Reproduced with permission of 23 American Journal of Comparative Law (1975) 337-355
Hans Smit [*]
The Structure of the Convention
Sphere of Application
Duration and Commencement of the Period
Cessation and Extension of the Period
Modification of the Period
Consequences of Expiration of the Period
Calculation of the Period
Declarations and Reservations
On 14 June 1974, 65 nations approved at the United Nations the text of a Convention on the Limitation Period in the International Sale of Goods. Thus was born the first convention developed by the U.N. Commission on International Trade Law (UNCITRAL).
A substantial part of the fourth session of UNCITRAL held in 1971 and virtually all of its fifth session in 1972 had been devoted to the preparation of this Convention. The final draft that came out of these sessions was submitted to the U.N. General Assembly, which referred it to the U.N. Conference on Prescription (Limitation) in the International Sale of Goods. Also referred to this Conference was a commentary on the draft prepared by the Secretariat in consultation with the rapporteur of UNCITRAL.
The Conference, to which all members of the U.N. had been invited, was held from May 20 until June 14, 1974. On the same day on which the text was approved, 8 nations signed, and thus signified their intention to ratify, the Convention.
The approval of the text of the Convention is significant for various reasons. Probably most important is that it confirms the ability of as varied a group of nations as that of UNCITRAL collaboratively to produce a convention relating to an important area of international intercourse. Of great significance is also that it proves that [page 337] international legislation is possible even on a subject, such as prescription, to which various legal systems in the world take very different approaches. And, of course, the approval of the Convention also marks another contribution to the growing body of international private law. Although the significance of prescription problems in international sales should not be overrated, the Convention does offer the international businessman the advantages of reasonable and uniform rules that can easily be found.
II. THE STRUCTURE OF THE CONVENTION
The Convention is divided into Four Parts of which Part I, containing the actual prescription provisions, is the most important. Parts II, III and IV deal with implementation, declarations and reservations, and final clauses, respectively.
The provisions of Part I deal with prescription as it relates to international sales in comprehensive detail. Not only those aspects that are peculiar to international sales are treated, but virtually all of the problems that may arise in the context of prescription are regulated. As a result, these provisions do provide a pattern along which international regulation of prescription in a more general sense may possible.
Because of the detail of many of its provisions, exhaustive discussion of the Convention cannot be attempted here. Only some of the more salient features of each of the principal topics treated in the Convention will be discussed. These are, in order, the sphere of application of the Convention, the duration and commencement, the cessation and extension, the modification, the overall limit, the consequences of expiration, and the calculation, of the limitation period. The provision on international effect will also be considered, as will some of the more important provisions in Parts II and III.
III. SPHERE OF APPLICATION
The subject matter reach of the Convention is limited in a variety of ways. The principal rule, laid down in Art. 1(1), is that the [page 338] Convention determines when claims of a buyer and seller against each other arising from a contract of international sale of goods or relating to its breach, termination, or invalidity can no longer be asserted by reason of the expiration of a period of time. This rule purports to settle a number of problems.
First, by using the words "against each other," it makes clear that only claims based on privity of contract are covered and that claims against third parties, whether or not based on a theory of a warranty traveling with the chattel, are excluded. This exclusion was very deliberate, because there was a strong measure of agreement that product liability claims and their ilk should not come within the reach of the Convention.
Second, the rule stated avoids any uncertainty that might arise as to whether claims of breach, termination, or invalidity can be said to "arise from" a contract of international sale of goods by specifically including them.
Third, the rule stated deliberately refrains from using the terms prescription or limitation and uses functional language to describe the consequence of the expiration period. It thus avoids choosing between whether it deals with the institution of prescription as it is known in certain legal systems or of limitation as it is known in others. Since all the consequences of expiration of' the period are defined in the Convention, this choice was both unnecessary and, in order to avoid too close identification with any particular legal system, undesirable. The abbreviated description of this period as "the limitation period" in the Convention itself was adopted only for the sake of convenience and has no substantive significance.
The general rule stated in Art. 1(1) is followed by a large number of limitations and exceptions. These do not only limit further the scope of Art. 1(1), but also provide for a number of exceptions.
