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Reproduced with permission of 13 Vindobona Journal of International Commercial Law & Arbitration (1/2009) 241-248

Promoting the Adoption of the United Nations Convention
on Contracts for the International Sale of Goods (CISG)

Luca G. Castellani [*]

  1. Devising Strategies for the Promotion of the CISG
  2. Assessing the Terms of the Success of the CISG
  3. The Path Ahead: Focus on Developing Countries
  4. Conclusion

1. DEVISING STRATEGIES FOR THE PROMOTION OF THE CISG

The United Nations Convention on Contracts for the International Sale of Goods, 1980 (CISG, or the Convention) [1] represents one of the pillars of uniform international trade law and a major success of the United Nations Commission on International Trade Law (UNCITRAL). Under Art. 1 CISG, the Convention applies to contracts for the sale of goods between parties whose places of business are in different Contracting States; or when the rules of private international law lead to the application of the law of a Contracting State. Therefore, wider adoption of the CISG by States is necessary to effectively expand its application.

The UNCITRAL Secretariat is tasked with the promotion of UNCITRAL texts. In fact, technical assistance and coordination activities are an important element of the mandate of UNCITRAL with a particular view to assisting developing countries.[2] Increasing demands in these areas led in 2004 to the creation of a dedicated Technical Assistance and Coordination Unit (TAC Unit) within the secretariat.[3]

Shortly after its establishment, the TAC Unit started devising strategies for the promotion of UNCITRAL texts. From the outset the CISG was identified as one of the [page 241] core treaties whose universal adoption would be particularly desirable in light of the economic importance of the subject matter for all countries, regardless of their level of development, as well as of the broad participation already achieved. This led to designing specific plans for the promotion of the Convention. First, UNCITRAL sponsored a number of conferences around the world to celebrate the twenty fifth anniversary of the adoption of the text of the CISG [4] This allowed for detailed stocktaking, which highlighted inter alia the importance of certain regional trade patterns.

One pattern referred to the desirability of adopting uniform trade law texts in certain regions where legal uniformity had recently been disrupted by State fragmentation.[5] The underlying rationale is that joint economic interests may not only foster regional economic development but also contribute to conflict prevention. Today, with the accession of Montenegro and of the Former Yugoslav Republic of Macedonia to the CISG, the States that made up the former Yugoslavia have again a common sales law. Moreover, eleven of the fifteen successor States of the Soviet Union have already become a party to the CISG and at least two more report progress towards that objective.[6] The secretariat continues to actively support these exercises in cooperation with relevant national and international partners.

Encouraged by the first responses, the UNCITRAL secretariat further worked on the promotion of the CISG at the regional level. In particular, it was suggested that a uniform sales law would greatly support those processes of regional economic integration that are being built on trade agreements in different parts of the world. From a legislative standpoint, adoption of the CISG in such cases would not only avoid duplication of legislative work, but also support both regional and global integration, thus maximising the impact of the harmonisation process. If, at a later stage, the level of regional economic integration demanded additional regional agreements, these could be enacted to complement rather than replace the Convention.

This proposal is in line with the practice in certain regions of the worlds and aims at streamlining existing trends: all North American Free Trade Agreement (NAFTA) members and twenty-three out of twenty-seven European Union countries have adopted the CISG as their uniform international sales law.[7] However, in other cases this has not yet been the case. For instance, while the Organisation for the Harmonisation of Business Law in Africa (OHADA) has adopted a General Uniform [page 242] Act on Commerce whose chapter on sale is largely inspired by the CISG, most of its member States have not become a party to the CISG despite the commonality of legal principles, thus missing the benefits arising from treaty participation.[8]

Regional groups currently considering the adoption of the CISG with a view also to furthering regional economic integration include the Association of South East Asian Nations' (ASEAN) member States, and Central America Free Trade Agreement - Dominican Republic (CAFTA-DR) member States.[9]

The engagement of the UNCITRAL Secretariat continued also at the bilateral level. Here, as well, guidelines were designed to better promote the CISG in a context of conflicting priorities and dwindling resources. First, as already mentioned, the CISG, together with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the "New York Convention"),[10] is considered a core international trade law treaty whose universal adoption is particularly desirable; hence, when a State approaches the secretariat for an assessment of its international trade legal framework, the adoption of these two texts is recommended as a starting point for trade law reform and modernisation.

