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This Note originally appeared in Volume 44 of Columbia Journal of Transnational Law and is reproduced with the permission of the Columbia Journal of Transnational Law Association. Cite to 44 Colum J. Transnat'l 992 (2006).

Differentiating between Internal and External Gaps in the U.N. Convention on Contracts for the International Sale of Goods: A Proposed Method for Determining "Governed by" in the Context of Article 7(2)

Anthony J. McMahon [*]

    Introduction
  1. Background and Objective of the CISG
  2. Article 7 and the Meaning of "Governed by"
    1. Article 7(1): Autonomy and Flexibility
    2. Article 7(2): The Gap Filler
    3. Identifying Matters "Governed by" the CISG
  3. Using the Substance-procedure dichotomy to Determine "Governed by"
    1. The Substance-Procedure Dichotomy and Tests for Identifying Procedural Matters
      1. The Two-Pronged Substance-Procedure Test
      2. The Rule of Evidence Substance-Procedure Test
    2. Necessity of Autonomy in Substance-Procedure Analysis
    3. Parol Evidence Rule as Example of the Substance-Procedure Analysis: The MCC-Marble Decision as Example and Warning
      1. Error of the MCC-Marble Court
  4. Rulings of the Argentine Commercial Court of Appeals and the Requirement of "Expert Arbitration"
    1. Mayer v. Onda Hofferle GmbH & C.
    2. Cervecería y Maltería Paysandú v. Cercevería Argentina S.A.
    3. "Expert Arbitrators"
    4. Suggestion of Proper Analysis to Have Been Taken by the Mayer and Paysandú Courts
      1. Application of the Two-Pronged Substance-Procedure Test
      2. Application of the Rule of Evidence Test
    Conclusion

INTRODUCTION

Article 7(2) of the United Nations (UN) Convention on Contracts for the International Sale of Goods (CISG), which provides a gap-filling mechanism, is an important tool in achieving the CISG's objective of harmonization of international sales law. However, that mechanism is only to be used to fill gaps in matters "governed by" the CISG. As two recent Argentine decisions highlight, courts can easily overlook this fact and use Article 7(2) in situations where it is inappropriate. This Note discusses the importance of ensuring that gaps are of matters "governed by" the CISG before recourse is taken to the gap-filling mechanism and proposes a method for making the "governed by" determination.

A primary objective of the United Nations Convention on Contracts for the International Sale of Goods (Convention or CISG)[1] is to increase uniformity in international sales law.[2] It seeks to achieve this by providing a body of law governing international commercial contracts independent of any national contract law regimes. Article 7 is a key tool in achieving the Convention's objective of uniformity. The first sentence of Article 7 directs [page 992] tribunals [3] to interpret the Convention's provisions in a manner that promotes uniformity in its application and is true to its international character.[4] This instruction requires that courts interpret the Convention autonomously, uninfluenced by the domestic law of the forum court.[5] The second sentence of Article 7 provides courts with a gap-filling mechanism for matters "governed by" the Convention but not expressly settled therein.[6] That is, the gap-filling mechanism is to be used to fill internal gaps; gaps with respect to matters that do not fall under the purview of the CISG are not to be filled via recourse to the gap-filling mechanism.[7] If a tribunal deciding a case governed by the CISG is confronted with an internal gap, it should first seek to fill it "in conformity with the [Convention's] general principles."[8] If the court can find no general principle on which to fill the gap, it is -- as a last resort -- to decide the matter in conformity with the law applicable by virtue of the rules of private international law.[9]

Article 7 thus presents courts applying the CISG with two difficult tasks. The first is how courts should craft gap fillers from the Convention's "general principles." The second difficult task, which is the subject of this Note, is preliminary to the first and has not been extensively explored. It is: How are courts to determine whether a matter is one that is "governed by" the Convention, that is, when is recourse to Article 7(2)'s gap-filling mechanism appropriate?[10] If a court were to determine that a certain matter is not "governed by" the Convention -- meaning that it is an external rather than an internal gap -- the gap should be filled by reference to an alternative source of law, either the private international law of the [page 993] forum or the lex fori.[11] This Note argues that it is imperative that this preliminary determination not be skipped by courts applying the Convention and recommends an analytical schema that may be helpful to courts in certain circumstances.

The determination of whether a gap is internal or external is difficult because it is beset by competing policy objectives. On the one hand, the more matters are found to be internal, the more the CISG's objective of uniformity is advanced. On the other hand, Member States have an interest in finding certain matters outside the purview of the Convention so that they can apply their own law and give effect to domestic policy choices. This friction emerges from the competing needs of uniformity and flexibility.[12]

Two recent decisions by the Commercial Court of Appeals of the City of Buenos Aires, Argentina, have highlighted the importance of a determination of whether a gap is internal or external before recourse is made to Article 7(2)'s gap-filling mechanism.[13] Both cases involved disputes stemming from international sales contracts in which the sellers brought suit against the buyers for failure to make payment.[14] The buyers defended themselves and counterclaimed on the grounds that the goods received did not conform with the contractual requirements.[15] In support of their claims, the buyers presented reports from technical experts whom they had contracted attesting to the defective nature of the goods.[16]

In both cases, the court first correctly determined that the CISG was the law applicable to the dispute. Then, when deciding the issue of whether the expert's report regarding conformity of the goods was to be admitted, the court -- without performing any analysis as to the law applicable to that matter -- applied the CISG. After determining that there was no specific provision in the CISG governing the matter, the court then invoked Article 7(2) to [page 994] determine the required means by which the party claiming non-conformity must prove its claim.[17] The court then made, without analysis, the conclusory statement that there was no general principle of the CISG on the issue and applied Argentine law as the last resort under Article 7(2).[18] Argentine law requires that a claim of non-conformity of goods be proven exclusively via "expert arbitration" (pericia arbitral).[19] The court therefore dismissed the defenses of non-conformity because the parties had not followed this prescribed procedure for proving their claims.[20]

This Note does not claim that the Argentine court necessarily erred in applying the Argentine requirement for proving non-conformity of goods, but rather that the court erred in how it arrived at its decision that the Argentine requirement of "expert arbitration" applied to the exclusion of any other evidence of non-conformity. This Note argues that in the two cases discussed, and in other cases where similar issues are raised, a tribunal confronted with a gap in the Convention should make an explicit analysis of whether the matter that is the subject of the gap is one governed by the CISG. In circumstances such as those presented by the two Argentine cases, this Note recommends that the tribunal apply a substance-procedure analysis and apply Article 7(2)'s gap-filling mechanism to substantive matters and the lex fori to procedural matters.

A substance-procedure analysis in the context of the CISG, however, is a complicated matter. Although it is generally accepted that procedural matters fall outside of the ambit of the CISG, a bright line cannot be drawn.[21] Some matters which may be labeled as "procedural" by the domestic law could in fact be governed by a provision of the CISG.[22] Therefore, it is important to not perform a substance-procedure test until after it has been determined that no provision of the CISG directly governs the matter. It is also important that a substance-procedure test be performed autonomously -- that is, a tribunal should not merely accept the forum's determination of whether a matter is substantive or procedural. Instead, it should perform its own analysis uninfluenced by the label affixed by the forum. [page 995]

Part I of this Note will provide a brief introduction to the history and purpose of the CISG. Part II will explore the role of Article 7 in achieving the CISG's objective of furthering uniformity in international sales contract law and the proper scope of Article 7' s application and will raise the problem of determining whether a gap is internal or external. Part III will discuss the substance-procedure dichotomy and describe two substance-procedure tests that can be used to determine whether a gap is internal or external. Part IV will discuss two recent decisions from the Commercial Court of Appeals of the City of Buenos Aires where the courts, deciding cases governed by the CISG, applied the Article 7 gap-filling analysis to a matter without first considering whether the gap was internal or external. Part IV will then argue that the courts should have first made an explicit determination as to whether the gap was internal and external and will demonstrate how a substance-procedural analysis could have been helpful to this end.

I. BACKGROUND AND OBJECTIVE OF THE CISG

The CISG represents an important achievement in a long movement to create a uniform law on international sales.[23] The idea was to "overcome the nationality of [commercial] law" that had resulted from the emergence of the European nation-states and their enactment of national codes.[24] Prior to the enactment of these national codes, international sales law in continental Europe was governed by the lex mercatoria,[25] a practical body of customary law based on usages created by the merchants and commercial courts in order to deal with commercial claims.[26] The CISG is part of the movement to recreate a commercial law that transcends national boundaries.[27] It was elaborated by a working group of the United Nations Commission on International Trade Law (UNCITRAL), and [page 996] adopted on April 11, 1980.[28] Currently, sixty-seven states are parties to the Convention.[29]

The CISG is divided into four parts. Part I delineates the sphere of application of the Convention and its general provisions. Part II establishes rules for the formation of a contract. Part III contains the substantive rules governing the rights and duties of the parties as well as available remedies for the contract. "Part IV contains the final public international law provisions" of the Convention and "Article 92(1) permits a Contracting State to implement the Convention without Part II or Part III."[30]

Part I of the CISG is most relevant to this Note. Part I contains Articles 1 through 13. Articles I through 6 establish the Convention's sphere of application. Article 1 provides that the CISG will only be applied when the parties' places of business are in different states and either those states are Member States or "the rules of private international law lead to the application of the law of a Contracting State."[31] Articles 2 through 6 provide exclusions from the Convention's application. Articles 2, 3, and 5 exclude contracts for the sale of certain goods,[32] certain contracts involving mixed sales and service obligations,[33] and liability for "death or personal injury caused by the goods," respectively.[34]

Article 4 provides the basic definition of the scope of the CISG's subject matter.[35] It states that the "Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such contract."[36] Article 4 therefore makes clear that "the CISG does not govern all the legal questions which may arise in connection with an international sales contract."[37] Rather, the CISG "merely governs the formation of the contract of sale -- and in so doing only lays down rules for 'objective agreement' -- and the rights and obligations of the parties arising [page 997] from such a contract."[38] According to Professors Schlechtriem and Schwenzer, Article 4's statement of the limitation of the Convention's application should be interpreted carefully:

The phrase "governs only" (formation, rights, and obligations) is too narrow and should be read as "governs without doubt," for the Convention also governs interpretation of statements, conduct, and contracts (Article 8), the applicability of usage and customs (Article 9), (freedom of) form (Article 11 ...), termination or modification of contracts by agreement (Article 29(1)), interpretation of the Convention and gap-filling ...[39]

Articles 7 through 13 set forth the Convention's general provisions. Articles 7, 8, and 11 are relevant for our purposes. Article 7, which is considered in detail below,[40] provides interpretive instruction and a gap-filling mechanism.[41] Article 8 governs how the statements and conduct of a party to a contract are interpreted: "It excludes recourse to domestic rules of interpretation"[42] and requires that a party's statements and conduct are to be interpreted according to that party's intent "where the other party knew or could not have been unaware of what that intent was."[43] Article 8 also requires that, in determining the intent of the party, "due consideration is to be given to all relevant circumstances of the case including the negotiations. ..."[44] Article 8 has been interpreted as requiring courts sitting in jurisdictions that apply the parol evidence rule to set that rule aside and admit evidence of preliminary negotiations and contemporaneous statements that would not normally be allowed to enter.[45] [page 998]

Article 11 provides that, "[a] contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses."[46] This article has been interpreted as requiring that courts sitting in jurisdictions where the statute of frauds is enforced must set that rule aside and recognize an unwritten sales contract as valid when it would not ordinarily do so under the domestic law.[47]

II. ARTICLE 7 AND THE MEANING OF "GOVERNED BY"

Article 7 is a key provision for advancement of the objective of uniformity of international sales law. Its objective is to combat the natural tendency of courts to decide matters in accord with the law with which they are most familiar -- that is, the law of their forum. Two situations provide tribunals with the opportunity to give in to the temptation to be unduly influenced by the law of their forum: (1) interpreting provisions of the CISG; and (2) filling gaps in the CISG. Article 7(1) addresses the former while Article 7(2) the latter.

