harry M. Flechtner, The Several Texts of the CISG in a Decentralized System: Observations on Translations, Reservations and Other Challenges to the Uniformity Principle in Article 7(1), 17 J.L. & Com. 187, 194 n. 23 (1998) <http://cisgw3.law.pace.edu/cisg/biblio/flecht1.html>.

61. Article 93:

"(1) If a Contracting State has two or more territorial units in which, according to its constitution, different systems of law are applicable in relation to the matters dealt with in this Convention, it may, at the time of signature, ratification, acceptance, approval or accession, declare that this Convention is to extend to all its territorial units or only to one or more of them, and may amend its declaration by submitting another declaration at any time."

62. Pursuant to Article 93, several States have made territorial declarations: Australia has declared that the Convention shall not apply to the territories of Christmas Island, the Cocos (Keeling) Islands and the Ashmore and Cartier Islands; Denmark has declared that the Convention shall not apply to the Faroe Islands and Greenland; New Zealand has declared that the Convention shall not apply to the Cook Islands, Niue and Tokelau.

63. Article 94:

"(1) Two or more Contracting States which have the same or closely related legal rules on matters governed by this Convention may at any time declare that the Convention is not to apply to contracts of sale or to their formation where the parties have their places of business in those States. Such declarations may be made jointly or by reciprocal unilateral declarations."

64. Denmark, Finland, Norway and Sweden the same countries that have made declarations under Article 92, have made also the declaration authorized by this provision, in order to preserve the common sales rules that they have developed for intra-Scandinavian trade.

65. For more details see also Winship, The Scope of the Vienna Convention.

66. Reservations are to be made at the time of signature, ratification, acceptance, approval or accession. However, in order to take into account later developments, the reservations available in Articles 94 and 96 can be made at any time, even after adoption of the Convention. The form of the reservation and the time when it becomes effective are governed by Article 97(2) and (3). A reservation may be withdrawn at any time (Article 94(4) and (5)).

67. See Peter Schlechtriem, UNIFORM SALES LAW. THE UN-CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS 48 (Vienna 1986), supra note 11; See also Fritz Enderlein & Dietrich Maskow, INTERNATIONAL SALES LAW 56 (1992), supra note 46.

68. See Peter Schlechtriem, Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany, supra note 53.

69. For more details, see László Réczei, Area of Operation of the International Sales Conventions, supra note 14, where he states: "Earlier drafts, prior to 1964, would have made the uniform law applicable only when the conflicts rules of the forum selected the law of a signatory State. This formula would have operated as follows: the forum settles the conflict in conformity with its own municipal conflicts law or with rules based upon an international convention; if these select the law of a country signatory to the Convention, recourse would be had to ULIS rather than to its general sales law. Next arises a question of "qualification": was the transaction a sales contract within the purview of ULIS? Naturally this would be decided by reference to ULIS (secondary qualification): if affirmative, the dispute could then be settled on the merits.

70. For this definition, see Giuseppe Cassoni, La compravendita nelle convenzioni e nel diritto internazionale privato, RIVISTA DI DIRITTO INTERNAZIONALE PRIVATO E PROCESSUALE 429, 434 (1982).

71. For this statement, see also Carbone, L'ambito di applicazione ed i criteri interpretativi della convenzione di Vienna, in LA VENDITA INTERNAZIONALE. LA CONVENZIONE DELL' 11 APRILE 1980 (Milan 1981); Herber & Czerwenka, INTERNATIONALES KAUFRECHT. KOMMENTAR ZU DEM ÜBEREINKOMMEN DER VEREINTEN NATIONEN VOM 11. APRIL 1980 ÜBER VERTRÄGE ÜBER DEN INTERNATIONALEN WARENKAUF 47 (Munich 1991); Siehr, Der internationale Anwendungsbereich des UN-Kaufrechts, RABELS ZEITSCHRIFT FÜR AUSLÄNDISCHES UND INTERNATIONALES PRIVATRECHT 587, 590 (1988).