Besides these general policy principles, certain connecting criteria may recommend consideration of the CISG on a priority basis. For instance, this may be the case for:

The role of the UNCITRAL Secretariat is not limited to the promotion of the CISG with a view to its adoption. Aware of the importance of capacity building, and in spite of particularly limited resources, the secretariat offers to those countries adopting the CISG at least a workshop to acquaint main legal actors with the Convention's provisions.

These activities are most effective when conducted with national or international partners with a local presence, so as to assure sustainability over time. The possibility of providing documents in the six official languages of the United Nations, as well as of referring to a vast amount of academic work also available in several languages, has proven to be particularly useful when organising such workshops.

Finally, the CISG is not an isolated piece of legislation, but has inspired other texts of a different nature, and interacts with them. From the perspective of the UNCITRAL Secretariat, this means that promotion of the CISG includes reference to the complementary nature of the Limitation Convention, especially in its 1980 version, and to the additional benefits that the joint adoption of these two treaties may provide. Indeed, the Limitation Convention, whose text was originally part of a broader exercise on contracts for the international sale of goods, was finalised separately due to the desire to provide an early resolution of the work of UNCITRAL.[17]

For historical reasons unrelated to its legal provisions, the Limitation Convention has received more limited State support than the CISG, however it may provide a significant contribution in terms of clarity and predictability in a technically challenging field. Therefore, its adoption should be carefully considered by those States already parties to the CISG.

Most recently, the CISG has also inspired certain provisions of the United Nations Convention on the Use of Electronic Communications in International Contracts, 2005 (the Electronic Communications Convention).[18] As the Electronic Communications Convention has attracted significant interest, in particular from developing countries wishing to overcome the digital divide by adopting modern uniform rules for cross border electronic commerce, the discussion of that treaty provides an opportunity to refer to the CISG and to promote it in those countries that are not yet a party. [page 244]

2. ASSESSING THE TERMS OF THE SUCCESS OF THE CISG

Seventy-three States have expressed their consent to be bound by the CISG in 28 years.[19] Statistically, this means an average of five ratifications or accessions every two years, or more precisely, about 2.6 per year. This pace of adoption is not impressive compared with that of international agreements in other fields such as human rights, environment or the fight against international crime and terrorism, however the CISG is the second most adopted treaty in the field of international trade law, after the New York Convention.[20]

The significant difference in the adoption rate between international trade law treaties and treaties in other areas points to certain fundamental differences between them. For instance, business is not always in favour of the adoption of regulatory tools. Moreover, legislative bodies and governmental offices have limited resources, which are allocated according to political priorities; international trade law, especially on the private side, usually does not rank high among those priorities. In addition, countries with limited capacity may find coordination between relevant offices excessively burdensome.[21] Last, but not least, the UNCITRAL Secretariat has a small staff, and as mentioned above, has only recently started devoting resources specifically to technical assistance, including promotion of texts.

Additional considerations may stem from a qualitative analysis of the States parties to the CISG. Part of the increase in the number of States may be explained by the fragmentation of certain large States into a number of smaller ones.[22]

Moreover, if we look at a geographic map of the participation in the CISG,[23] northern hemisphere and in Latin America, but that the CISG has failed so far to appeal to the southern hemisphere.[24] This applies also to [page 245] certain significant trading countries and regional hubs such as Brazil, India, South Africa, and Turkey, all of whom should have a greater incentive to adopt modern trade law in light of their economic might. However, a closer look at the reasons for the limited participation shows a variety of positions. Turkey's accession, delayed due to early elections in 2007, seems now imminent.[25] Brazil and India have recently shown renewed interest in considering the adoption of the text.[26] In South Africa, calls for accession to the CISG have been made on a regular basis;[27] the interest in the treaty may receive new momentum through consideration of its regional and sub-regional implications.

Unfortunately, smaller countries may face additional obstacles in considering the CISG. The adoption of the Convention in Africa, the Caribbean and the Pacific, has taken place on a leopard skin pattern; among Arab countries, only those with a strong legal tradition favouring a modernist approach have adopted the CISG, i.e. Egypt, Iraq and Syria.[28] The limited level of participation and awareness thereof, among other factors, seem to prevent widespread use of the Convention on a regular basis, which is a requirement for its wider study and further capacity building at the country level. Thus, the implementation status of the CISG in several developing countries that have already adopted it remains unclear.

