John O. Honnold Go to Database Directory || Go to Bibliography

Reproduced with permission from 1 International Trade and Business Law Journal (Australia 1995) 1-10

Uniform Laws for International Trade:
Early "Care and Feeding" for Uniform Growth

John O. Honnold

Introduction

This important journal has been launched at an auspicious time and place. The time is right: the importance and feasibility of uniform law for international trade have been established. Five years have passed since Australia implemented the UN Convention on Contracts for the International Sale of Goods (CISG) -- the most basic of the uniform laws prepared by the United Nations Commission on International Trade Law (UNCITRAL). The Sales Convention (CISG) has already been implemented by 38 countries, with adherents from each economic and legal system of the world. This is also the right place for this journal. The reasons include Australia's many-faceted leadership in developing uniform law and the scholarly support provided by the University of Queensland Law Faculty.

This article considers measures for the "care and feeding" of young international conventions to promote healthy growth for their life's mission: uniformity not only in words but, especially, in their interpretation and application. For clarity, examples will be drawn from the Sales Convention but principles for achieving uniformity can apply to other international uniform laws. Of special significance here are the UNCITRAL laws that are already on the statute-books in Australia: the 1980 Sales Convention (CISG), the 1985 Model Law on International Commercial Arbitration and the 1978 Convention on the Carriage of Goods by Sea ("Hamburg Rules").[1]

At this point I can not resist recalling memories that made it impossible to decline the invitation to submit this paper. In 1972 one of the series of distinguished Solicitors-General who represented Australia in the work of UNCITRAL asked me to come and help explain what we were doing. What resulted was an intensive introduction to Australia, with lecture-stops at Bar Associations, universities and government offices stretching from Brisbane [page 1] via Sydney, Canberra, Melbourne, and Adelaide to Perth! These memories were kept warm by the opportunity to participate in important conferences on legal developments organised by the Attorney-General's department.

Finally, some background for this paper: In 1986 the Twelfth International Congress of Comparative Law was held in Australia. As a General Reporter my topic was this: Do differing approaches to interpreting legislation affect uniform application of international conventions? What can be done? A study plan with pointed questions on these questions was answered by national reporters from 16 countries; both "common law" and "civil law" traditions were represented.[2] These national reports provided the grist for my General Report to the Congress; this led to further work in this area that is reflected in this paper.[3]

Can national approaches to interpretation be reconciled?

With important unifying laws in force world-wide, jurists and scholars face this problem: What approaches to interpretation will best promote uniform application of these laws? A thorough study of the various approaches of the world"s legal systems would require a multi-volume treatise prepared by a substantial team of comparative law scholars.[4] Fortunately, all that is necessary now is to red-flag some of the differences of approach that pose special hazards for unification.

A second caveat: comparative studies often refer to the approaches of "common law" and "civil law" systems -- a necessary but desperate measure to avoid unmanageable fragmentation of the subject. This study will also need to refer to some of these commonly accepted traditions, but with the understanding that legal systems of "common law" or "civil law" ancestry have their own distinct features. Fortunately, for our purpose we do not need to try to pin labels on the legal systems of the world. The job at hand is to consider and evaluate different approaches to interpretation; ancestry will have only historical interest. In practice, the patterns of the law at hand are what matter. [page 2]

Different types of domestic laws (e.g., statutes governing taxes and crimes) call for sharply different approaches; by the same token, international conventions designed to control sovereign states need to be handled differently from conventions that govern commercial transactions between private parties.[5]

In sum, this study asks only this question: Which approaches to interpretation are most appropriate for uniform laws for international trade? With this in mind, the baton passes to jurists and scholars of the country where the international law is being applied: Do our practices fit the problem at hand? If not, how can one develop more appropriate responses to the special needs of this young and promising member of our legal family?

"Plain meaning": context; legislative history

We start with the basic obligation of fidelity to the words of the statute; departures from this principle undermine further constructive international work.[6] Unfortunately, legal terms can have an elusive, chameleon-quality even in domestic legislation; in international legislation that must be translated into many other languages the use of domestic legal terminology can produce chaos. What can be done?