For an application of Article 1(1)(b), see OLG Düsseldorf, February 10, 1994, published in DER BETRIEB 2492 (1994) <http://cisgw3.law.pace.edu/cases/940210g1.html>.

72. For this conclusion, see also Ferrari, VENDITA INTERNAZIONALE DI BENI MOBILI. ART. 1-13. AMBITO DI APPLICAZIONE. DISPOSIZIONI GENERALI 30 (1994).

73. See the decision of the Tribunale di Monza, March 29, 1993, reprinted in FORO ITALIANO 916 ff. (1994). Translated into English in 15 J.L. & COM. (1995) <http://cisgw3.law.pace.edu/cases/930114i3.html>.

74. See Franco Ferrari, Diritto uniforme della vendita internazionale: questioni di applicabilità e diritto internazionale privato, RIVISTA DI DIRITTO CIVILE [669-685 (1995)] [translated in 15 J.L. & COM. 159-174 (1995)]; see also Witz, supra note 68, at 25-26.

75. See, for example, OLG Dusseldorf, January 8, 1993, published in NEUE JURISTISCHE WOCHENSCHRIFT RECHTSPRECHUNGS-REPORT 999 (1993) <http://cisgw3.law.pace.edu/cases/930108g1.html>;

- Tribunal de Commerce de Bruxelles, 11ème ch., 13 November 1992, n. RG 4.825/91, in UNILEX 1996 <http://cisgw3.law.pace.edu/cases/921113b1.html>;

- Tribunal de Commerce de Bruxelles, 7ème ch., 5 October 1994, n. RG 1.205/93, in UNILEX 1996 <http://cisgw3.law.pace.edu/cases/941005b1.html>;

- ICC Court of Arbitration, n. 8324/1995, in Journal du droit international (1996) 1019 <http://cisgw3.law.pace.edu/cases/958324i1.html>, which expressly states that "l'autonomie des parties étant une règle du droit international privé, la désignation par elles du droit français en l'espèce conduit à l'application de la Convention" at p. 1020, ICC Court of Arbitration, n 7844/1994, in ICC International Court of Arbitration Bulletin (1995) n. 6, 72 <http://cisgw3.law.pace.edu/cases/947844i1.html>;

- ICC Court of Arbitration, n. 7656/1994, in ICC International Court of Arbitration Bulletin (1995) n. 6, 64;

- Schiedsgericht der Handelskammer Hamburg, 21 March 1996, in Recht der Internationalen Wirtschaft (1996) 766 <http://cisgw3.law.pace.edu/cases/960321g1.html> .

76. For more details, see Bernard Audit, The Vienna Sales Convention and the Lex Mercatoria, in Lex Mercatoria and Arbitration 139, 143-44 (Thomas E. Carbonneau ed., 1990) <http://cisgw3.law.pace.edu/cisg/biblio/audit.html>, where the author also gives examples for "physical link": the delivery of the goods in a Contracting State even though neither party has a place of business in that State; or one party having its place of business in a Contracting State while the other does not, e.g., the seller in the United States and the buyer in [Brazil].

77. See for discusion Manlio Frigo, La determinazione della legge applicabile in mancanza di scelta dei contraenti e le norme imperative nella Convenzione di Roma, in LA CONVENZIONE DI ROMA SUL DIRITTO APPLICABILE AI CONTRATTI INTERNAZIONALI 17 (Giorgio Sacerdoti & Manlio Frigo ed., Milan 1994).

78. For a detailed discussion of the concept of "closest connection," see, for instance, Roberto Baratta, IL COLLEGAMENTO PIÙ STRETTO NEL DIRITTO INTERNAZIONALE PRIVATO DEI CONTRATTI (Padova, 1991).