3. THE PATH AHEAD: FOCUS ON DEVELOPING COUNTRIES

Significant work remains to be done to promote the CISG in developing countries, where the advantages arising from its adoption seem particularly significant.[29] In fact, contracts for sale of goods concluded between parties with their place of business, respectively, in a developed and in a developing country, usually do not contain the choice of the domestic law of the latter as applicable law. [page 246]

This may happen for a number of reasons, ranging from difficult access to that law to the balance of contractual power. Hence, the law chosen will be the domestic law of the developed country or the law of a third State, possibly that of the place of arbitration. In both cases, the business in the developing country will have limited or no prior knowledge of the law chosen. However, the uniform and neutral nature of the CISG and its ability to balance conflicting interests makes its provisions acceptable to all parties. This is especially true when the States where the parties have their places of business have already adopted it and therefore counsel are already familiar with the text and its interpretation. Thus, the CISG may greatly simplify the choice of the applicable law.

Benefits may be even greater when the contract does not contain a choice of applicable law. In that case, adoption of the CISG by the developing country could trigger its application under Art. 1(1)(a) of the Convention, thus avoiding the application of rules of private international law, which could be time consuming and resource intensive perhaps leading to different results based on the forum seized.[30]

As small and medium sized enterprises, especially in developing countries, have limited access to expert legal advice when drafting their contracts and little influence on the choice of the law applicable to the contract, they would take advantage correspondingly from the application of the CISG. Small and medium sized enterprises constitute the backbone of a modern and balanced economy. They support economic diversification and may therefore significantly contribute to achieving sustainable growth. In conclusion, they may play an important role in addressing those structural problems affecting developing countries. The CISG may be instrumental in making this role effective.

Finally, the availability of the text of the Convention, as well as of other related materials prepared by the UNCITRAL secretariat in the six official languages of the United Nations may provide an additional advantage at the capacity-building stage. This adds to the fact that academic works on the Convention are available in a volume that no domestic law of a developing country is likely to ever reach.

4. CONCLUSION

In conclusion, the success of the CISG in terms of the level of appreciation of its provisions and of the unrelenting appearance of commentaries, many of which are of a particularly high standard, is indisputable. In terms of participation, the CISG has gone beyond the expectations of some of its drafters.

But the better part of this assessment lies in the future.

Being about to turn thirty, the age when adults are fully aware of their strength and have already gathered enough experience to put it to work, the CISG has a great [page 247] potential to become the truly global sales law. It is up to us to ensure that this goal materialises at the pace we deem most desirable. [page 248]


FOOTNOTES

* Legal Officer, UNCITRAL Secretariat, Vienna (Austria). The views expressed herein are those of the author and do not necessarily reflect the views of the United Nations.

1. United Nations, Treaty Series, vol. 1489, at p. 3.

2. United Nations General Assembly Resolution 2205 (XXI) of 17 December 1966, 'Establishment of the United Nations Commission on International Trade Law'.

3. United Nations General Assembly Official Records, fifty eighth session, Supplement No. 17 (A/58/17), Report of the United Nations Commission on International Trade Law on its thirty sixth Session, 30 June-11 July 2003, at paras. 258-259.

4. United Nations General Assembly Official Records, sixtieth session, Supplement No. 17 (A/60/17), Report of the United Nations Commission on International Trade Law on its thirty eighth Session, 4-15 July 2005, at para. 203.

5. For instance, this would be the case for former Yugoslavia and for the former Soviet Union.

6. Knieper, R., "Celebrating Success by Accession to CISG," (2005-6) 25 Journal of Law and Commerce 477 (Armenia acceded to the CISG after the publication of this article).

7. On the application of the CISG in the European Union member States and future perspectives, see the interesting considerations of Schroeter, U., "Global Uniform Sales Law -- With A European Twist? CISG Interaction With EU Law" 2009 Vindobona Journal 181.

8. Among OHADA member States, only Guinea is a party to the CISG. See also Castellani, L.G., "Ensuring Harmonisation of Contract Law at Regional and Global Level: the United Nations Convention on Contracts for the International Sale of Goods and the Role of UNCITRAL" (2008) Uniform Law Review / Revue de droit uniforme 115 (Actes du Colloque sur l'harmonisation du droit OHADA des contrats -- Ouagadougou 2007).