A. Article 7(1): Autonomy and Flexibility

The creation of a single law code does not in and of itself create uniform law. In addition to the creation of a unitary source of law, a project to create truly uniform law must ensure that the law's provisions are interpreted uniformly. If Article 23 of the CISG is interpreted one way in Belgium and another in Burundi, there is no uniform law. Article 7(1) facilitates the uniform application of the Convention by directing tribunals to interpret the Convention's provisions autonomously, thereby aiding the creation of a CISG -- specific jurisprudence. However, Article 7(1) also reminds tribunals of the Convention's political reality. [page 999]

Article 7(1) states that "[i]n the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade."[48] These few words carry a large amount of meaning. A key purpose for instructing tribunals to give regard to the "international character" and the "need to promote uniformity" in the application of the CISG is to require that the CISG be interpreted autonomously.[49] To interpret the CISG autonomously means to do so "free from preconceptions of domestic laws."[50] Article 7(1) is an instruction to a tribunal to "transcend its domestic perspective and become a different court that is no longer influenced by the law of its own nation state.[51]

In addition to the requirement that the Convention's provisions be interpreted autonomously, Article 7(1) directs courts to interpret the CISG "with great caution" by referencing the "international nature" of the CISG.[52] The CISG is a result of negotiations among a number of states coming from different legal systems that made their proposals and entered into compromises "in order to achieve what they regarded as the minimum required by their particular interests."[53]

The drafters of the CISG were faced with competing objectives. First, they needed to draft a document that achieved their primary objective -- harmonization of international sales law. However, in order to achieve this goal, the Convention had to be adopted by a large number of countries. Therefore, the drafters had to create a document with a considerable amount of "flexibility" so as to make it adaptable into national jurisdictions.[54] The goal of flexibility requires that certain issues, particularly policy-related issues, be left open.[55] Such flexibility facilitates adoption because countries perceive it ''as a tool which enables them to preserve their [page 1000] sovereignty and to protect their own domestic legal systems."[56] It has been suggested that recognition of the flexibility in the CISG is important so that "the substantive purposes and the political underpinnings of the CISG" are not undermined.[57] That is, courts should not attempt to pursue uniformity to the extreme lest the betray the compromises entered into by the Member States.[58] Certain policy matters are explicitly carved out from the Convention's scope. For example, Article 4 states that the Convention is concerned with neither "the validity of the contract or of any of its provisions or of any usages"[59] nor "the effect which the contract may have on the property in the goods sold."[60] Other provisions of the Convention are ambiguous, and it has been suggested that this ambiguity was left in because of inability or unwillingness on the part of the drafters to resolve it.[61]

It has been argued the political realities of the CISG also require a standard of predictability -- a requirement of consideration of the likelihood that the Member States would have anticipated that the matter considered was one which would fall within the scope of the CISG.[62] The argument is that if it appears that a question at issue was not one that the contracting parties would have contemplated would fall under the purview of the CISG, then the CISG should not be applied to the matter.[63] [page 1001]

B. Article 7(2): The Gap Filler

The second sentence of Article 7 furthers the objective of uniformity by providing a gap-filling mechanism. Article 7(2) requires that "[q]uestions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based. ..."[64] In the absence of such general principles, Article 7(2) directs courts to apply "the law applicable by virtue of the rules of private international law."[65] It is "[o]nly as a last resort" that a court may settle the matter in accord with the "domestic law indicated by the conflict of law rules of the forum."[66]

Article 7(2) does not, however, apply to all gaps but only to those concerning matters "governed by" the Convention.[67] It is only to fill these internal gaps, or lacunae intra legem, that courts are to take recourse to the Convention's general principles. These internal gaps are to be contrasted with external gaps, or lacunae praeter legem, which consist of matters that are not within the purview of the [page 1002] CISG.[68] As regards external gaps, because the CISG does not apply to these matters, they are directly settled via recourse to domestic law.[69]

Determining whether a gap is internal or external is therefore crucial to a court considering a case governed by the CISG. The answer to this question will govern the analysis a court undertakes and the authorities it relies upon in filling that gap. Despite the importance of the question, the Convention gives little guidance on distinguishing between these two categories of gaps.[70] As a result, it is sometimes difficult to determine "whether a given issue not expressly addressed by the CISG actually falls under its scope."[71] Disputes have arisen as to whether certain matters are within the scope of the Convention or not.[72] On other occasions, courts have decided that matters either are or are not governed by the CISG without first performing a proper analysis. This Note argues that courts should, when confronted with a gap in the CISG, specifically consider whether that gap is internal or external before applying either domestic law or the gap-filling provisions of Article 7(2) .

C. Identifying Matters "Governed by" the CISG

Article 7(2) applies only to matters governed by the Convention but not expressly settled therein. Therefore, recourse is to be had to the general principles only when a court is faced with an internal gap. Recourse to Article 7(2)'s gap-filling mechanism is not to be had in dealing with external gaps. [page 1003]

The Convention provides limited guidance in determining whether a gap is external or internal. Article 4 establishes the general scope of the subject matter covered by the Convention. It states, "[t]his Convention governs only the formation of the contract of sale and the rights and obligations of the seller and buyer arising from such a contract."[73] Limitations are imposed on the Convention's reach by Articles 2, 3, and 5, which provide that the Convention does not apply to contracts for the sale of certain kinds of goods, contracts for certain mixed supply and labor contracts, and tort liability, respectively.[74] However, as previously noted,[75] although Article 4 appears to provide only a very limited scope of application to the CISG, it in fact ventures into areas beyond the mere formation of a contract and the rights and duties of parties thereto.[76] Because there are no clear borders around the subject matter of the CISG, it is difficult at times to determine whether a particular matter falls within or without its scope.

In some circumstances, a substance-procedure analysis may be helpful in determining whether a matter is one governed by the CISG. The CISG has been described as substantive law,[77] and courts and scholars have used a substance-procedure analysis to determine whether a gap is internal or external. For example, U.S. courts have determined that the parol evidence rule is not applicable under the CISG by first determining that it is substantive and then finding that it is precluded by a conflicting provision of the CISG.[78]

III. USING THE SUBSTANCE-PROCEDUREDICHOTOMY TO DETERMINE "GOVERNED BY"

The CISG has been described as "substantive" as opposed to "procedural" law.[79] Therefore, in determining whether a matter is one "governed by" the CISG, one possibility is to determine whether it is substantive or procedural. If a matter is deemed to be procedural rather than substantive, one can conclude that the matter is not one [page 1004] "governed by" the Convention. "When a court labels a rule 'procedural' for choice-of-law purposes, the court applies local law without further analysis...." [80] Making the substance-procedure distinction, however, is easier said than done.[81] This Part will look at how substantive and procedural law are used to decide different matters arising in the same case and will discuss two different tests for identifying procedural matters. It will then demonstrate how a substance-procedure analysis should be applied to CISG cases.

A. The Substance-Procedure Dichotomy and Tests for Identifying Procedural Matters

A court may determine that another forum's substantive law should apply, but the court's own procedural rules will generally still govern the trial. For example, if a case is in U.S. District Court on diversity jurisdiction, the court will employ the substantive law that would be used to decide the case if it were heard in state court, but the case will still be governed by the Federal Rules of Civil Procedure (F.R.C.P.).[82] Thus, discovery proceedings, for example, will be conducted in conformity with the F.R.C.P. In a case governed by the CISG the same result occurs, except that the judge will replace substantive local law with the provisions of the CISG rather than with those of a foreign jurisdiction. However, the judge will continue to use the procedural rules of the jurisdiction in which he sits in disposing of the case.[83]

This Note will explore the use of two tests that have been proposed by academics and used by courts to determine whether a matter is substantive or procedural in order to determine whether a gap is internal or external to the CISG. In what immediately follows, the functioning of these tests is discussed. The first is a two-pronged substance-procedure test that can be applied to a range of matters. The second test will be called the "rule of evidence" test. In a nutshell, it states that if it can be determined that a rule is a rule of evidence, then it is procedural and the forum's rule should be [page 1005] applied, Although this test would be very useful for cases such as those faced by the Argentine courts, its general usefulness is more limited than the two-pronged test.

1. The Two-Pronged Substance-Procedure Test

The two-pronged substance-procedure test queries: (1) the "difficulty of finding and applying the foreign rule"; and (2) "the likelihood that the forum' s rule will change the outcome in a manner that induces forum shopping."[84] "The more inconvenient it would be to find and apply a foreign rule and the less likely it is that the rule will affect the result, the greater the justification for a 'procedural' label."[85] Affixing the procedural label would not be appropriate, however, if the foreign rule is not particularly difficult to identify and apply and there is a probability that the rule may affect the outcome.[86]

The Restatement (Second) of Conflict of Laws states that "[t]he local law of the forum determines the admissibility of evidence, ..."[87] The stated rationale for the rule is trial speed -- requiring courts to employ alternative rules for the admission of evidence would cause significant trial delay.[88] The Restatement considers the rules of evidence to be procedural.[89] According to the Restatement, the forum's rules of procedure should be applied because the forum [page 1006] has the greatest interest in the functioning of its judicial machinery, and parties entering into commercial transaction do not anticipate that specific procedural rules will be used in the event of litigation, so they have no expectations on the matter that would be unfairly disappointed if one set of procedural rules is applied rather than another.[90]

2. The Rule of Evidence Substance-Procedure Test

The "rule of evidence" test, however, must consist of something more than merely looking to the label affixed to the rule in the forum.[91] A court should perform its own analysis to determine whether a matter is one of substance or of procedure. Professor Farnsworth provided a useful analysis of the nature of a rule of evidence in his dissection of the parol evidence rule.

According to Professor Farnsworth, a rule of evidence, which is a procedural rule, is one that bars "some methods of proof to show a fact but permit[s] that fact to be shown in a different way."[92] The parol evidence rule operates to "bar[] the showing of the fact itself -- the fact that the terms of the agreement are other than those in the writing,"[93] rather than prohibiting a disfavored means of proving that fact. "In sum, the true basis of the parol evidence rule is something other than a desire to keep from the jury an inherently unreliable type of evidence."[94] Although the parol evidence rule is exclusionary in that it renders certain types of evidence inadmissible, it is not a rule of evidence.[95] Courts and scholars have repeatedly found the parol evidence rule to be substantive.[96] [page 1007]

Both the two-pronged and the rule of evidence substance-procedure tests can be useful in determining whether a matter is "governed by" the CISG and therefore whether a given gap is internal or external to the Convention. The two-pronged test is of more general application. It can be used in a more diverse set of circumstances to determine whether a legal matter is substantive or procedural. The rule of evidence test is useful in a smaller set of situations. Its applicability will generally be appropriate when, as in the cases before the Argentine court, the legal rule in question permits or bars the admission of certain evidence. In cases where the rule of evidence test is appropriate, the two-pronged test can also be used in order to double check the analysis; however, the reverse is not true.