The decade of work that led to the Sales Convention included rooting out words with domestic legal connotations in favour of non-legal "earthy" words that refer to physical acts. Instead of connecting risk of loss with domestic concepts such as "property" or "title", risk passes when the goods are "handed over to the first carrier"; if the buyer is to come for the goods, risk passes when the buyer "takes over" the goods (CISG 67(1) and 69(1)). A vital measure of control was provided by the repeated review of multi-lingual drafts in UNCITRAL; when a draft failed to be clear in translation, alarms would be sounded by delegations from other legal and linguistic systems. Drafting in this setting imposed demanding standards for imagination, intellectual rigour and patience.

A confession: this writer was slow to grasp the full power of the Convention's full context in resolving ambiguities. For example: the Convention (Article 1) applies when the parties" "places of business" are in different Contracting States. "Place of business" could be ambiguous in this setting: Party P, based in State A, sends agents to State B where extended [page 3] negotiations lead to an international contract: under the Convention"s rules on applicability (Article 1(1)) did party P have a "place of business" in State B? Only if one ignores that under CISG 10(a) the relevant "place of business" is the one "with the closest relationship to the contract and its performance" and that Articles 31(c), 42(1)(b) and 69(2) (delivery of goods; passage of risk) refer to important acts of "performance" at the seller"s or buyer"s "place of business". There are many other instances where the full context of the Convention resolves ambiguities.[7]

Legislative history

Experience with domestic statutes that govern a large and complex field tells us that the language of the Sales Convention, even in context, will not give a clear answer to all problems. In these early years of the Convention, before broad development of consensus by international case law (below), in addition to the statutory words there is only one other common international point of reference -- the legislative history (travaux préparatoires).

A decade or so ago it would have been necessary to speak of the resistance of English courts to references by counsel to parliamentary debates -- subject to the charming exception that Hansard's reports of debates may be placed before the court for use by the judges, should they wish to consult this material of their own initiative.[8]

Significantly, the House of Lords made its first important departure from this tradition in construing an international convention -- surely a necessary step for multi-lingual instruments that, even in the English version, have been influenced by representatives of rebellious ex-colonies who may have lost touch with traditional English legal idioms and the patterns established by Parliamentary draftsmen.[9] A broader outlook is mandated by multi-lingual international conventions. For example, the Sales Convention (Article 7) underscores the obvious point that interpretation should have regard for the Convention's "international character and the need to promote uniformity in [page 4] its application." When important and difficult issues of interpretation are at stake, diligent counsel and courts will need to consult the Convention's legislative history. In some cases this can be decisive.[10]

When researching points of legislative history of the Sales Convention one needs to be aware of special features of the legislative process during the decade of UNCITRAL's preparation of the 1978 draft for a Sales Convention -- the document that was the basis for discussion and decisions at the 1980 Diplomatic Conference. One happy and astonishing feature of this decade of work in UNCITRAL is that consensus was reached on each provision without ever taking a formal vote. Summaries of the discussions were faithfully recorded, but the lack of votes on proposals that were not explicitly accepted or rejected in reaching consensus could blur contours of the decision.[11]

Clearer light, however, was shed by the Commission's response to Reports of the Secretary-General; these Reports, distributed in multi-lingual versions in advance of UNCITRAL sessions, usually provided the basis for discussion and action.[12] The significant point is that these Reports typically developed the commercial and legal background of alternative proposals. When, as often, one of these alternatives was accepted, relevant legislative history would include not only the discussion by the Commission but also the background and implications of that proposal in the Secretary-General's Report -- materials that resemble a domestic Commission or Committee report that leads to legislation.