The time periods to which Art. 1(1) refers are limited in Art. 1(2). The latter provision makes clear that not every time period, the expiration of which may result in the loss of a claim, is covered. For it specifically excludes from the Convention's coverage provisions, either of national law or in a contract, that set a time period within which, on penalty of forfeiture of the claim, notice of a claim must be given or some other act not amounting to institution of legal proceedings must be performed. A moment's reflection will bring the realization that this provision opens the parties an opportunity to [page 339] avoid application of the Convention simply by providing in their own contract that, on penalty of loss, notice of claims must be given within a specified period. It may well be asked whether so easy an avenue of escape was intended. The answer must, however, be affirmative: A prior version which made the possibility of escape more explicit  was omitted only after the British delegation explained that the contractual escape was already permitted by Art. 1(2). As a result, the parties to an international contract of sale can exclude application of the Convention not only directly by an explicit provision in the sense of Art. 3, but also indirectly by using a provision as described in Art. 1(2).
The narrow range of contracts of international sale of goods to which Art. 1(1) applies results from the combined application of Arts. 2 and 3(1). Art. 2(a) defines international sales broadly as contracts of sale between a buyer and seller who, at the time of conclusion of the contract, have their places of business in different States. Read in conjunction with Art. 1(1), this provision might therefore be thought to warrant the conclusion that the Convention applies to all such contracts, irrespective of whether the buyer or the seller has his place of business in a Contracting State. This conclusion would be erroneous however, because Art. 3(1) provides specifically that the Convention applies only if, at the time of conclusion of the contract, the parties to the contract have their places of business in Contracting States. It would undoubtedly have been simpler and more, straightforward to eliminate Art. 3(1) and insert the word "Contracting" before "States" in Art. 2(a). However, an amendment to this effect proposed by the U.S.A. did not carry the day. As will be seen below, this rejection added to the problems arising under Art. 38.
The ground rule laid down in Art. 2(a) is further refined and qualified in the other paragraphs of Art. 2. In addition, Articles 4-6 except a number of specific sales, claims, and contracts from the coverage of the Convention.
Of special importance are further the provisions of Art. 3(2), and (3). Art. 3(2) provides that the Convention applies irrespective of any otherwise applicable choice of law rule. Except in the instances in which the Convention itself refers to choice of law rules [see Arts. 12(1), 14 (1), and 22(3)], choice of law rules are therefore eliminated. [page 340]
The only way in which the parties can directly exclude application of the Convention is by an explicit provision. A prior version of Art.3(3) required that this exclusion be valid under the applicable law. This requirement was eliminated on the ground that it imported undesirable uncertainty. The effectiveness of an exclusion must therefore be determined solely by reference to the terms of Art. 3(3). Of course, as indicated above, indirect escape from the Convention is possible under Arts. 1(2) and 22(3). However, whether a contractual provision of the kind described there is valid does not depend on the Convention, which explicitly provides that it does not affect it, but on the applicable law, including the applicable choice of law.
IV. DURATION AND COMMENCEMENT OF THE PERIOD
The basic rules are that the limitation period is four years  and that it commences on the date on which the claim accrues. The concept of accrual is further defined in Arts. 10-12, dealing with particular situations.
Art. 10(1) posits the general rule that in cases of breach of contract the claim accrues when the breach occurs. That rule is qualified by Art. 10(2) when the claim arises from a defect or other lack of conformity -- that is, if it in any way fails to comply with the requirements of the contract. In that case, the claim accrues when the goods are actually handed over to, or their tender is refused by, the buyer. This special rule is based on the notion that the limitation period should not begin to run before the buyer has a chance to discover the lack of conformity. The time fixed for this purpose is that at which the goods are handed over or tendered to the buyer. Use of the term "delivery" was avoided, because of its asserted ambiguity  and because delivery in the technical sense may take place before the goods are physically handed over to the buyer. Of course, this rule may lead to difficulties when the goods are delivered, but not actually handed over, to the buyer. This may occur when the buyer sells the goods to someone else and effectuates delivery by negotiating the shipping documents before he has had any opportunity to take physical possession of the goods. The reasonable intendment of the rule appears to be that the limitation period does not commence until the ultimate buyer obtains physical possession of the goods. Indeed, even if the latter does not obtain the goods by purchase, but by barter or gift, he should most probably be regarded as "the buyer" as these words are used in Art. 10(2).