The purpose for using either of these tests in a case governed by the CISG is to determine whether a matter is governed by the Convention. Based on the premise that the CISG only governs substantive matters, a court that determines that a matter is procedural should be confident that the local rule should be applied to it. However, affixing a label of either substance or procedure to a legal rule is trickier than normal in the context of the CISG. The following caveats -- namely that any substance-procedure analysis must be performed autonomously and that such analysis must only be performed after the court has assured itself that no CISG provision directly governs the matter -- must be kept in mind when doing so. The need for autonomy in the substance-procedure analysis is discussed next, while the requirement that the substance-procedure analysis not be performed unless there is no governing CISG provision is discussed in the analysis of the Eleventh Circuit's MCC- Marble decision.[97]

B. Necessity of Autonomy in Substance-Procedure Analysis

Although it has been largely settled that the CISG deals only with substantive matters and that procedural matters are to be handled in accordance with the lex fori, one should use caution in employing this distinction. Certain CISG provisions may receive a "procedural" label in some jurisdictions. For this reason, it is key that the substance-procedure analysis be performed autonomously, [page 1008] without reference to the labels that would be affixed under the domestic legal system in question.

Article 11, for example, requires that a party be permitted to prove the existence of a contract "by any means."[98] The result is that countries where the statute of frauds provides that certain contracts can only be proven by means of a writing, the domestic rule is displaced by Article 11 and that contract can be proven by a means other than a writing. This is the case even if the jurisdiction has labeled its statute of frauds as procedural.[99] It is therefore important that courts undertake an autonomous analysis of whether a matter is substantive or procedural rather than merely falling back on the labels used in the forum.

C. Parol Evidence Rule as Example of the Substance-Procedure Analysis: The MCC-Marble Decision as Example and Warning

In the United States, courts have used a substance-procedure analysis to determine whether the parol evidence rule [100] can be invoked in a case governed by the CISG. In those cases, one party seeks to introduce evidence of a prior agreement or a contemporaneous oral agreement on the grounds that the CISG requires courts to consider such evidence, while the opposing party claims that the parol evidence rule bars the admission of such evidence. It is now settled that the parol evidence rule is substantive, rather than procedural, and therefore is not applicable in cases governed by the CISG.[101] The analysis used to determine the applicability of the parol evidence rule in cases governed by the CISG may be useful in determining whether the Argentine requirement that proof of non-conformity be made by expert arbitrators is procedural or substantive, and therefore an internal or external gap.

In deciding whether the parol evidence rule can be invoked in a case governed by the CISG, the Eleventh Circuit in MCC-Marble [page 1009] Ceramic Center, Inc. v. Ceramica Nuova D'Agostino used the substance-procedure dichotomy.[102] Determining the rule to be substantive and in conflict with a specific provision of the CISG, the court declined to apply it.[103]

MCC-Marble concerned a contract for the sale of tiles by an Italian corporation, D'Agostino, to an American corporation, MCC.[104] In October of 1990, MCC's representative met D'Agostino's representative at a trade fair in Italy.[105] The MCC representative neither spoke nor read Italian and the D'Agostino representative did not speak English.[106] Through an interpreter, they arrived at the crucial terms (price, quality, quantity, delivery, and payment) for the purchase of a number of shipments of tiles by MCC.[107] The parties then recorded the terms they had negotiated on the front of one of D'Agostino's pre-printed order forms, which the MCC representative signed.[108] On the front of the signed order form was the pre-printed condition that "the buyer hereby states that he is aware of the sales conditions stated on the reverse and that he expressly approves of them. ..."[109] Condition 6(b) printed on the back of the form stated that, "default or delay in payment within the time agreed upon gives D'Agostino the right to ... suspend or cancel the contract itself. ..."[110]

After performance had begun, MCC sued D'Agostino claiming a breach of the contract when D'Agostino failed to satisfy multiple orders. In response D'Agostino claimed, inter alia, that MCC had defaulted on payment in previous shipments, and, therefore, under condition 6(b) of the contract, D'Agostino was not obligated to fill MCC's orders.[111] D'Agostino counterclaimed for damages. The district court, relying in part on the printed provisions in D'Agostino's standard forms, entered summary judgment in favor of D'Agostino, and MCC appealed.[112] [page 1010]

MCC, relying upon Article 8 of the CISG, claimed that it should not have been bound by the pre-printed contract terms because it was not the intent of the parties that they be binding.[113] MCC claimed that the district court, in finding MCC bound by the pre-printed contract terms, had improperly ignored evidence regarding the parties' subjective intent at the time of memorializing the terms of the contract and had erred by applying the parol evidence rule.[114] MCC had submitted three affidavits discussing the preliminary negotiations and contending "that the parties subjectively intended not to be bound by the terms on the reverse of the pre-printed form. ..."[115] The district court had refused to consider the affidavits on the grounds that they were barred by the parol evidence rule because they were not introduced to assist in the interpretation of the contractual terms but rather to exclude those terms.[116]

The key issue before the Eleventh Circuit was whether it was appropriate for the district court to exclude MCC's affidavits on the basis of the parol evidence rule. The court began its analysis by observing that "the parol evidence rule, contrary to its title, is a substantive rule of law, not a rule of evidence."[117] The court had reached this conclusion by relying on Professor Farnsworth's analysis of the parol evidence rule discussed above.[118]

Finding that the parol evidence rule was not procedural, the MCC-Marble court determined that it was not to be applied "regardless of the source of the substantive rule of decision."[119] The court illustrated this point with an example of the role of the Federal [page 1011] Rules of Evidence in a case governed by the CISG:

The CISG provides that a contract for the sale of goods need not be in writing and that the parties may prove the contract "by any means, including witnesses." CISG, art. 11. Nevertheless, a party seeking to prove a contract in such a manner in federal court could not do so in a way that violated in [sic] the rule against hearsay.[120]

Based on its finding that the parol evidence rule was a substantive rule of law, the MCC court determined that, because it conflicted with a provision of the CISG, the parol evidence rule could not be applied.[121] The court determined that Article 8(3)'s direction to courts to give "due consideration ... to all relevant circumstances of the case including [ ] negotiations ..."[122] was a "clear instruction to admit and consider parol evidence regarding the negotiations to the extent they reveal the parties' subjective intent."[123] For a court to apply the parol evidence rule in a case governed by the CISG would be to "upset the parties' reliance on the Convention by substituting familiar principles of domestic law when the Convention requires a different result."[124] The court noted that "[o]ne of the primary factors motivating the ... adoption of the CISG was to provide parties to international contracts for the sale of goods with some degree of certainty as to the principles of law that would govern potential disputes ...."[125] [page 1012]

1. Error of the MCC-Marble Court

Although MCC-Marble is a good example of a court using a substance-procedure test in order to determine whether a gap in the CISG is internal or external, the court erred by performing a substance-procedure test in the first place. A substance-procedure analysis should only be employed after the court has determined that there is no directly governing CISG provision. Employing a substance-procedure analysis before making this preliminary analysis creates the possibility that a CISG provision will be displaced by a local rule to which has been affixed the "procedural" label.

The MCC-Marble court had determined that the CISG was applicable to the case. It subsequently determined that Article 8(3) of the CISG "is a clear instruction to admit and consider parol evidence regarding the negotiations. ..."[126] The analysis should have ended there, without reference to how the matter may have been handled under the local rule. The determination of whether the local rule was substantive or procedural would have no effect on the clear applicability of Article 8(3). A court's use of a substance-procedure analysis of the parol evidence rule after determining that Article 8(3) governed the matter could open the door to the improper application of the CISG. The underlying theory of the court's substance-procedure analysis is that if it were to determine that a domestic rule is procedural, it should be applied regardless of whether a CISG provision governs the matter. This is incorrect. CISG provisions are applicable regardless of whether the courts of the jurisdiction apply a procedural or substantive label to them. Therefore, it is key that courts refrain from using a substance-procedure analysis until after they are certain that the CISG does not directly govern the matter. If a Convention provision does control the matter, a substance-procedure analysis is superfluous because it will have no effect on the applicability of that Convention provision.

IV. RULINGS OF THE ARGENTINE COMMERCIAL COURT OF APPEALS AND THE REQUIREMENT OF "EXPERT ARBITRATION"

Two recent decisions by the Appellate Commercial Court of Buenos Aires, Argentina, highlight the importance of first analyzing whether a gap concerns a matter governed by the Convention before applying Article 7(2)'s gap-filling mechanism. Both cases were governed by the CISG. In both cases, the question of what law [page 1013] should be used to determine whether certain evidence was admissible arose. The CISG did not provide a provision that directly governed the matter, thereby creating a legal gap. In both cases, the court failed to consider whether the matter was one governed by the CISG. Instead, the court applied Article 7(2)'s gap-filling mechanism and applied the local law under that Article's last resort provision.

This Note argues that the court should have first queried whether the gap concerned a matter governed by the Convention before taking recourse to Article 7(2). Had the court used a substance-procedure analysis in making this determination, it likely would have concluded that the matter was one of procedure and therefore not governed by the CISG. As a result, it would have applied the local rule to the matter without recourse to the gap-filling mechanism of Article 7(2).

A. Mayer v. Onda Hofferle GmbH & C.

The case of Mayer v. Onda Hofferle GmbH & C. arose from a contract between an Argentine supplier and a German purchaser of charcoal.[127] In 1988, the parties agreed to the sales contract, .which contained a Free on Board (FOB) Buenos Aires clause.[128] The Argentine seller brought suit against the buyer for failure to pay for the goods.[129] The German buyer counterclaimed, seeking damages for breach of contract on the theory that the goods did not conform to [page 1014] the contractual requirements.[130] Specifically, the buyer claimed that the charcoal had excessive moisture and was not suitable for its intended purpose[131] The trial court found for the seller, and the buyer appealed.[132]

The appellate court found that the CISG was applicable in the case.[133] The court first determined that the application of the Convention was not appropriate under Article l(l)(a), which provides that the CISG is applicable if "both States are Contracting States,"[134] because Germany did not become a Contracting State to the Convention until 1994.[135] The court then analyzed whether the Convention was applicable under Article l(l)(b), which provides that the CISG applies to contracts of sale of goods between parties whose places of business are in different States "when the rules of private international law lead to the application of the law of the Contracting State."[136]

The court determined that Argentine law was applicable to the case and, consequently, the CISG was to be applied.[137] Under Argentine private international law, the applicable law is that of the place of performance.[138] In contracts for the sale of goods, where typically there are two "performances" -- the delivery of the goods and the payment therefore -- the performance which determines the applicable law is that which is most characteristic of the contract -- meaning, the delivery of the goods.[139] Because the contract was FOB, Buenos Aires, the court determined that the "most [page 1015] characteristic" performance occurred in Buenos Aires, where the merchandise was placed on board the ship.[140] Accordingly, the court found Argentine law applicable.[141] Argentina became a Contracting State to the CISG on January 1, 1988, the year in which the parties formed their contract, and, as a result, the CISG was applicable to the case.[142]

After determining that the CISG was applicable, the court analyzed its scope of application.[143] The court stated that the Convention governed the obligations of the seller with respect to the delivery of the merchandise and the rights of the seller in situations in which the quantity, quality and type do not correspond to that stipulated in the contract. However, the court then determined that the CISG:

"[D]oes not contain any rule -- or general principle -- concerning the procedure to follow to determine the quality of the goods when impugned by the buyer. When faced with such an omission, one should refer to the solution provided in Article 7(2), which establishes that questions related to matters governed by the Convention that are not expressly resolved therein nor in the general principles on which it is based, will be resolved in conformity with the law applicable under the norms of international private law. That is to say, in such cases, the Convention calls on the national systems of private international law."[144]