The Secretary-General's report, in addressing particularly complex or contentious issues, employed an approach that, at the outset, struck some delegates as a "common law" oddity. Instead of proposing a draft, the Report would set forth a set of facts at the cross-roads of important decisions, and would invite the group to choose among alternative outcomes -- e.g., outcome "A", "B", or "C". Starting with decisions on outcomes or results provided a helpful route to decision in difficult situations where starting with a legal draft would often produce alternative drafts, misunderstanding and impasse. In addition, starting with agreement on results speeded agreement on a draft. [page 5] What is relevant here is that an unintended by-product of this approach was clearer legislative history.[13]

Statutory "gaps" and international uniformity

Assume that a problem falling within the scope of a uniform law like the Sales Convention is not addressed by an express provision of the statute. How should this problem be solved -- by turning to domestic law or by analogical extension of the provisions or underlying general provisions of the uniform law?

Domestic approaches to this issue differ; it is important to consider which approach best serves the objectives of international unification.

The problem is clearly exposed by contrasting provisions of the two conventions to establish uniform law for international sales. The 1964 Sales Convention (ULIS), prepared by the Rome Institute (UNIDROIT) primarily by drafters of "civil law" background, provided (Article 17):

"Questions concerning matters governed by the present Law which are not expressly settled therein shall be settled in conformity with the general principles on which the present Law is based."

In UNCITRAL and the 1980 Diplomatic Conference, many delegates pressed for the above-quoted provision of 1964 ULIS. On the other hand, delegates primarily of "common law" background were concerned by the leeway that the 1964 Convention might allow for judicial extrapolation of the Convention's "general principles". This concern led to the inclusion in Article 7(2) of a provision substantially the same as the above-quoted provision of 1964 ULIS, with the addition, at the end, of the following:

"... or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law."

In spite of the warning (above) of dangers from loose generalisations about "common law" and "civil law", at this point we need to take account of historic differences in approach.[14]

For example, the French Civil Code was designed to supersede the law of the ancien régime. To guard against back-sliding, judges were required to anchor decisions in some article of the code -- an approach that required creative extensions by analogy of the code's provisions to meet the myriads of new problems that arose during the following centuries. Our "common law" [page 6] approach has been basically different. For example, the (UK) Sale of Goods Act, the (US) Uniform Sales Act and even our relatively modern (US) Uniform Commercial "Code" all depend on supplementary support from the surrounding ocean of judge-made common law.

When a "gap" seems to appear in the Sales Convention we face this question under the above-quoted final clause of CISG 7(2): Should the tribunal place primary stress on the first alternative in CISG 7(2) and look hard for "the general principles on which [the Convention] is based", or should the tribunal quickly turn to the second alternative and decide in conformity with domestic law "applicable by virtue of the rules of private international law"?

For judges of the "common law" tradition the latter alternative may seem more natural, familiar and consistent with accepted ways of dealing with domestic statutes. In addition, local, familiar domestic law may be easier to apply -- unless, of course, counsel lead the court into the dismal swamp of private international law -- "conflicts".

However, the tribunal (aided by able counsel) may well ask: Which course is more consistent with the Convention's central goal to promote international uniformity? A decision, pursuant to Article 7(2) applying by analogy the principles underlying express provisions of the Convention is an interpretation of the Convention which judges in other countries will be obliged to consider, and will thereby contribute to the growing body of applicable international case law. On the other hand, domestic law invoked by the court is not an interpretation of the Convention, and need not be respected in other countries. Moreover, domestic law often will not provide principles that are compatible with the structure of the Convention and the special needs of international trade. The choice between the above alternatives has stimulated thought and writing by many scholars. All that is feasible here is to note that these inquiries have produced a remarkable degree of consensus favouring analogical extension of the Convention's principles over recourse to domestic law.[15]

If a court sees a "gap" and flinches from seeking, or fails to find, an applicable "general principle", the Sales Convention still provides an important alternative to domestic law.

Article 9 provides that parties are bound not only "by practices they have established between themselves" but also by international trade usages; both not only supplement the Convention but also, in case of conflict, supersede the [page 7] Convention's provisions (CISG 6, 9(2)). Counsel who face a "gap problem" and who do not welcome the prospect of domestic law should take advantage of the opportunity (which many seem to ignore) to learn how the parties, or others in the trade, have handled this problem.