A special rule is also provided in cases of fraud committed before or at the conclusion of contract or during its performance. With [page 341] respect to claims arising from such fraud, the period begins to run when the fraud was or reasonably should have been discovered. The same rule was also proposed for claims for lack of conformity, but was rejected in favor of what were thought to be the more certain criteria laid down in Art. 10(2). It must be awaited whether these criteria are indeed as clear as their drafters assumed. However, since such presumably clearer criteria could not be formulated in regard to claims for fraud, the more flexible formula was used. The impact of fraud on a limitation period that has already begun to run is determined by Art. 21.
A special rule is also provided for claims arising from guarantees that are stated to be effective for a specified period of time. This rule was considered necessary, because it was feared that, in its absence, it might be held that a claim based on such a guarantee could not be brought after expiration of the period stated in the guarantee. Although it would seem difficult for a reasonable court to reach this result, it was asserted that an English court had in fact reached it. Therefore, the rule of Art. 11 was adopted, which provides that the period shall begin to run when the buyer notifies the seller of the fact on which his claim is based or at the end of the stated period, whichever is earlier. While this rule has the consequence of permitting the buyer in effect to lengthen the period by failing to give the required notice, this opportunity is limited by the alternative beginning point prescribed by Art. 11 and the overall limitation of Art. 23.
Problems that may arise in cases of anticipatory breach and breach of installment contracts are also specially regulated so as to eliminate any uncertainty as to when the period begins to run.
V. CESSATION AND EXTENSION OF THE PERIOD
While the consequences of commencement of judicial proceedings on a limitation period that has begun to run differ in the various legal systems of the world, two approaches predominate. Probably most legal systems give to initiation of proceedings a suspensory effect: while the proceedings are pending, the period remains suspended, but upon their conclusion it resumes running. The American approach is different. The initiation of proceedings does not suspend the running of the period: it simply continues to run. The important advantage of the American approach is that it precludes a claimant from in effect indefinitely suspending the period by bringing successive actions.
It might have been thought wise for the drafters of the Convention to choose either of these approaches. After all, the problems [page 342] arising under both were known and could therefore be dealt with. Vaunting the merit of choosing a system that was wholly novel and therefore not laden with national glosses however, the drafters opted for a totally new approach: upon initiation of legal proceedings, the period "shall cease to run." And that this means exactly what it says and that the termination is unqualified and absolute is made clear by other provisions, which employ a fiction in order to achieve in some cases that the period is deemed to have continued to run. Since the latter provisions in effect lead to the result reached under American law and the American system does appear in fact to be the better one, the American delegation urged its adoption to the Conference. However, its efforts were in vain, and the novel, and necessarily untested, approach was adopted. At the same time, special rules were also provided that define the actual times at which a claim is asserted separately for judicial proceedings, arbitral proceedings, other legal proceedings, and counterclaims. A U.S. proposal to substitute for these rather elaborate provisions the simple rule that a claim is asserted in legal proceedings at the time defined by the law of the forum did not gain sufficient supporters.
Of course, a totally new rule always carries with it the danger of unwanted consequences. Two of these consequences are specifically dealt with in Arts. 17 and 18(3) .The first provides that, when the proceedings have ended without a decision on the merits, the period "'shall be deemed to have continued to run." If at the end of the proceedings, as a result of this fiction, the period has expired or has less than a year to run, the creditor is given one year. A similar construction is used in Art. 18(3) to cope with the problem created by Art. 19(1) and (2), which provides that commencement of legal proceedings  against one or more jointly and severally liable debtors or by a subpurchaser against a buyer shall also cause the period to cease running in regard to the other debtor or the remote seller, if proper notice is given in writing. Here again, once the proceedings have ended, the fiction is interposed that the period "shall be deemed not to have ceased running" and the creditor is given at most a year. In both cases, if the fiction had not been interposed, the limitation period would have remained open beyond its normal expiration time until closed by the overall limitation of Art. 23 ten years after it began to run. [page 343]
The two unwanted consequences of the novel approach specifically dealt with are not the only ones, however. At least one other occurs when the proceedings are brought to a conclusion favorable to the creditor on the merits. This situation is not covered by Art. 17 and may occur if, under the applicable law, the claim does not merge into the judgment. In that situation, the limitation period had ceased running, and remains open until it is closed by Art. 23 ten years after it began to run. Both at the fifth session of UNCITRAL and at the U.N. Conference, it was urged that this situation be dealt with by providing a solution similar to that employed in Arts. 17 and 18(3). However, procedural confusion at the time at which this provision was discussed and voted upon eventually led to its not being adopted.