9. Bell, G.F., "Harmonisation of Contract Law in Asia -- Harmonising Regionally or Adopting Global Harmonisations -- The Example of the CISG" (2005) Singapore Journal of Legal Studies 362; also available at: <http://www.cisg.law.pace.edu/cisg/biblio/bell3.html>.

10. United Nations, Treaty Series, vol. 330, at p. 38.

11. United Nations, Treaty Series, vol. 1511, at p. 3.

12. These include the Dominican Republic and Ghana.

13. These are currently Ghana and Venezuela.

14. United Nations, Treaty Series, vol. 834, at p. 169.

15. United Nations, Treaty Series, vol. 834, at p. 107.

16. At the present time, these are The Gambia, San Marino and the United Kingdom.

17. Sono, K., The Limitation Convention: the Forerunner to Establish UNCITRAL Credibility, available at: <http://cisgw3.law.pace.edu/cisg/biblio/sono3.html>.

18. United Nations Publication Sales No. E.07.V.2 (treaty not yet in force).

19. Albania deposited the instrument of accession to the CISG on 13 May 2009, thus becoming the seventy fourth State party to the Convention.

20. The New York Convention has 144 State parties; therefore, its pace of adoption (over 50 years) is about 2.9 expressions of consent to be bound per year. It is therefore marginally more successful than the CISG.

21. For example, the consideration of the CISG often requires coordination between the Ministry for Foreign Affairs, responsible for adoption of treaties and the Ministry of Justice, responsible for the substantive matter.

22. This is the case for former Czechoslovakia, Soviet Union, Yugoslavia; for the record, the CISG has also lost one State party due to reunification, the former German Democratic Republic.

23. Such as that provided by LegaCarta, available at: <http://legacarta.org/index.php>.

24. Indeed, all major trading countries in the northern hemisphere are already a party to the CISG, with the exception of the United Kingdom where the discussion over the accession to the CISG is well documented: Moss, S., "Why the United Kingdom Has Not Ratified the CISG" (2005-6) 25 Journal of Law and Commerce 483; Mullis, A., "Twenty Five Years On -- The United Kingdom, Damages and the Vienna Sales Convention" (2007) Rabels Zeitschrift für ausländisches und internationales Privatrecht 35; Borges, R.S., "The United Kingdom and the UN Convention on Contracts for the International Sale of Goods (CISG): to Ratify or Not to Ratify?" (2008) 14 Journal of International Maritime Law 331. In Latin America, the main exception is Brazil: see Grebler, E., "The Convention on International Sale of Goods and Brazilian Law: Are Differences Irreconcilable?" (2005-6) 25 Journal of Law and Commerce 467.

25. The law authorising the deposit of the instrument of accession was adopted as Kanun No. 5870, published in the Resmî Gazete (Official Journal) of 14 April 2009.

26. For instance, adoption of the CISG was recently discussed in India at the international conference on "Institutional Arbitration in Infrastructure & Construction", organised by the Construction Industry Arbitration Council (CIAC), and at the conference on "International Commercial Arbitration & Sale of Goods: UNCITRAL Perspective", organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Indian Council of Arbitration (ICA). Both events took place in Delhi in October 2008. In Brazil, the adoption of the CISG will be the object of a seminar organised by the Brazilian Branch of the International Law Association (ILA Brazil), which will take place at the Pontifical Catholic University in Rio de Janeiro on 25 and 26 June 2009.

27. Eiselen, S., "Adoption of the Vienna Convention for the International Sale of Goods (the CISG) in South Africa" (1996) 116 South African Law Journal 323; Ibid, "Adopting the Vienna Sales Convention: Reflections Eight Years down the Line" (2007) 19 SA Mercantile Law Journal 14.

28. Most recently joined by Lebanon.

29. For a recent comprehensive discussion of the benefits arising from the adoption of the CISG see Schwenzer I., Hachem P., "The CISG -- Successes and Pitfalls" (2009) 57 American Journal of Comparative Law 457.

30. The forum seized could be where enforceable assets are, i.e., again, often not in a developing country.


©Pace Law School Institute of International Commercial Law - Last updated January 19, 2010
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