International case-law and doctrine

Our last topic concerns the role of international case law in response to the Sales Convention's call for interpretation "to promote uniformity in [the Convention's] application ..." -- a mandate that clearly calls for due regard for interpretations in other countries.

One often faces this question: How can we expect uniformity without supervision by an international tribunal? True, no international court has jurisdiction to review these private law decisions, nor is there significant support for establishing such a court because of the delays this would create in settling commercial disputes.

Domestic experience helps to put this problem in perspective. Many who are not specialists in the US federal system are dismayed to learn that our "Supreme" Court has no jurisdiction to correct conflicting interpretations of the many uniform laws of our 50 states, for example, the Uniform Commercial Code (UCC).[16] Divergent interpretations have, of course, developed. The important point, however, is that they have not significantly detracted from the great value of our uniform state laws; the "saving grace" is the shared conviction by our courts of the need to preserve uniformity by giving weight to decisions in other states. As a result, a generally satisfactory uniformity of result has been achieved.[17]

We should expect (and insist) that tribunals construing an international convention will appreciate that they are colleagues of a world-wide body of jurists with a common goal. To this end, strenuous efforts are under way to provide world-wide access to decisions applying uniform laws. In response to a request by the UN Secretary-General, nearly all of the Contracting States have appointed national correspondents who undertake to transmit decisions to the UNCITRAL Secretariat in Vienna. To help the Secretariat overcome language barriers, the National Correspondents are requested to prepare a short summary of the decision in one of the six UN Languages -- English, French, Spanish, Russian, Chinese and Arabic. These summaries are then translated into the other UN languages, and are periodically issued as an [page 8] UNCITRAL document for world-wide distribution.[18] Systems for electronic "on-line" distribution of this material are now in place; others are in process of development. The original texts of decisions and other materials may be obtained from the UNCITRAL Secretariat on payment of the cost of copying and mailing.[19]

In assessing interpretations of uniform laws in other countries, counsel and courts need to take into account the principle espoused in some civil law countries that the writings of leading scholars (doctrine) have more weight than court decisions. The extent to which this principle reflects current practice may vary, but in situations where it is important to the weight of international authority one should not neglect available writings of scholars familiar with other legal systems.[20]

For many counsel and courts, confronting international uniform law may seem strange and daunting. Fortunately, extremely helpful guides have been prepared for finding the remarkable outpouring of writing inspired by these new developments. For bibliographic help on the Sales Convention the present writer is especially grateful for Winship's bibliography of studies in English, and for Will's multi-lingual bibliography.[21]

Counsel who, like most of us, would prefer not to litigate before a foreign court will naturally consider a contract clause that designates a forum in this country or (an alternative often more acceptable to the foreign party) a clause calling for arbitration. Australia has become an especially attractive site with its adoption of the UNCITRAL Model Law on International Commercial Arbitration. The Model Law establishes modern, international standards [page 9] which, inter alia, minimise judicial interference by providing maximum finality for the award.[22]

Conclusion

The development of the world's commerce has been accompanied by uniform international laws which call for special "care and feeding". At this formative stage the present study has suggested a few lines of thought and development that could promote healthy and sturdy growth. This, however, is only the beginning; much more needs to be done. [page 10]


FOOTNOTES

1. The "Hamburg Rules" were enacted by the Australian Parliament on 11 November 1991, to become effective on 1 November 1994, unless each House of the Parliament passed resolutions which had the effect of retaining the Amended Hague Rules: see Carriage of Goods by Sea Act (Cth) 1992, s 2(3). Such resolutions were passed in October, 1994. See also J. Honnold, "Ocean Carriers and Cargo: Clarity and Fairness - Hague or Hamburg", (1993) 24 J Mar L. & Comm 75. Materials on the wider scope of UNCITRAL"s work will appear in the Proceedings of the May 1992 Congress celebrating the 25th anniversary of UNCITRAL, held in the UN General Assembly: "UNCITRAL Congress: Uniform Commercial Law in the 21st Century".