In so finding, the court determined, though not explicitly and perhaps not consciously, that the matter of "the procedure to follow to determine the quality of goods" claimed to be non-conforming is one that is governed by the CISG. Flowing from the determination [page 1016] that the matter was governed by the CISG, it appears that the court looked first to the CISG for a rule governing the manner of proving non-conformity, and, having found none, turned then to the gap-filling process of Article 7(2). After an apparently perfunctory search for a "general principle" of the Convention, the court applied Argentine law under the "last resort" option of Article 7(2), which provides for gap-filling with a rule "in conformity with the law applicable by virtue of the rules of private internationallaw."[145] As the court had already found in its analysis of the applicability of the CISG that Argentine law was applicable to. the case, the court determined that the manner of proving the purported defects of the goods in question must be determined by the Argentine Commercial Code.[146]

In support of its counterclaim, the buyer had presented a report of an analysis of the charcoal performed by a German company, apparently performed on behalf of the buyer.[147] However, the court refused to consider this evidence because it did not comply with the requirements for proving non-conformity of goods under the Argentine Commercial Code.[148] The court found that Article 476 of the Commercial Code [149] mandates that one challenging the quality of goods received present that issue to expert arbitrators (peritos arbitradores).[150] Finding that the evidence presented by the buyer could not replace the process of expert arbitration, the court determined that this evidence was inadmissible as proof of the quality of the goods.[151] The court then found for the seller, ordering the [page 1017] buyer to pay the amount outstanding for the charcoal plus interest and costs.[152]

B. Cervecería y Maltería Paysandú v. Cercevería Argentina S.A.

The Appellate Commercial Court of Buenos Aires confronted a similar legal issue in Cerceceria y Maltería Paysandú S.A. v. Cerceceria Argentina S.A.[153] In fact, the same panel of judges that decided Mayer heard Paysandú, and both opinions were written by the same judge.[154] Unsurprisingly, the same legal reasoning was employed and the same conclusions reached. As a result, a party's non-conformity claim was dismissed because he failed to provide proof in conformity with the Argentine Commercial Code.

In Paysandú, the Uruguayan seller delivered a shipment of malted barley to the plant of the buyer located in Argentina.[155] The seller sued for failure to make payment, and the buyer responded that the barley was of inferior quality.[156] The trial court, which apparently did not apply the CISG, found for the seller, and the buyer appealed.[157] [[page 1018]

The appellate court found the CISG applicable under Article 1(1)(b),[158] finding Argentine private international law applicable because the place of the "most characteristic" performance was Argentina.[159] Using language almost identical to that of Mayer, the court perfunctorily found that the CISG did not contain a rule or general principle to determine the procedure for ascertaining the quality of goods when called into question by the buyer.[160] The court then determined that, under the "last resort" provision of Article 7(2), it was appropriate to apply the Argentine Commercial Code to resolve the matter. [161]

The buyer had presented as evidence of the non-conformity of the goods the results of an analysis performed by a German laboratory.[162] However, as in Mayer, the court held that this evidence was inadmissible because, under Argentine law, the only means of proving non-conformity of goods in a commercial sales contract was through the judgment of expert arbitrators.[163] The court held that, because the defendant's claim of non-conformity was not supported by evidence, judgment for the plaintiff was appropriate.[164]

The decisions in Mayer and Paysandú suffer from the same flaws. First, both apply the gap-filling mechanism of Article 7(2) to the issue of the means of proving non-conformity without first determining whether that issue is one governed by the CISG. In both decisions the court properly concludes that the CISG governs the dispute. However, it appears that after making this initial [page 1019] determination, the court assumes that all matters that arise in the case will be governed by the CISG. Therefore, when the court finds that the means of proving non-conformity of goods is a material issue, and that the CISG does not deal explicitly with the question, it immediately applies the gap-filling mechanism of Article 7(2). It would have been more appropriate for the court first to determine whether the issue of the means of proving non-conformity is one governed by the CISG in order to determine whether recourse to the Convention's gap-filling mechanisms was appropriate.

Second, in both cases, the court's Article 7(2) analysis differed substantially from what the drafters of the Convention intended courts to perform. The court did not perform a true attempt to find and employ a general principle of the Convention which could increase the uniform application of the Convention. Instead, the court merely made the perfunctory statement that the CISG did not contain any general principle concerning the procedure for determining the quality of goods when the buyer claims they are non-conforming. The court did not look to any of the various means that courts have used to discover general principles, such as analogical reasoning, reference to foreign court decisions,[165] or another means to recognize the CISG's international character and its objective of promoting uniformity in its application.[166]

Based on the token search for general principles in the Argentine court's decisions in Mayer and Paysandú, it appears that the court never intended to impose a requirement for the proof of non-conformity other than that mandated by Article 476 of the Commercial Code, which requires that non-conformity be determined through the process of expert arbitration. Instead, it appears that the court thought that, in order to employ Article 476, it first was required to pass through the hoops of CISG Article 7(2). The court therefore stated in passing that there was no general principle to be found in order to arrive at Article 7(2)'s "last resort" provision which allows for gap-filling in conformity with domestic law and provided the needed cover for applying Article 476. It may have been appropriate for the court to employ the Argentine requirement for proving non-conformity; however, if this were appropriate, the proper way to have done so likely would have been by finding that this issue was not one to which the Convention applied, and therefore [page 1020] recourse to domestic law was appropriate.[167] Courts should not seek to find ways to circumvent the provisions of Article 7(2); this practice would only serve to frustrate the Convention's goal of establishing uniform commercial law. However, the Convention's aims are not furthered when its provisions are misapplied.

C. "Expert Arbitrators"

The goal of this Note is to propose an alternative to the analysis performed by the court in Mayer and Paysandú. However, in order to analyze these two decisions and the appropriateness of recourse to Argentine commercial law, it is important to understand the role of the "official expert" in Argentine law and the legal nature and effect of the decisions rendered by "expert arbitrators" in the context of Article 476 of the Commercial Code.

The "official expert" occupies a position without counterpart in the U.S. legal system. An "official expert" is a person with specialized knowledge in some science, art, industry, or technical activity which the judge lacks, or at least which the judge is not required to have.[168] His role is to assist the judge in the decision- making process,[169] which he does by investigating the parties' factual claims in his area of expertise and submitting his judgment of those factual claims to the judge.[170] The judge then uses the official expert's decision on those technical factual claims in rendering his [page 1021] final decision on the case.[171] The official expert can be seen as a "collaborator" with the judge whose decision is an "element in the elaboration" of the logic of the civil judgment.[172] The official expert is not associated with either of the parties to the litigation.[173] As an aide in the judicial process, he must be independent and impartial.[174]

The procedure of expert arbitration is provided for in the Argentine Civil and Commercial Code.[175] The expert arbitration process is a combination of the normal investigation and decision-making process of the official expert and an arbitration procedure.[176] The main difference between the decision of an official expert and the judgment of an expert arbitrator is the weight given them.[177] The decision of an official expert is a means of proof.[178] The judge will determine the probatory weight of the official expert's decision, taking into account the competence of the official expert, the scientific and technical basis of the decision, the opinions of the parties' own experts, and the decision' s conformity to rational analysis.[179] The judge is given wide latitude to rule on the case and is not obligated to render judgment in strict conformity with the decision of the official expert.[180] In contrast, in a case in which factual determinations are to be submitted to expert arbitration, extrajudicial investigations, made without control of the opposing party and without judicial intervention, have no probatory value.[181]

The judgment of an expert arbitrator has a binding effect on the judge [page 1022] of the case.[182] He is required to issue judgment in accordance with the expert arbitrator's decision.[183] In this regard, the expert arbitrator's decision can be considered res judicata with respect to the conformity dispute.[184]

Although the submission of a dispute to arbitration is normally the result of a voluntary agreement by the parties, here the parties find arbitration imposed upon them by the legislature.[185] The effect of a requirement that a technical issue be submitted to expert arbitration is to shift jurisdiction on the matter of the technical dispute from the judge to the expert arbitrator, leaving the judge to apply the law to the arbitrator's factual conclusions.[186]

This obligatory recourse to expert arbitration provides benefits to the system of adjudication of commercial disputes.[187] It allows the factual disputes to be clarified and adjudicated in an expedited form by experts in the field.[188] In addition, it relieves judges from passing judgment on technical issues outside their field of expertise.

Article 476 of the Argentine Commercial Code states that "the ... defects of the goods sold, as well as a difference in quality, should always be determined by expert arbitrators in the absence of a stipulation to the contrary."[189] Article 476 thereby excludes the determination of the factual dispute of non-conformity from the ambit of the judge and gives full decision-making power over these issues of fact to the expert arbitrator.[190] Any factual dispute falling under Article 476 must be submitted to expert arbitration. The arbitrator's decision is then submitted to the judge, who bases his judgment on the factual decision of the arbitrator, to which he is bound.[191]

The Argentine commercial courts have faced the situation in which the party claiming non-conformity does not proceed to expert arbitration several times.[192] Courts have repeatedly stated that, under Article 476, expert arbitration is the only means of proof of [page 1023] non-conformity.[193] When parties have presented courts with evidence of non-conformity that does not comply with the expert arbitration procedure, courts have refused to consider that evidence.[194] Normally, the claim of non-conformity is rejected if it is not supported by a judgment rendered in expert arbitration.

D. Suggestion of Proper Analysis to Have Been Taken by the Mayer and Paysandú Courts

The Mayer and Paysandú courts erred when they immediately applied the gap-filling mechanism of Article 7(2) in order to determine the appropriate means of proving non-conformity of goods. Article 7(2)'s gap-filling mechanism is to be applied only to matters "governed by" the CISG.[195] Both courts erred when they assumed that the question of means of proof of non-conformity was a matter governed by the CISG without making specific determinations that this was the case. As a result, Article 7(2) was misapplied to these situations.

In a case governed by the CISG, such as the Mayer and Paysandú cases, when a specific legal question is raised, the first step that a court should take is to query whether a provision of the CISG directly controls the matter in question. The Mayer and Paysandú courts correctly performed this step. If a provision of the CISG directly controls a question arising in a case governed by the CISG, that provision should be applied without further analysis. A [page 1024] substance-procedure analysis, or any other test to determine whether the CISG provision is appropriate, is out of place. Failure to adhere to this step may lead to the error committed by the Eleventh Circuit in MCC-Marble.[196]

If there is no CISG provision that directly controls the matter, the second step is to question whether the matter is one governed by the CISG -- that is, whether the gap presented is internal or external. The Argentine court erred in its analysis by skipping this step and assuming that the gap was internal. In determining whether a gap is internal or external, a substance-procedure test may be helpful. Finally, if the gap is determined to be external, then the local law should be applied. If the gap is internal, then recourse should be had to Article 7(2)'s gap-filling mechanism.[197]

Once the court in Mayer and Paysandú determined that there was no provision of the CISG that directly governed the question of appropriate means of proof of non-compliance of goods, it should have determined whether the gap was internal or external. In doing so, a substance-procedure test -- either the two-pronged test or the rule of evidence test, both discussed above -- would have been helpful to the courts in making this determination. It is likely that either of these tests would have led the court to determine that the matter was procedural and therefore the gap was external to the CISG.