79. See H. Kaufmann-Kohler, La prestation charactéristique en droit international privé des contrats et l'influence de la Suisse, Schweizer Jahrbuch für Internationales Recht 195 (1989); Massimo Magagni, LA PRESTAZIONE CARATTERISTICA NELLA CONVENZIONE DI ROMA DEL 19 GIUGNO 1980 (Milan 1989); Paolo Michele Patocchi, Characteristic Performance: A New Myth in the Conflict of Laws? Some Comments on a Recent Concept in the Swiss and European Private International Law of Contract, in FESTSCHRIFT FÜR LALIVE 113 (Paris 1993); Nicky Richardson, The Concept of Characteristic Performance and the Proper Law Doctrine, 1 BOND L. REV. 284 (1989).

80. See Kaye, THE NEW PRIVATE INTERNATIONAL LAW OF CONTRACT OF THE EUROPEAN COMMUNITY (1993).

For this statement, see, in legal writing, also Andrea Giardina, Volontà della parti, prestazione caratteristica e collegamento più significativo, in VERSO UNA DISCIPLINA COMUNITARIA DELLA LEGGE APPLICABILE AI CONTRATTI 3, 14 (Tullio Treves ed., Padova, 1983); Ugo Villani, Aspetti problematici della prestazione caratteristica, in LA CONVENZIONE DI ROMA SULLA LEGGE APPLICABILE ALLE OBBLIGAZIONI CONTRATTUALI 17, 22 (Tito Ballarino ed., Padova, 1994).

See also OLG Koblenz, January 16, 1992, reported in RECHT DER INTERNATIONALEN WIRTSCHAFT 1021, 1024 (1992) <http://cisgw3.law.pace.edu/cases/920116g1.html>, expressly stating that "the payment of money never constitutes the characteristic performance."

81. See Bernard Audit, L'application en France de la Convention de Rome sur la loi applicable aux obligations contractuelles, in LA CONVENZIONE DI ROMA SULLA LEGGE APPLICABILE ALLE OBBLIGAZIONI CONTRATTUALI 41, 43 (Verona 1994); Th.M. de Boer, Een Hollandse kijk op het EEG-Overeenkomstenverdrag: het Balenspers-arrest, 42 ARS AEQUI 207, 210 (1993).

82. For judicial applications see:

- OLG Köln, October 16, 1992, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 143, 144 (1993) <http://cisgw3.law.pace.edu/cases/921016g1.html>;

- OLG Frankfurt a.M., September 17, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 950, 951 (1991) <http://cisgw3.law.pace.edu/cases/910917g1.html>;

- LG Frankfurt, September 16, 1991, reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 952, 953 (1991) <http://cisgw3.law.pace.edu/cases/910916g1.html>;

- LG Hamburg, September 26, 1990, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 400, 401 (1991) <http://cisgw3.law.pace.edu/cases/900926g1.html>;

- LG Aachen, April 3, 1990, published in RECHT DES INTERNATIONALEN WIRTSCHAFT 491, 492 (1990) <http://cisgw3.law.pace.edu/cases/900403g1.html>;

- OLG München, March 2, 1994, published in NEUE JURISTISCHE WOCHENSCHRIFT RECHTSPRECHUNGS REPORT 1075, 1076 (1994) <http://cisgw3.law.pace.edu/cases/940302g1.html>;

- OLG Düsseldorf, February 10, 1994, reported in RECHT DER INTERNATIONALEN WIRTSCHAFT 53, 54 (1995) <http://cisgw3.law.pace.edu/cases/940210g1.html>;

- KG Berlin, January 24, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 683, 683 (1994) <http://cisgw3.law.pace.edu/cases/940124g1.html>;

- OLG Karlsruhe, November 20, 1992, reprinted in NEUE JURISTISCHE WOCHENSCHRIFT RECHTSPRECHUNGS-REPORT 1316, 1316 (1993) <http://cisgw3.law.pace.edu/cases/921120g1.html>;