2. A particularly helpful study was prepared by Professor and Dean Kenneth Sutton of the University of Queensland, Sutton, Methodology in Applying Uniform Law for International Sales, in AES Tay, ed., Law and Australian Legal Thinking in the 1980s (1986) (Paris), 91-98. Other national reporters were L Popov (Bulgaria), JS Ziegel (Canada), C. Samson (Canada & Quebec), A Kanda (Czechoslovakia), P Schlechtriem (FR Germany), L Sevón (Finland), D Maskow (German DR), G Eörsi (Hungary), MJ Bonell (Italy), F van der Velden (Netherlands), JH Farar (New Zealand), J Rajski (Poland), WLH Khoo (Singapore), Malcolm Clarke (UK), and LC Arria, Venezuela.

3. J. Honnold, "Uniform Words and Uniform Application: The 1980 Sales Convention and International Juridicial Practice", in P Schlechtriem, ed., Einheitliches Kaufrecht Und Nationales Obligationenrecht (1987) (Nomos, Baden-Baden), 115-147. (This study will be cited herein as "JH, Report to Comparative Law Congress".) See also report based on a 1990 Lecture at the University of Stockholm, "Juridisk Tidskrift, Stockholms Universitet" (1990-1991) 1-14.

4. See, e.g., R. Schlesinger, et al., Formation of Contract, A Study of the Common Core of Legal Systems (1968) (Dobbs Ferry, NY: Oceana), 2 Vols.

5. The present writer has ventured to suggest that those provisions of the 1980 Sales Convention (CISG) that are designed to settle commercial disputes between private parties, including the flexible provisions on trade usages (Article 9(2)) and other unwritten expectations (Article 8(2)), do not apply to the Convention"s "Final Provisions" (Article 89-101) that govern the obligations of States to each other; these inter-State obligations appropriately fall under the strict rules of the Vienna Convention on the Law of Treaties (1969). See J. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (1991) 103 and note 44, (Deventer (Neth) & Boston: Kluwer) 2d ed (cited herein as "JH, Commentary on CISG").

6. One dares to hope that the spread of literacy "deconstruction" of law has run its course.

7. The basic term "goods" as moveable tangible property is clarified by a series of exclusions in Article 2, and by "packaging" (Article 35), replacement of defective parts (Article 46), and warehousing to prevent deterioration (Article 85-88). See also JH, Commentary on CISG, above note 5 (scope of "sales on execution or otherwise by authority of law" (Article 2(c)) clarified by any of the following Articles: 49, 64, 75, 81 and 88.

8. See the comments on English practice in JH, Report to Comparative Law Congress, above note 3.

9. Fothergill v. Monarch Airlines [1980] 2 All ER 696 (HL), construing an Act of Parliament that gave effect to the Warsaw Convention on the liability of air carriers. Later decisions in English and the Commonwealth have followed this lead.

10. For the legislative history shedding light on the apparent conflict between Articles 14 and 55 on the validity of "open price" contracts, see JH Commentary on CISG, above note 5 at 137.6, 324-325.3. The present writer must confess that in preparing the Commentary's first edition he had overlooked this decisive material, which came to light only in the preparation of his Documentary History of the Uniform Law for International Sales (1989) (Kluwer: Deventer & Boston). The difficulties of finding legislative history, spread over 10 volumes and 1,000 pages, led to the preparation of this volume; see id. Preface (vii) and 4-6.

11. This was not true of proceedings at the 1980 Diplomatic conference, where proposals were acted on by recorded votes. At the end of the conference, each of the 101 articles received approval by a two-thirds majority, followed by unanimous approval of the final text.

12. These Reports appear in Volumes I-X of UNCITRAL's Annual Reports in conjunction with consideration and action by the Commission, and are included, with indexing and cross-referencing, in the Documentary History cited in note 10, above.