1. Application of the Two-Pronged Substance-Procedure Test

Under the two-pronged substance-procedure test, a court will first determine "the difficulty of finding and applying the foreign rule."[198] The "foreign rule" in this context would be a CISG gap filler. The court would then consider "the likelihood that the forum' s rule will change the outcome in a manner that induces forum shopping."[199] If the Mayer and Paysandú courts were to have applied this analysis, it is likely that they would have concluded that, with respect to the matter of means of proving conformity of goods, there was no "foreign rule" -- that is, a CISG gap filler -- to apply. Such a conclusion would have obviated the second prong of the analysis and thereby resulted in a determination that the matter was procedural and application of Argentine law. [page 1025]

If the Mayer and Paysandú courts were to use the two-prong test, the first step would have been to determine "the difficulty of finding and applying the foreign rule."[200]

Here, the analysis would have been more complicated than in the traditional conflict of laws scenario in which the court is choosing between the laws of different sovereign states. In a CISG case, the "foreign rule" is not so easy to discover. It consists of a gap filler which is "in conformity with the general principles" [201] of the Convention. Therefore, finding the foreign rule requires a two-step process: first, finding an appropriate general principle, and, second, crafting a gap filler in conformity therewith.

The legal question facing the Mayer and Paysandú courts was what was the appropriate means of proving non-conformity of goods. It appears that the best possible sources for a general principle on this question would be Articles 8 and 11. From these, one could extrapolate that the CISG contains the general principle that evidence should always be liberally admitted. Article 8 requires that courts consider "all relevant circumstances of the case" in determining the parties' understanding of the terms of a contract.[202] Thus, Article 8 provides a liberal rule in the adjudication of contract disputes, requiring that evidence that would normally be blocked by the parol evidence rule be admitted.

Article 11 provides that contracts need hot be in writing to be enforceable.[203] Instead contracts are capable of being "proved by any means, including witnesses."[204] Article 11, therefore, further liberalizes restraints on the admission of evidence in contract disputes by disallowing the operation of the statute of frauds to prevent the admission of evidence that would otherwise be admitted.

In the Mayer and Paysandú cases, the parties seeking admission of the experts' reports could have argued, based on these two articles, that the CISG espouses the general principle that evidence in contract disputes should be liberally admitted. The parties would then argue that, because there is an applicable general principle, the matter was one governed by the CISG. If the matter were found to be governed by the CISG, recourse to Article 7(2) would be appropriate, and this general principle would be used as a basis for a specific gap filler in this case. Here, based on the general [page 1026] principle that evidence should be liberally admitted, the gap filler would be that in proving non-conformity of goods, courts should liberally admit evidence.

Query, however, whether the extrapolation of such a general principle from Articles 8 and 11 would be appropriate. It is important to consider the context of Articles 8 and 11. In both cases, the provisions address a situation where a few countries had adopted specific rules which acted to restrict the admissibility of certain evidence that would be admitted in most other countries. That is, the parol evidence rule and the statute of frauds, though well entrenched in many common law countries, do not exist and are likely not to be understood in civil law countries. Therefore, Articles 8 and 11 serve to erase this discrepancy by adopting into the CISG the civil law system' s admission of evidence that would otherwise be blocked by the common law's parol evidence rule or statute of frauds.

The purpose of Articles 8 and 11 is to deal with specific situations where countries have generally adopted one of two rules and those rules conflict. In those situations, the CISG adopts one of the two rules and thereby furthers its goal of uniform sales law. In context, it seems more appropriate to view Articles 8 and 11 as seeking to erase specific discrepancies in sales law rather than as statements of a broad general principle favoring the liberal admission of evidence in contracts disputes.

Alternatively, even if one were to determine that extracting a general principle in favor of the liberal admission of evidence from Articles 8 and 11 was proper, this situation may be a good example of what Professors Schlechtriem and Schwenzer meant when they wrote that if a general principle is too vague the matter should be regarded as not one "governed by" the Convention.[205] Tying this concept into the issue of foreseeability, one would have to ask whether Argentina would have been able to anticipate that its system for determining the conformity of goods would be superseded by the Convention.

An analogy can be drawn to the case confronted by the Seventh Circuit in Zapata Hermanos.[206] There, the court determined that it was unlikely that the United States would have been able to anticipate that a provision of the CISG would displace the American rule that each side pays its own legal fees.[207] Because it was [page 1027] unforeseeable that the United States would have anticipated that the American rule would be trumped by the CISG, the Seventh Circuit determined that the United States had not intended that it do so.[208] Based on this reasoning, the court held that the CISG in fact did not trump the American rule.[209]

The Mayer and Paysandú courts, in determining whether the matter of the procedure for determining conformity of goods was one governed by the CISG, should have considered the likelihood that Argentina would have been able to foresee that its domestic procedure would be trumped by the CISG. It appears unlikely that Argentina would have anticipated that in signing the CISG it was surrendering its method for determining the conformity of goods. No alternative method for proving non-conformity is set forth in the CISG. Argentina's system is not an anomaly -- for example, Italy appears to use a very similar system[210] There is no clear alternative that could be selected and thereby enhance uniformity in international sales law. All of this leads to the conclusion that it is unlikely that Argentina would have been able to foresee that a CISG gap filler would displace its system of peritos arbitradores to determine conformity of goods.

In addition to the inability to foresee that the CISG would displace Argentina's system for determining the conformity of goods, crafting a gap filler and using it to replace domestic law on this matter would likely invade an area that had been intentionally left to the policy makers of the Member States. As discussed above,[211] the drafters of the CISG built a fair amount of flexibility into the document so as to make it adaptable into a large number of national jurisdictions. The CISG is the result not only of an effort to harmonize international sales law but also a significant political compromise. It is important that courts applying the CISG not attempt to apply it too widely and risk violating the political compromises agreed to at ratification.

The Argentine legislature has decided that the exclusive means of proving non-conformity of goods is expert arbitration. Adopting a foreign rule that allowed parties to a commercial sales dispute to circumvent the expert arbitration process and directly submit evidence to the judge on the issue of conformity would [page 1028] undermine this policy decision. Judges would be required to rule on issues that are otherwise placed outside their area of competence, thereby undermining Argentina's interest in the orderly application of its laws.

The first prong of the substance-procedure analysis in the context of a case governed by the CISG presents a problem that does not normally arise: In determining the difficulty of finding and applying the foreign rule, one may conclude that there is no foreign rule to apply. In cases where no foreign rule -- that is, an appropriate gap filler -- exists, a court should conclude that the matter is not one "governed by" the Convention and directly apply the forum's rule. The above analysis indicates that the matter of the means of proving non-conformity is not one governed by the Convention. Even if a general principle favoring the liberal admission of evidence could be extrapolated from Articles 8 and 11, forging and applying a gap filler based on that general principle does not appear appropriate. Applying a gap filler to this matter would mean using the CISG to displace domestic law on an issue where it is unlikely that Argentina could have anticipated that, in signing the CISG, it was agreeing to the displacement of its domestic law. Further, applying a gap filler to this matter would be an inappropriate intrusion into an area in which the CISG yields to Argentina's domestic policy-making authority. In sum, because there is no appropriate CISG gap filler in this case, it appears that the answer to the first prong of the two-pronged test -- how hard is it to identify and apply the foreign rule -- is: impossible. Accordingly, it would have been appropriate for the Mayer and Paysandú courts to conclude that the matter was one of procedure, rather than substance, and therefore Argentine law was to be applied without recourse to Article 7(2).

2. Application of the Rule of Evidence Test

The Mayer and Paysandú courts could have also used the rule of evidence test to determine whether the Argentine rule governing the means of proof of non-conformity of goods was one of substance or procedure. Application of the rule, of evidence test in Mayer and Paysandú would have likely resulted in a determination that the Argentine rule is a rule of evidence and therefore procedural.

Professor Farnsworth distinguished the parol evidence rule from a rule of evidence and showed why one is a rule of procedure while the other is one of substance. A rule of evidence, according to Farnsworth, is the result of a policy decision and seeks to bar use of a [page 1029] particular method of proving a fact.[212] It does not, however, bar proof of fact itself. On the other hand, the parol evidence rule raises a bar to proving the fact itself, specifically that certain things were said or done during contract negotiations.[213]

Based on this distinction, Argentina's requirement that proof of non-conformity of goods be made through the use of expert arbitration appears more similar to a rule of evidence than the parol evidence rule. The required use of expert arbitration does not serve to prevent a showing of certain facts -- whether the goods received complied with certain criteria. Rather, the requirement is the result of a policy decision by the Argentine legislature. In much the same way that courts and legislatures in the United States determined that hearsay is an unreliable source of evidence, the Argentine legislature determined that proving non-conformity of goods in commercial contracts by any means other than expert arbitration is unreliable. As a result it established this system as the exclusive means for proof of non-conformity.

This demonstrates that the requirement of the use of expert arbitration is a rule of evidence and therefore a procedural rule. The requirement that expert arbitration be used to prove non-conformity of goods does not impose a bar on what facts a party may prove in a dispute. Instead the rule concerns itself only with the method and mechanics by which certain facts are proven. Under this substance- procedure analysis, it would have been appropriate for the Mayer and Paysandú courts to have concluded that the matter of proof of non-conformity of goods was procedural and therefore not governed by the CISG. It therefore should not have applied Article 7(2) to the matter.

CONCLUSION

The CISG is a key advancement in the effort to create a uniform international sales law. Harmonizing international sales law is an important objective because it increases predictability of dispute resolution and thereby lowers costs to those entering into international sales contracts.

Article 7(2) has been an important reason for the CISG's success in harmonizing international sales law. Article 7(2) provides a gap-filling mechanism by which gaps in the Convention are filled in accordance with the Convention's general principles. However, [page 1030] this gap-filling mechanism is not to be used for all gaps. Instead, it is only to be used to fill gaps with respect to matters governed by the Convention. There is, therefore, an important intermediate step that courts applying the CISG must perform before taking recourse to Article 7(2): ensuring that the gap they are confronted with concerns a matter governed by the Convention -- meaning, that the gap is internal, rather than external, to the Convention.

Two recent decisions by the Commercial Court of Appeals of the City of Buenos Aires, Argentina, have demonstrated how this step is easily disregarded, and the importance that it not be. In these cases, the court automatically applied Article 7(2) without first ensuring that they were faced with an internal gap. One way for the court to make this analysis would have been to use a substance- procedure analysis -- procedural matters being beyond the scope of the CISG.

Two possible substance-procedure analyses were available to the Argentine court: the two-pronged test and the rule of evidence test. Under either, it appears that the gap the court faced was procedural and thus external to the CISG. Therefore, the court's recourse to Article 7(2) was inappropriate. Instead, it should have directly applied Argentine law to the matter.

It is important that Article 7(2) not be employed beyond its intended scope. In the Argentine cases, it appears that the court knew that application of Argentine law to the matter in question was appropriate, but felt that passage through Article 7(2) was compulsory. As a result, the court employed a phony Article 7(2) analysis in order to arrive at the predetermined conclusion that Argentine law was applicable. The goals and objectives of the CISG are not advanced when its provisions are misapplied.

For this reason, it is important that courts first ensure that a gap is internal before applying Article 7(2) to it. A substance- procedure analysis is one way that this determination can be made. The Argentine court could have used either the two-pronged test or the rule of evidence test. The former is of more general application than the latter, and other similar tests could likely be applied to different situations. It is crucial, though, that this step in the gap-filling process in CISG cases not be overlooked. [page 1031]


FOOTNOTES

* Articles Editor, Columbia Journal of Transnational Law, 2005-2006; J.D. Candidate, Columbia Law School, 2006; B.A., Wake Forest University, 1998. The idea for this Note originated in Professor Alejandro Garro's seminar on International Business Transactions in Latin America. I am grateful to Professor Garro for introducing me to the CISG and for his helpful comments on earlier drafts.