- OLG Köln, October 2, 1992, reported in RECHT DER INTERNATIONALEN WIRTSCHAFT 1021, 1024 (1992) <http://cisgw3.law.pace.edu/cases/921002g1.html>;

- OLG Frankfurt, June 13, 1991, published in NEUE JURISTISCHE WOCHENSCHRIFT 3102, 3102 (1991) <http://cisgw3.law.pace.edu/cases/910613g1.html>;

- AG Oldenburg i.H., April 24, 1990, reprinted in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 336, 337 (1991) <http://cisgw3.law.pace.edu/cases/900424g1.html>;

- LG Stuttgart, August 31, 1989, reproduced in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFARHRENSRECHTS 317, 317 (1990) <http://cisgw3.law.pace.edu/cases/890831g1.html>.

There are also several Dutch cases. See for example Rechtbank Amsterdam, October 5, 1994, reprinted in 13 NEDERLANDS INTERNATIONAAL PRIVAATRECHT 195, 195 (1995) <http://cisgw3.law.pace.edu/cases/941005n1.html>.

83. See Arbitral Tribunal ICC, No. 7197, reprinted in JOURNAL DU DROIT INTERNATIONAL 1028, 1030 (1993) <http://cisgw3.law.pace.edu/cases/927197i1.html>.

84. For more details, see Ronald A. Brand & Harry M. Flechtner, Arbitration and Contract Formation in International Trade: First Interpretations of the UN Sales Convention, 12 J.L. & Com. 239, 258-59 (1993) <http://cisgw3.law.pace.edu/cisg/wais/db/articles/journal1.html>.

85. See Final Award in Case No. 5713 of 1989, 15 Y.B. Com. Arb. 70 (1990) (officially unpublished) <http://cisgw3.law.pace.edu/cases/895713i1.html>.

86. For an Austrian case denying the CISG's applicability on the ground that the rules of private international law of the States to whose law the Austrian conflicts rules referred make applicable the law of a non-Contracting State, see Bezirksgericht für Handelssachen, February 20, 1992, published in RECHT DER WIRTSCHAFT 239 (1992) <http://cisgw3.law.pace.edu/cases/920220a3.html>.

87. See Winship, The Scope of the Vienna Convention on International Sale Contracts, in INTERNATIONAL SALES.

88. See, for example, Final Award in Case No. 6076 of 1989, 15 Y.B. Com. Arb. 83, 86-87 (1990) (officially unpublished) <http://cisgw3.law.pace.edu/cases/896076i1.html>.

89. See Judgment of Feb. 22, 1994, OLG Köln, 1994 Recht der Internationalen Wirtschaft [RIW] 972 <http://cisgw3.law.pace.edu/cases/940222g1.html>; Judgment of Sept. 17, 1993, OLG Koblenz, 1993 RIW 934 <http://cisgw3.law.pace.edu/cases/930917g1.html>; Judgment of Jan. 8, 1993, OLG Düsseldorf, 1993 IPRax 412 <http://cisgw3.law.pace.edu/cases/930108g1.html>.

90. Note, however, that according to Schlechtriem, UNIFORM SALES LAW. THE UN-CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS 48 (Vienna 1986), supra note 11, the criterion of applicability set forth in Article 1(1)(b) "revives the spectres which were raised in conjunction with the Hague Conventions."

See also Herber, Anwendungsbereich des Uncitral-Kaufrechtsübereinkommens, in DAS UNCITRAL-KAUFRECHT IM VERGLEICH ZUM ÖSTERREICHISCHEN RECHT 28, 37 (Peter Doralt ed., Vienna 1985), where the author argues that by virtue of the criterion set forth in Article 1(1)(b), the sphere of application of the CISG corresponds to the "universalist" approach of the Hague Conventions. According to Reinhart, supra note 139, at 14, the sphere of application of the CISG seems to be even more extended than that of the ULIS and ULF.