13. The focus on facts and outcomes as a tool for mutual understanding in a multi-legal setting was first suggested to the present writer by R. Schlesinger, Formation of Contract, A Study of the Common Core of Legal Systems (1968) (Dobbs Ferry, NY: Oceana), 2 Vols. This pioneering study included scholars from common law and civil law backgrounds.

14. For a fuller development of this background see A Von Mehren and J Gordley, The Civil Law System (1977) 2d ed (Boston: Little Brown); JH Commentary on CISG, above note 5 at 96-102.

15. See, e.g., CM Bianca and MJ Bonell (eds) Commentary on the International Sales Law, (1987) (Milan: Guiffré), 75-83 (citing other studies); JH, Commentary on CISG, above note 5 at 99-102, pp 152-155. See also Hellner, Gap-Filling by Analogy, Festskrift till Lars Hjerner, Studies in International Law (1990) (Stockholm: Norstedts), 219-233; Volken, CISG: Scope, Interpretation and Gap-Filling, in P Sarcevic and P Volken (eds) (1986) Dubrovnik Lectures (NY: Oceana), 239-264; Guneskara, Judicial Reasoning by Analogy with Statutes, 1993 NZ Law J 446.

16. Perhaps even more surprising to one not familiar with our complex parallel structures of state and federal (US) courts is the requirement that our federal (US) courts follow the interpretations of the courts of the state whose law is applicable under "conflicts" rules.

17. Indeed, a carefully considered decision to differ from decisions in other states probably provides a healthy opportunity for reconsideration of doubtful decisions -- a value that can counterbalance some degree of loss in uniformity.

18. The fourth in this series of publications was issued on 30 August 1994: UN Document A/CN.9/SER.C/ABSTRACTS/4.

19. The system for reporting and distribution of decisions is described in the UNCITRAL document, Case Law on UNCITRAL Texts (CLOUT), A/CN.9/SER.C/GUIDE/1 (19 May 1993). The UNCITRAL Secretariat can be reached at Vienna International Centre, PO Box 500, A-1400 Vienna, Austria: Fax (43 1)237 485; Telex 135612 uno a; Tel 21131-4061. The National Correspondent for Australia is Ms. Jenny Clift, Business Law Division, Attorney-General's Department. The sixth meeting of National Correspondents was held at UN Headquarters, NY, on 16 June 1994. See also G Fisher, "UNCITRAL gives International Trade Law CLOUT", 21 Australian Bus L Rev 362 (1993).

20. See JH Report to Comparative Law Congress, above note 3 at 127. On the weight that common law jurisdictions give to domestic scholarly writing and to court decisions in civil law jurisdictions see id. 123-126. See also R. Schlesinger, H. Baade, M. Damaska & P. Herzog, Comparative Law (1988) especially the note at 643 (Westbury, NY: Foundation Press), 597-656.

21. A current consolidated bibliography by Peter Winship, Professor of Law at SMU Law School, Dallas, was published in 28 The International Lawyer (Summer 1994), 401-424; Winship has also written important articles about the Sales Convention. For the bibliography of studies, in a wide range of languages, by Michael R. Will, Professor of Law at Heidelberg University, see Internationale Bibliographie zum UN-Kaufrecht, Köln, Bundesstelle für Aussenhandels ... BJAI (1990).

22. The Model Law has already been implemented by Canada, Mexico, Germany, Finland, Scotland. The Russian Federation, Bulgaria, Hong Kong, Bermuda, Cyprus, Tunisia and Nigeria. (A small committee of the American Arbitration Association (AAA) has prepared draft legislation for US adoption. The present writer, a member of this committee, ventures to hope for -- but dares not predict -- enactment here. Australia has reason to be proud of the favourable international reception of a study of the Model Law for the Commonwealth Secretariat, prepared by Dr. Gavan Griffiths, Solicitor-General of Australia.

Australia's attractiveness as a venue is further enhanced by being one of the 90 parties to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards.


Pace Law School Institute of International Commercial Law - Last updated October 9, 2008
Comments/Contributions
Go to Database Directory || Go to Bibliography