1. United Nations Convention on Contracts for the International Sale of Goods, Apr. 11, 1980, S. TREATY Doc. No.98-9 (1984), 1489 U.N.T.S. 3 [hereinafter CISG].

2. See id. pmbl.; Larry A. DiMatteo et al., The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence, 24 Nw. I. INT'L L. & Bus. 299, 302-04 (2004); 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 I.L. &COM. 187, 187 (1998).

3. The CISG is used by domestic courts and arbitration tribunals to decide cases.

4. CISG, supra note 1, art. 7(1) ("In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.").

5. See COMMENTARY ON THE U.N. CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG) 96 (Peter Schlechtriem & Ingeborg Schwenzer eds., 2d ed. 2005) [hereinafter COMMENTARY]; DiMatteo et al., supra note 2, at 302-03.

6. CISG, supra note 1, art. 7(2).

7. An important note need be made here: Although the applicable law in a case may be the CISG, that does not necessarily mean that every legal matter is governed by the CISG. The CISG will generally determine the rights and obligations of the parties to the dispute, but other legal matters may arise that do not fall under its purview. The topic of this Note is distinguishing which matters are governed by the CISG and which are not -- that is, between internal and external gaps -- in a case whose applicable law is the CISG.

8. CISG, supra note 1, art. 7(2).

9. Id.

10. See COMMENTARY, supra note 5, at 96 ("Whether or not a particular matter is governed by the Convention will often be in some doubt. ...").

11. See MARCO TORSELLO, COMMON FEATURES OF UNIFORM COMMERCIAL LAW CONVENTIONS 47 (2004).

12. Id. at 45.

13. Cámara Nacional de Apelaciones en lo Commercial de la Capital Federal [CNCom.], sala E [Court of Appeals in Commercial Matters, Section E], 07/11/2002, "Cervecería y Maltería Paysandú S.A. v. Cervecería Argentina S.A.," La Ley [L.L.] (2003-18-06) (Arg.), available at <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/sargen11.htm>; Cámara Nacional de Apelaciones en lo Commercial de Buenos Aires, Sala E [CNCom.], 17/10/2001, "Mayer, Alejandro v. Onda Hofferle GmbH & C. S/ordinario," El Derecho [E.D.] (Arg.), available at <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/sargen10.htm>.

14. See CNCom., sala E, 07/11/2002, "Cervecería y Maltería Paysandú v. Cervecería Argentina," L.L. (2003-18-06) (Arg.); see also CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.).

15. Id.

16. Id.

17. Id.

18. Id.

19. For an in-depth discussion of the nature and role of "expert arbitrators" in Argentine commercial litigation, see infra Part IV.C.

20. See CNCom., sala E, 07/11/2002, "Cervecería y Maltería Paysandú v. Cervecería Argentina," L.L. (2003-18-06) (Arg.); see also CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.).

21. COMMENTARY, supra note 5, at 71-72.

22. Id. at 72.

23. See Franco Ferrari, Uniform Interpretation of the 1980 Uniform Sales Law, 24 GA. J. INT'L & COMP. L. 183, 184-85 (1994).

24. Id.

25. Id. at 185.

26. Id.

27. Another important step in the movement toward a uniform international sales law was the 1964 Hague Conference, which, under the auspices of the International Institute for the Unification of Private Law (UNIDROIT) produced two conventions: the Convention Relating to a Uniform Law on the International Sale of Goods (ULIS), July 1, 1964, 3 I.L.M. 855, and the Convention Relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF), July 1, 1964, 3 I.L.M. 864. More recently, UNIDROIT created the UNIDROIT Principles of International Commercial Contracts 2004, available at <http://www.unidroit.org/english/principles/contracts/principles2004/blackletter2004.pdf>

28. See JOHN HONNOLD, UNIFORM LAW FOR INTERNATIONAL SALES UNDER THE 1980 UNITED NATIONS CONVENTION 2-10 (2d ed. 1991).

29. UNCITRAL, Status: 1980 -- United Nations Convention on Contracts for the International Sale of Goods, <http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG_status.html> (last visited Mar. 6, 2006). This Note refers to the states parties to the CISG as Member States.

30. COMMENTARY, supra note 5, at 3.

31. CISG, supra note 1, art. 1.

32. Id. art. 2.

33. Id. art. 3.

34. Id. art. 5.

35. Flechtner, supra note 2, at 198.

36. CISG, supra note 1, art. 4.

37. COMMENTARY, supra note 5, at 64.

38. Id. (internal citations omitted).

39. Id. (internal citations omitted).

40. See infra Part II.

41. CISG, supra note 1, art. 7.

42. COMMENTARY, supra note 5, at 112 (internal citation omitted).

43. CISG, supra note 1, art. 8(1).

44. Id. art. 8(3).

45. See MCC-Marble Ceramic Ctr., Inc. v. Ceramica Nuova D'Agostino, S.p.A., 144 F.3d 1384, 1389 (11th Cir. 1998) (holding that the CISG does not permit operation of the parol evidence rule); Henry D. Gabriel, A Primer on the United Nations Convention on the International Sale of Goods: From the Perspective of the Uniform Commercial Code, 7 IND. INT'L & COMP. L. REV. 279, 281-82 (1997) ("[Article 8] allows open-ended reliance on parol evidence. ... Subjective intent is given primary consideration."); HERBERT BERSTEIN & JOSEPH LOOKOFSKY, UNDERSTANDING THE CISG IN EUROPE 29 (1997) ("['T]he CISG has dispensed with the parol evidence rule which might otherwise operate to exclude extrinsic evidence under the law of certain Common Law countries."); Harry M. Flechtner, Recent Developments: CISG, 14 J.L. & COM. 153, 157 (1995) ("Commentators generally agree that article 8(3) rejects the approach to the parol evidence questions taken by U.S. domestic law."); John E. Murray, Jr., An Essay on the Formation of Contracts and Related Matters Under the United Nations Convention on Contracts for the international Sale of Goods, 8 J.L. & COM. II, 12 (1988) ("We are struck by a new world where there is ... no parol evidence rule.").

46. CISG, supra note 1, art. 11.

47. See Murray, supra note 45, at 12; Atla-Medine v. Crompton Corp., No.00 CIV 5901 (HB), 2001 WL 1382592, at *5 n.6 (S.D.N.Y. 2001) (noting that "[w]here applicable, the CISG may render enforceable agreements not evidenced by a writing and therefore subject to the Statute of Frauds ...").

48. CISG, supra note 1, art. 7(1).

49. COMMENTARY, supra note 5, at 94-95.

50. Id. at 94. An example of autonomous interpretation may be helpful. If a tribunal is interpreting the requirement of Article 18 -- that notice of acceptance must be given within a "reasonable time" -- the tribunal should not rely solely on its forum's law to determine what a "reasonable time" is. Instead, it should use decisions by other tribunals that have interpreted Article 18 as persuasive authority as to the meaning of "reasonable time." The result is the development of CISG -- specific jurisprudence which will facilitate application of its provisions uniformly regardless of where the tribunal sits.

51. John E. Murray, Jr., The Neglect of CISG: A Workable Solution, 17 J.L. & COM. 365, 367 (1998).

52. COMMENTARY, supra note 5, at 96.

53. Id.

54. TORSELLO, supra note 11, at 46.

55. Id.

56. Id. at 45; see also Flechtner, supra note 2, at 206 (referring to the "significant political challenges that had to be overcome in the drafting and ratification processes"').

57. Flechtner, supra note 2, at 188.

58. Id.

59. CISG, supra note 1, art. 4(a).

60. Id. art. 4(b).

61. Flechtner, supra note 2, at 207 (arguing that the drafters may not have intended that Article 25's provision on foreseeable damages be applied uniformly because they consciously refused to amend the provision's text to decide whether the point of reference is the time of contracting or breach).

62. See Harry Flechtner & Joseph Lookofsky, Viva Zapata! American Procedure and CISG Substance in a U.S. Circuit Court of Appeal, 7 VINDOBONA J. INT'L COM. L. & ARB. 93, 99-100 (2003).

63. In Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Company, Inc., the Seventh Circuit considered whether attorney fees fell within Article 74's provision for damages, which includes losses suffered as a consequence of a breach of contract. See 313 F. 3d 385, 388 (7th Cir. 2002). The court held that attorney fees were not to be included in damages under Article 74. Instead, the matter of allocation of attorney fees was to be settled under the lex fori, the "American rule," which mandates that each party pay his or her own litigation fees. Id. at 389. This holding rested, in part, on the court's perception that none of the Member States to the CISG had considered that the matter of attorney fees to be governed by the CISG. Id. In addition, the court determined that the American rule was procedural, and because the CISG does not concern itself with procedure, the question should be resolved in accordance with domestic law. Id. at 388. The court determined that it was unlikely that the United States would have signed the CISG if it thought that by doing so it was yielding the "hallowed" American rule; the majority of other countries would not have considered the question because, under their domestic rules, the norm is that loser pays, so the matter would have been of no import. Id. at 389. Commentators have suggested that the Seventh Circuit was correct to refuse to displace the American rule because the United States never would have considered that the CISG was intended to cover this matter, and had it known that the CISG would preempt the rule, it would have refused to ratify the Convention. Flechtner & Lookofsky, supra note 62, at 99. Furthermore, countries in which the loser pays would protest preemption by the CISG of their "well-understood domestic rules on attorney fees." Id. at 99-100.

64. CISG, supra note 1, art. 7(2). A brief discussion of how tribunals use general principles to fill gaps may be useful here. In order to fill a gap with a general principle, the first step is to identify such a principle. General principles of the CISG are generally extracted from specific Convention provisions. For a list of general principles that have been identified by courts and commentators, see COMMENTARY, supra note 5, at 104. For example, it has been suggested that Article 20(2) -- which provides that, in calculating the period of time of acceptance, official holidays and non-business days are to be included -- states a general principle that official holidays are to be included in computing periods of time other than those relating to acceptance. Id. at 105. Once the general principle has been identified, a gap filler is constructed to fill the gap at issue.

However, there are limits to how liberally courts may construe the CISG in order to identify general principles. "[I]f there are no principles on which new rules could be based, or if the principles discernible are too vague to allow rules on specific issues, these matters must be regarded as not being governed by the CISG." Id. at 103. The search for general principles, therefore, is related to the main topic of this Note -- how to determine whether a matter is "governed by" the CISG.

65. COMMENTARY, supra note 5, at 103.

66. Alejandro M. Garro, The Gap-Filling Role of the UNIDROIT Principles in International Sales Law, 69 TUL. L. REV. 1149, 1156 (1995).

67. See CISG, supra note 1, art. 7(2).

68. Franco Ferrari, Burden of Proof under the CISG, REV. CONVENTION CONT. INT'L SALE GOODS 1,2 (2000-2001).

69. COMMENTARY, supra note 5, at 65. Which domestic law will be applied will depend on the type of external gap the court faces. If the external gap is one of procedural law, recourse will be had to the lex fori. See MCC-Marble Ceramic Ctr., Inc. v. Ceramica Nuova D'Agostino, S.p.A., 144 F.3d 1384, 1389 (11th Cir. 1998). For other types of external gaps, some have argued that the appropriate domestic law should be that made applicable by the rules of private international law. See Shrivbir S. Grewal, Risk of Loss in Goods Sold During Transit: A Comparative Study of the United Nations Convention on Contracts for the International Sale of Goods, the Uniform Commercial Code, and the British Sale of Goods Act, 14 LOY. L.A. INT'L & COMP. L. REV. 93, 102 (1991) (stating that, generally, the question of who carries the burden of proof is to be determined by the choice of law rules of the forum, not the Convention).