91. For this statement, see also Boschiero, Le Convenzioni di diritto materiale uniforme, in 21 TRATTATO DI DIRITTO PRIVATO 259, 267 (Pietro Rescigno ed., Turin, 1987); Ferrari, THE SPHERE OF APPLICATION OF THE 1980 VIENNA SALES CONVENTION 7 (Deventer/Boston 1995).

92. See Pelichet, La vente internationale de marchandises et le conflit de lois, RECEUIL DES COURS DE L'ACADÉMIE DE DROIT INTERNATIONAL DE LA HAYE 9, 32 (1987).

93. See Grigera Naon, The UN Convention on Contracts for the International Sale of Goods, in THE TRANSNATIONAL LAW OF INTERNATIONAL COMMERCIAL CONTRACTS; Gyula Eörsi, A propos the 1980 Vienna Convention on Contract for the International Sale of Goods, 31 AM. J. COMP. L. 333, 353 (1983); Boschiero, Le Convenzioni di diritto materiale uniforme, in 21 TRATTATO DI DIRITTO PRIVATO 259, 267 (Pietro Rescigno ed., Turin, 1987).

94. For the same opinion, see Réczei, The Area of Operation of the International Sales Convention, 29 AM. J. COMP. L. 513, 516 n.10 (1981), supra note 14; Winship, The Scope of the Vienna Convention on International Sale Contracts, in INTERNATIONAL SALES. THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.

95. The complete name of the Convention is: General Conditions of Delivery of Goods between Organizations of the Member Countries of the Council for Mutual Economic Assistance 1968. (Amended in 1975 and 1979).

96. See Volken, The Vienna Convention: Scope, Interpretation, and Gap-Filling, in INTERNATIONAL SALE OF GOODS. DUBROVNIK LECTURES <http://cisgw3.law.pace.edu/cisg/biblio/volken.html>.

97. See Article 95 CISG: "Any State may declare at the time of the deposit of its instruments of ratification, acceptance, approval or accession that it will not be bound by subparagraph 1(b) of article 1 of this Convention."

98. See Gerold Herrmann, Einheitliches Kaufrechts für die Welt: UN-Übereinkommen über internationale Warenkaufverträge, PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 109, 111 (1981) (stating that the introduction of the possibility of making reservations under Article 95 is regrettable); Pelichet, La vente internationale de marchandises et le conflit de lois, RECEUIL DES COURS DE L'ACADÉMIE DE DROIT INTERNATIONAL DE LA HAYE 9, 32 (1987).

99. The countries that have made the reservation are China, the Czech Republic, Slovakia, the United States and Singapore.

At the time it acceded to the CISG, Canada combined the authority granted by Article 93 and Article 95 by making an Article 95 reservation that applied only to one province -- British Columbia, but later withdrew this "provincial" Article 95 reservation. See CISG Contracting States and Declarations Table, 17 J.L. & Com. 449 (1998).

100. See Ferrari, Specific Topics of the CISG in the Light of Judicial Application and Scholarly Writing (1995), supra note 13.

101. For this solution, see Malcom Evans, Art. 95, in COMMENTARY ON THE INTERNATIONAL SALES LAW; Richards, Contracts for the International Sale of Goods: Applicability of the United Nations Convention, 69 IOWA L. REV. 209, 219 (1983).

102. For this conclusion, see also Ferrari, THE SPHERE OF APPLICATION OF THE 1980 VIENNA SALES CONVENTION 7 (Deventer/Boston 1995).

103. For a similar solution, see Winship, The Scope of the Vienna Convention on International Sale Contracts, in INTERNATIONAL SALES. THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS; Volker Behr, Commentary to Journal of Law and Commerce Case 1: Oberlandesgericht Frankfurt am Main, 12 J.L. & COM. 271, 272-273 (1993) <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/behr910917g1.html>; Ferrari, Specific Topics of the CISG in the Light of Judicial Application and Scholarly Writing (1995), supra note 13.

104. For similar assertions, see Peter Schlechtriem, Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany, supra note 53.