70. See COMMENTARY, supra note 5, at 61 ("Whether or not a particular matter is governed by the Convention will often be in some doubt. ..."); Ferrari, supra note 68, at 3; CISG, supra note 1, arts. 4-5.

71. Garro, supra note 66, at 1156.

72. Ferrari, supra note 68, at 3.

73. Article 4 goes on to specify that, in general, the Convention does not govern "(a) the validity of the contract or of any of its provision or of any usage; (b) the effect which the contract may have on the property in the goods sold." CISG, supra note 1, art. 4.

74. CISG, supra note 1, arts. 2,3,5.

75. See supra notes 35-39 and accompanying text.

76. COMMENTARY, supra note 5, at 64.

77. See, e.g., Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., 31.3 F. 3d 385,388 (7th Cir. 2002) ("The Convention is about contracts, not about procedure.").

78. See, e.g., MCC-Marble Ceramic Ctr., Inc. v. Ceramica Nuova D'Agostino, S.p.A., 144 F.3d 1384 (11th Cir. 1998).

79. BERNSTEIN & LOOKOFSKY, supra note 45, at 6.

80. PETER HAY ET AL., CONFLICT OF LAWS: CASES AND MATERIALS 404 (12th ed. 2004).

81. Most lawyers and law students trained in the United States will shudder upon hearing the phrase "Erie doctrine." See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).

82. See Hanna v. Plumer, 380 U.S. 460 (1965).

83. See MCC-Marble Ceramic Ctr., 144 F.3d at 1389 n.13 (stating that, although the CISG is the substantive law governing the case, "[a] federal district court applies the Federal Rules of Evidence because these rules are considered procedural, regardless of the source of the law that governs the substantive decision").

84. HAY ET AL., supra note 80, at 404; see also RUSSELL J. WEINTRAUB, COMMENTARY ON THE CONFLICT OF LAWS 59 (4th ed. 2001).

85. HAY ET AL., supra note 80, at 404. Russell Weintraub notes that:

"If it would be very difficult for local judges and lawyers to adjust to the application of the foreign rule and if it is unlikely that the outcome will be altered by application of the forum's rule, the forum's rule is properly labeled as 'procedural' ... and correctly applied without further analysis." WEINTRAUB, supra note 84, at 59.

86. See WEINTRAUB, supra note 84, at 59. Of course, many rules that are properly labeled procedural may "affect the result" of the case. See HAY ET AL., supra note 80, at 404 (stating that the "affect the result" factor is to determine whether the rule would provide a tactical advantage to a party such that it would lead to forum shopping).

87. RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 138 (1971).

88. The Restatement (Second) of Conflict of Laws states that:

"Considerations of efficiency and convenience require that questions relating to the admissibility of evidence, whether oral or otherwise, should usually be determined by the local law of the forum. The trial judge must make most evidentiary decisions with dispatch if the trial is to proceed with reasonable celerity. The judge should therefore, as a general rule, apply the local law of his own state." Id. § 138 cmt. a.

89. Although the authors of the Restatement try to avoid use of the "substance" and "procedure" labels, they were unable to do so completely. Comment c to § 138 says that "[o]n occasion, a rule phrased in terms of evidence may in fact be a rule of substantive law." Id. § 138 cmt. c. The clear inference is that rules of evidence are generally procedural.

90. Id. § 138 cmt. a (discussing why the forum's rules of procedure should apply to a dispute).

91. As the Restatement points out, "[o]n occasion, a rule phrased in terms of evidence may in fact be a rule of substantive law." Id.

92. E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS § 7.2 (3d ed. 2004). A rule of evidence may seek to exclude a method of proving a fact because of a policy determination that it is "for one or another reason [an] untrustworthy or undesirable means of evidencing some fact to be proved." I. WIGMORE, EVIDENCE § 2400 (Chabourn ed. 1981).

93. FARNSWORTH, supra note 92, § 7.2

94. Id.

95. Id.

96. Id. Indicative of the fact that the parol evidence rule is substantive is that if a timely objection is not made to the introduction of parol evidence at trial, that objection is not deemed waived, whereas failure to make a timely objection t a violation of a rule of evidence waives any ground for complaint against admission of that evidence. Id. (citing In re Smith, 427 P.2d 443 (Kan. 1967) ("[P]arol evidence rule is one of substantive law and not merely a rule of evidence, and therefore, must be adhered to, irrespective of whether or not proper objection was made at trial.")) Additionally, under the Erie doctrine, federal courts sitting in diversity "are bound to apply the parol evidence rule of the state in question, thus treating the parol evidence rule as 'substantive' rather than 'evidentiary."' Id. (citing Betz Laboratories v. Hines, 647 F.2d 402 (3d Cir. 1981) ("[P]arol evidence is substantive rather than evidentiary, so we apply state law.")).

97. For discussion of the error of the MCC-Marble decision, see infra Part III.C.1.

98. CISG, supra note 1, art. 11.

99. COMMENTARY, supra note 5, at 87.

100. The U.C.C. gives the following definition of the parol evidence rule:

"Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement. ..."

U.C.C. § 2-202 (1998) (emphasis added).

101. See supra note 45 and accompanying text.

102. MCC-Marble Ceramic Ctr., Inc. v. Ceramica Nuova D'Agostino, S.p.A., 144 F.3d 1384 (11th Cir. 1998).

103. Id.

104. Id. at 1385.

105. Id.

106. Id.

107. Id.

108. Id.

109. Id. at 1386.

110. Id.

111. Id. at 1385. MCC claimed it had reduced payment for those earlier shipments, and was entitled to do so under Article 50 of the CISG, because the tile received was of inferior quality. See id. at 1386 n.4.

112. Id. at 1386.

113. Id. at 1387. Article 8 of the CISG reads:

"(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.

"(2) If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.

"(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties."

CISG, supra note 1, art. 8.

114. MCC-Marble, 144 F.3d at 1387.

115. Id.

116. Id. at 1388 n.10. The parol evidence rule does not permit evidence of contemporaneous oral agreements that contradict the contract's written terms. See infra Part III.C.l.

117. MCC-Marble, 144 F.3d at 1388-89.

118. See supra Part III.A.2.

119. MCC-Marble, 144F.3d at 1389.

120. Id. at 1389 n.13 (quoting CISG, supra note 1, art. 11).

121. Id. at 1391.

122. CISG, supra note 1, art. 8(3).

123. MCC-Marble, 144 F.3d at 1389.

124. Id. at 1391. It is now generally accepted in U.S. courts that the parol evidence rule does not apply when the CISG governs the contract. See Shuttle Packaging Sys., LLC v. Tsonakis, No 1:01-CV-691, 2001 WL 34046276, at *8 (W.D. Mich. Dec. 17, 2001) ("[I]nternational sales agreements under the Convention are not subject to the parol evidence rule."); Mitchell Aircraft Spares, Inc. v. European Aircraft Serv. AB, 23 F. Supp. 2d 915, 919-21 (N.D. Ill. 1998); Claudia v. Olivieri Footwear Ltd., No.96 Civ. 8052 (HB) (THK), 1998 WL 164824, at *5-6 (S.D.N.Y. Apr. 7, 1998) ("[C]ontracts governed by the CISG are freed from the limits of the parol evidence rule and there is a wider spectrum of admissible evidence to consider in construing the terms of the parties' agreement."); Filanto S.p.A. v. Chilewich Int'l Corp., 789 F. Supp. 1229, 1238 n.7 (S.D.N.Y. 1992), appeal dismissed, 984 F.2d 58 (2d Cir. 1993) ("[T]he Convention essentially rejects ... the parol evidence rule."). But see Beijing Metals & Minerals Imp./Exp. Corp. v. American Bus. Ctr. Inc., 993 F.2d 1178, 1183 n.9 (5th Cir. 1993) (applying parol evidence rule in case governed by the CISG).

125. MCC-Marble, 144 F.3d at 1391.

126. Id. at 1389.

127. Cámara Nacional de Apelaciones en lo Comercial de Buenos Aires, Sala E [CNCom.], 17/10/2001, "Mayer, Alejandro v. Onda Hofferle GmbH & C. S/ordinario," E.D. (Arg.), available at <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/sargen10/htm>. The case was decided by the Cámara Nacional de Apelaciones en lo Comercial de la Capital Federal (CNCom.) (Court of Appeals in Commercial Matters). Because of Argentina's federal system of government, the judicial power is divided between the federal and provincial systems. The Supreme Court of Justice (Corte Suprema de Justicia) (CSJN) is the final court of appeals for both systems. Under the CSJN, the federal judicial system is divided in areas of subject matter competence. These include the civil, criminal, administrative, labor, family, and commercial fora. CNCom. is the appellate court for the commercial division of the national system. See Ernesto Nicolas Kozameh et al., Guide to the Argentine Executive, Legislative and Judicial System (July 15, 2001), <http://www.llrx.com/features/argentina.htm#commercial>.

128. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.). FOB (Free on Board) "means that the seller delivers when the goods pass the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point." INT'L CHAMBER OF COM., INCOTERMS 2000: ICC OFFICIAL RULES FOR THE INTERPRETATION OF TRADE TERMS (1999), available at <http://www.arete.com.ua/docs/incoterms.php?fob>.

129. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.).

130. Id.

131. Id.

132. Id.

133. It is unclear whether the trial court applied the CISG in arriving at its judgment. See id.

134. CISG, supra note 1, art. l(l)(a).

135. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.).

136. CISG, supra note 1, art. l(l)(b).

137. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.).

138. The Argentine Civil Code provides that, in all contracts whose place of performance is Argentina, suit may be brought against the obligee in an Argentine court regardless of whether he resides or is domiciled in Argentina. CÓDIGO CIVIL [CÓD. CIV .] art. 1215.

139. Id. Other decisions have been more detailed in explaining the concept of the "most characteristic performance." In Argentine law, the most characteristic performance is that which best satisfies the economic objective of the contract. See Cámara Segunda de Apelaciones en lo Civil y Commercial de Paraná [CCiv. y Com.], 10/8/1988, "Sagemüller, Francisco G. v. Sagemüller de Hinz, Liesse L. y otro," La Ley [L.L.] (1989-E-192) (Arg.). For a contract for the sale of goods, the most characteristic performance is the delivery of the property which is being legally transferred. Payment is not considered a characteristic performance. The idea, apparently, is that payment is an attribute of every contract whereas the goods purchased or sold are unique to that contract. See id.

140. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.). Argentine courts have consistently found that the port named in the FOB clause is the place of delivery of goods. See, e.g., CCiv. y Com., 10/8/1988, "Sagemüller, Francisco G. v. Sagemüller de Hinz, Liesse L. y otro," L.L. (1989-E-192) (Arg.).

141. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.).

142. Id.

143. Id.

144. The court stated in Spanish:

"Mas no contiene ninguna regla -- ni principio general -- conciemente al procedimiento a seguir para determinar la calidad de los efectos, cuando es impugnada por el adquiriente. Antes esta omisión, debe acudirse a la solución contemplada en el art. 7.2., en cuanto establece que las cuestiones relativas a las materias que se rigen por la Convención que no estén expresadamente resueltas en ellas ni en los principios generales en que se basa la misma, se dirimarán de conformidad con la ley applicable en virtud de las normas."

Id. (emphasis added).

145. CISG, supra note 1, art. 7(2).

146. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.).

147. Id.

148. Id.

149. Article 476 states that:

"The ... defects of the goods sold, as well as a difference in quality, shall always be determined by expert arbitrators in the absence of a stipulation to the contrary." "Los vicios o defectos que se atribuyan a las cosas vendidas, así como la diferencia en las calidades, serán siempre determinadas por peritos arbitradores, nomediando estipulación contraria."

CÓDJGO DE COMERCIO [CÓD. COM.] art. 476.

150. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.). For an explanation of the process of expert arbitration in the Argentine legal system, see infra Part IV.C.

151. CNCom., 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.). The court went on to state that even if the report were admitted as evidence, judgment for the seller would still be appropriate. According to the report, the court found, the charcoal could be used for cooking. As the (seller's) complaint claimed that the intended purpose of the charcoal was for sale in supermarkets to be sold for use in outdoor barbeques, the court found that, under Article 35(2)(a) of the CISG, which states that goods that "are fit for the purpose for which the goods of the same description would ordinarily be used," the goods were in conformity and the seller could not be found liable. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.). There are two problems with this analysis. The first is that the court was apparently willing to conclude that the ordinary use for this type of charcoal was outdoor barbeques, based merely on the assertion of the plaintiff seller that this was the case. It would appear that this was not the buyer's intended use: It claimed that the charcoal did not conform with the contractual requirements while at the same time stating that the charcoal was fit for barbeques. Second, the court's analysis under Article 35 is flawed. Article 35(2) states that, "[e]xcept where the parties have agreed otherwise, the goods do not conform with the contract unless they: (a) are fit for the purposes for which goods of the same description would ordinarily be used. ..." CISG, supra note 1, art. 35(2) (emphasis added). The Mayer court interpreted this provision as though it read "goods do conform if they are fit for the purposes for which goods of the same description would ordinarily be used." That is a misconstruction of Article 35(2), which is designed to protect the buyer if an implied warranty is violated by the seller. It is not intended to provide a type of "safe harbor" for the seller whereby if he can show that the goods are fit for their ordinary purpose he establishes conformity of the goods. The court's alternative ground for ruling for the seller may be an indication that the court is not confident in its principal ground -- the rejection of the buyer's defense of non-conformity for failure to provide acceptable proof of such under the Argentine Commercial Code. Interview with Alejandro M. GARRO, Adjunct Professor of Law, Columbia Law School, in New York, N.Y. (Feb. 7,2005).

152. CNCom., sala E, 17/10/2001, "Mayer v. Onda Hofferle," E.D. (Arg.).

153. CNCom., sala E, 07/11/2002, "Cervecería y Maltería Paysandú S.A. v. Cervecería Argentina S.A.," La Ley [L.L.] (2003-18-06) (Arg.), available at <http://www.uc3m.es/uc3m/dpto/PR/dppr03/cisg/sargen11.htm>.

154. Id.

155. Id.

156. Id.

157. Id.

158. The CISG was not applicable under Article 1(1)(a) because, although Argentina had adopted the CISG before the contract was entered into, Uruguay did not adopt the CISG until February 1, 2000, after the date of the contract. See CNCom., 07/II/2002, "Cervecería y Maltería Paysandú v. Cervecería Argentina," L.L. (2003-18-06) (Arg.); see also CISG, supra note 1, art. 1(1)(a) ("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. ...").

159. See CNCom., sala E, 07/11/2002, "Cervecería y Maltería Paysandú v. Cervecería Argentina," L.L. (2003-18-06) (Arg.). Argentina had adopted the CISG in 1988, so the determination that Argentine private international law was applicable made the CISG applicable. See CISG, supra note 1, art. 1(1)(b) ("This Convention applies ... when the rules of private international law lead to the application of the law of a Contracting State."). For discussion of the Argentine conflicts of law rule that the applicable law in a sales contract dispute is that of the state where the goods were delivered, see supra note 138.

160. See CNCom., sala E, 07/11/2002, "Cervecería y Maltería Paysandú v. Cervecería Argentina," L.L. (2003-18-06) (Arg.).

161. Id.

162. Id.

163. Id. (citing CÓD. COM. art. 476 ("The ... defects of the goods sold, as well as a difference in quality, shall always be determined by expert arbitrators in the absence of a stipulation to the contrary.")).

164. Id.

165. See supra note 63 for a brief discussion of ways courts in other jurisdictions have sought to adhere to Article 7(2)'s direction to fill gaps in conformity with the Convention's general principles.

166. See CISG, supra note 1, art. 7(1).

167. An interesting contrast to the handling of this matter by the Argentine courts is the treatment of a similar situation by the Tribunale di Vigevano, in Italy. The German plaintiff had sued the Italian defendant claiming that the goods it had received were defective. See Alessandro Rizzieri, Decision of the Tribunal of Vigevano, Italy, July 12, 2000, 20 J. L. & COM. 209, 210 (2001). The court determined that the applicable law was the CISG. Id. at 212. In support of its defectiveness claim, the plaintiff sought to introduce the testimony of a witness and a report written by an expert contracted by the plaintiff. The court rejected both offerings because "under Italian procedure" such testimony and report could "only be rendered by an expert witness appointed by the court." Id. at 223. The court noted that the report had to be rejected because, having been made "on behalf of one of the parties, it ... lack[ed] the objectivity of a neutral third party." Id.

The contrast with the Mayer and Paysandú decisions is clear. Whereas the Argentine courts implicitly found the matter of admissibility of proof of non-conformity to be governed by the CISG and applied Article 7(2)'s gap-filling mechanism thereto, the Italian court determined that the matter was procedural and therefore directly applied the local rule without recourse to the CISG.

168. ALI J. SALGADO, CODIGO PROCESAL CIVIL y COMERCIAL DE LA N ACION COMENT ADO y CONCORDADO CON EL CODIGO PROCESAL CIVIL y COMERCIAL DE LA PROVINCIA DE BUENOS AIRES 483 (2d ed., 1987).

169. Id.

170. Id.

171. Id.

172. Id. at 484.

173. Id. at 483.

174. Id. at 486.

175. CODIGO PROCESAL CIVIL Y COMERCIAL DE LA NACION [COD. PROC. CIV. Y COM.] art. 773 ("Expert arbitration will proceed ... when the law establishes the use of the procedure ... for the exclusive resolution of specific and discrete questions of fact.").

176. Roque I. Caivano, La Pericia Arbitral y una Nueva Muestra de la Falta de Cultura Arbitral, note attached to the judgment in CNCom., sala E, 28/02/2000, "Planolux S.A. v. Vaplas S.A.," LexisNexis Argentina 20010843 (Arg.) [hereinafter Caivano].

177. See CASTRO ET AL., CODIGO PROCESAL CIVIL Y COMERCIAL DE LA NACION COMENT ADO Y CONCORDADO CON EL CODIGO PROCESAL CIVIL Y COMERCIAL DE LA PROVINCIA DE BUENOS AIRES 559 (3d ed., 1986).

178. See id. at 560.

179. CÓD. PROC. CIV. Y COM. art. 477.

180. See Corte Suprema de Justicia [CSJN], "Metalurgica Constitucion S.A. v. Nacion," Fallos (1975-291-174) (Arg.); CNCom., sala D, 24/10/1989, "Israel, Jacobo v. Chiaradia, Luis / prueba de peritos-efectos:' Jurisprudencia Argentina [J.A.] (1990-II-15) (Arg.); Cámara Nacional de Apelaciones en lo Civil y Comercial Federal,[CCiv. y Com.], sala 3, 21/05/1996, "Canteras Malagueno SAICF v. Caja Nacional de Ahorro y Seguro," LexisNexis Argentina 7/2259 (Arg.).

181. See CARLOS JUAN ZAVALA RODRIGUEZ, CODIGO DE COMERCIO Y LEYES COMPLEMENTARIAS COMENTADOS Y CONCORDADOS ¶ 1188 (1961).

182. See, e.g., CNCom., sala A, 19/04/1983, "Satz y Álvarez Saic v. Kalve Saic," LexisNexis Argentina 11/7989 (Arg.).

183. See CÓD. PROC. CIV. Y COM. art. 773.

184. See Jaime L. Anaya, La Olvidada Pericia Arbitral, El Derecho [E.D.] 607.

185. Caivano, supra note 176.

186. Id.

187. See id.; see also Anaya, supra note 184, at 606.

188. See Caivano, supra note 176.

189. CÓD. PROC. CIV. Y COM. art. 476.

190. See Caivano, supra note 176.

191. Id.

192. Id.

193. See, e.g. CNCom., sala B, 27/02/1987, "Fomax S.R.L. v. Carlos A. Palo S.R.L." LexisNexis Argentina 11/7887 (Arg.) (holding that, in order to prove latent defects, the decision of an expert arbitrator is irreplaceable, as it is demanded by the language of Article 476 and has been repeatedly upheld by court decisions); CNCom., sala C. 20/09/1988, "Gaveteco Saicf v. Timuka S.A.," LexisNexis Argentina 11/5093 (Arg.) (holding that it is imperative that a buyer who impugns the quality of the goods sold resort to the expert arbitration procedure required by Article 476, as it is the legally accepted means of handling this type of controversy in matters of commercial sales).

194. See, e.g., CNCom., sala E, 28/02/2000, "Planolux S.A. v. Vaplas S.A." LexisNexis Argentina 20010843 (Arg.); CNCom., sala C, 11/06/1984, "Zumos S.R.L. v. Ro-Dia S.R.L. / prueba de peritos," J.A. (1985-1-236) (Arg.) ("[T]he reports of technical consultants are not equivalent to those of expert arbitrators required by Article 476 of the Commercial Code."); CNCom., sala B, 13/12/1984, "Aserradero Martín Fierro Sacic v. Marchand S.R.L.," LexisNexis Argentina 11/7925 (Arg.) (stating that questions of quality of goods must be determined by peritos, a process which cannot be replaced by witnesses); Cámara de Apelaciones en lo Civil y Commercial [C. 2a Civ. y Com. La Plata], sala 2, 15/05/2003, "Emulo S.A. v. Egia S.A.," LexisNexis Argentina 14/89483 (Arg.) (holding that the decision of expert arbitrators is irreplaceable to a showing of non-conformity of goods, unless recourse to expert arbitration is impossible).

195. CISG, supra note 1, art. 7(2).

196. For discussion of the error of the MCC-Marble decision, see supra Part III.C.1.

197. The third step in the gap-filling procedure is beyond the scope of this Note.

198. HAY ET AL., supra note 80, at 404.

199. Id.

200. Id.

201. CISG, supra note 1, art. 7(2).

202. Id. art. 8(3).

203. Id. art. 11 ("A contract of sale need not be concluded in or evidenced by writing ...").

204. Id.

205. See COMMENTARY, supra note 5, at 103.

206. Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., 313 F.3d 385 (7th Cir. 2002).

207. Id. at 389.

208. Id.

209. Id.

210. See Rizzieri. supra note 167, at 223 (stating that, under Italian procedure, an opinion as to non-conformity of goods can only be offered to the court "by an expert witness appointed by the court" and not by witnesses hired by the parties).

211. See supra Part II.A.

212. FARNSWORTH, supra note 92, § 7.2.

213. Id.


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