105. See LG Hamburg, September 26, 1990, reported in RECHT DER INTERNATIONALEN WIRTSCHAFT 1015 (1990) <http://cisgw3.law.pace.edu/cases/900926g1.html>;

- OLG Frankfurt, June 13, 1991, published in NEUE JURISTISCHE WOCHENSCHRIFT 3102 (1991) <http://cisgw3.law.pace.edu/cases/910613g1.html>;

- OLG Frankfurt, September 17, 1991, reported in NEUE JURISTISCHE WOCHENSCHRIFT 633 (1992) <http://cisgw3.law.pace.edu/cases/910917g1.html>.

106. See the German statute introducing the CISG from July 5, 1989, published in BUNDESGESETZBLATT II 586 (1989).

In this regard, see also UN Depositary Notification C.N. 365.1989, Treaties-3, dated March 16, 1990, where it is stated that "[t]he Government of the Federal Republic of Germany holds the view that Parties to the Convention that have made a declaration under article 95 of the Convention are not considered Contracting States within the meaning of subparagraph (1)(b) of article 1 of the Convention. Accordingly, there is no obligation to apply -- and the Federal Republic of Germany assumes no obligation to apply -- this provision when the rules of private international law lead to the application of the law of a Party that has made a declaration to the effect that it will not be bound by subparagraph (1)(b) or article 1 of this Convention."

For a short reference to this statute, see also Enderlein et al., supra note 48, at 294.

107. Several authors favor this solution; see, Ferrari, VENDITA INTERNAZIONALE DI BENI MOBILI. ART. 1-13. AMBITO DI APPLICAZIONE. DISPOSIZIONI GENERALI 30 (1994); Gerold Herrmann, Anwendungsbereich des Wiener Kaufrecht-Kollisonrechtliche Probleme, in WIENER KAUFRECHT. DER SCHWEIZERISCHE AUSSENHANDEL UNTER DEM ÜBEREINKOMMEN ÜBER DEN INTERNATIONALEN WARENKAUF 83, 89 (Eugen Bucher ed., Bern, 1991); Ole Lando, The 1985 Hague Convention on the Law Applicable to Sales, RABELS ZEITSCHRIFT FÜR AUSLÄNDISCHES UND INTERNATIONALES PRIVATRECHT 65, 82 (1987).

108. For this argument, see also Ferrari, VENDITA INTERNAZIONALE DI BENI MOBILI. ART. 1-13. AMBITO DI APPLICAZIONE. DISPOSIZIONI GENERALI 30 (1994).

109. For this line of reasoning, see Boschiero, Le Convenzioni di diritto materiale uniforme, in 21 TRATTATO DI DIRITTO PRIVATO 259, 267 (Pietro Rescigno ed., Turin, 1987)

110. See BGH, December 4, 1985, published in ENTSCHEIDUNGEN ZUM WIRTSCHAFTSRECHT 166 (1986); OLG Karlsruhe, April 14, 1978, reported in RECHT DER INTERNATIONALEN WIRTSCHAFT 544 (1978), where is stated that the reservations declared by other Contracting States were to be disregarded, i.e., the German courts applied the Conventions even where the Contracting State the law of which was to be applied would not have done so by virtue of a reservation.

For a reference to this case law in support of the applicability in cases where the rules of private international law of a forum located in a Contracting State lead to the law of a Contracting reservatory State, see Herber, KOMMENTAR ZUM EINHEITLICHEN UN-KAUFRECHT.

111. See Boschiero, Le Convenzioni di diritto materiale uniforme, in 21 TRATTATO DI DIRITTO PRIVATO 259, 267 (Pietro Rescigno ed., Turin, 1987); 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, 321 (1988).

112. See also Pelichet, La vente internationale de marchandises et le conflit de lois, RECEUIL DES COURS DE L'ACADÉMIE DE DROIT INTERNATIONAL DE LA HAYE 9, 32 (1987); Plantard, Un nouveau droit uniforme de la vente internationale: La Convention des Nations Unies du 11 avril 1980, JOURNAL DU DROIT INTERNATIONAL 311, 321 (1988).

113. For this solution, see also Pelichet, La vente internationale de marchandises et le conflit de lois, RECEUIL DES COURS DE L'ACADÉMIE DE DROIT INTERNATIONAL DE LA HAYE 9, 32 (1987).

114. See LG München, July 3, 1989, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 316 (1990) <http://cisgw3.law.pace.edu/cases/890831g1.html>;

- LG Stuttgart, August 31, 1989, reported in RECHT DER INTERNATIONALEN WIRTSCHAFT 984 (1989) <http://cisgw3.law.pace.edu/cases/890831g1.html>;

- LG Aachen, April 3, 1990, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 491 (1990) <http://cisgw3.law.pace.edu/cases/900403g1.html>;

- AG Oldenburg, April 24, 1990, reported in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 336 (1991) <http://cisgw3.law.pace.edu/cases/900424g1.html>;

- LG Hamburg, September 26, 1990, reprinted in EUROPÄISCHE ZEITSCHRIFT FÜR WIRTSCHAFTSRECHT 181 (1991) <http://cisgw3.law.pace.edu/cases/900926g1.html>;

- AG Frankfurt, January 31, 1991, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 345 (1991) <http://cisgw3.law.pace.edu/cases/910131g1.html>;

I. I. I. I. I. I. - OLG Frankfurt, June 13, 1991, reported in RECHT DER INTERNATIONALEN WIRTSCHAFT 591 (1991) <http://cisgw3.law.pace.edu/cases/910613g1.html>;

- LG Baden-Baden, August 14, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 62 (1992) <http://cisgw3.law.pace.edu/cases/910814g1.html>;

- Rechtbank Amsterdam, October 5, 1994, published in NEDERLANDS INTERNATIONAAL PRIVAATRECHT 195 (1995) <http://cisgw3.law.pace.edu/cases/941005n1.html>;

- Rechtbank Amsterdam, December 7, 1994, reported in NEDERLANDS INTERNATIONAAL PRIVAATRECHT 196 (1995) <http://cisgw3.law.pace.edu/cases/941207n1.html>.

115. For similar statement, see Peter Schlechtriem, Vienna Sales Convention 1980 (recent developments) -- Developed Countries, paper presented at the Conference for International Business Law (Singapore, September 1992).

116. See Arbitral Tribunal ICC, No. 5713, reported in YEARBOOK OF COMMERCIAL ARBITRATION 70 (1990) <http://cisgw3.law.pace.edu/cases/895713i1.html>.

117. See Watkins-Johnson Co. 7 Watkins Johnson Ltd. v. The Islamic Republic of Iran & Bank Saderat Iran (Award No. 429-370-1) <http://cisgw3.law.pace.edu/cases/890728i2.html>.

118. See, Richard Hyland, 2 GUIDE TO PRACTICAL APPLICATIONS OF THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS 3 (Albert H. Kritzer ed., 1994) <http://cisgw3.law.pace.edu/cisg/biblio/hyland.html>.

119. See, John C. Reitz, A History of Cutoff Rules as a Form of Caveat Emptor: Part I -- The 1980 U.N. Convention on the International Sale of Goods, 36 AM. J. COMP. L. 437, 471 n.127 (1988) <http://www.cisg.law.pace.edu/cisg/biblio/reitz1.html>.

120. See Hyland, 2 GUIDE TO PRACTICAL APPLICATIONS OF THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS 3 (Albert H. Kritzer ed., 1994), supra note 118.

121. See Arbitral Tribunal ICC, No. 6281, published in 15 YEARBOOK OF COMMERCIAL ARBITRATION 96 (1990) <http://cisgw3.law.pace.edu/cases/896281i1.html>.


Pace Law School Institute of International Commercial Law - Last updated May 30, 2003
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