As can readily be seen, Arts. 17 and 18(3) may in effect lead to extension of the limitation period. What in effect amount to extensions of the period are also made possible by Arts. 19-21.
Some legal systems provide that not only the assertion of a claim in legal proceedings, but also a formal summons or other similar act may have an effect on the running of the limitation period. Art. 19 is designed to give effect to such provisions, but only under the conditions it specifies. These are that the act must be performed in the State in which the debtor has his place of business and, under the law of that State, have the effect of "recommencing a limitation period." If these conditions are met, a new limitation period of four years rather than that prescribed by the local law shall again begin running.
According to Art. 20, a new limitation period also commences to run when the debtor acknowledges his obligation in writing before the expiration of the limitation period; payment of interest or partial performance shall have the same effect as an acknowledgment if such acknowledgment may reasonably be inferred from it. The text leaves ambiguous whether the payment or partial performance must also occur before the expiration of the limitation period. However, interpolation of this requirement seems best to accord with the thrust of this provision.
Art. 21 provides for extension of the limitation period when "a [page 344] circumstance which is beyond the control of the creditor and which he could neither avoid nor overcome" prevents him from causing cessation of the running of the period. The quoted words undoubtedly include what are commonly called acts of God or force majeure. The use of these terms was deliberately avoided, because they were thought to have different meaning in different legal systems. One may well wonder if the divergencies in meaning are in fact so great and, in any event, whether the quoted words are more likely to receive uniform interpretation. Here again, novelty is not necessarily synonymous with improvement. However, the quoted words do have the merit of making reasonably clear that they include not only acts of God, but also acts of the debtor. If he is responsible for the creditor's inability to cause cessation of the running of the period, Art. 21 is also applicable. Prior drafts of this Article qualified the quoted words by requiring that the circumstance described not be "personal" to the creditor. These drafts attempted to hook into the law of various countries that there are circumstances which are properly described by the quoted words, but nevertheless do not excuse performance of a prescribed act. Included in such circumstances may be such occurrences as sicknesses and strikes. The qualification was omitted, most probably because it was thought to introduce too opaque a concept; The view was also defended that, if the creditors' sickness did in fact make it impossible to bring proceedings against the debtor, he should reasonably be entitled to benefit from Art. 21. Whatever the reasons for the omission, the courts will now have to determine to what extent, if any, "personal" circumstances are excluded. It does not, seem too bold to assume that they will tend to be inspired by the approach taken under their own law.
When a circumstance as defined in Art. 21 occurs, the period keeps on running. However, it does not expire at the time at which it would normally expire, unless that time is more than one year after the relevant circumstance ceased to exist. The end of that year marks the earliest possible end of the period.
Of course, the overall limitation of Art.23 also applies to whatever extensions may in effect be obtained under Arts. 19-21. [page 345]
VI. MODIFICATION OF THE PERIOD
Art. 22(1) lays down the general principle that the parties may not contractually modify the limitation period either upwards or downwards, but this principle is subject to important qualifications. In the first place, this prohibition can be avoided by either explicitly excluding application of the Convention pursuant to Art. 3(3) or by using the opportunity opened by Art. 1(2) or 22(3). In addition, during the running of the limitation period, it can in effect be extended by the operation of Arts. 13-21. Art. 22(2) adds to these possibilities by permitting the debtor to extend the period in writing while it is running. This extension is effective for the period specified by the debtor and may be renewed. The notion behind this provision is that there is no objection to the debtor's extending a limitation period that is designed for his protection, when he finds it in his interest to do so -- e.g., when negotiations are possible or in progress, in order to forestall the hardening of positions that litigation often occasions. The requirement that the extension must occur while the period is running was interposed to prevent a party with overbearing bargaining power to exact extension at the time of contracting. Of course, extension permitted by Art. 22(2) may, although it need not, take the form of a contract. And in any event, its effectiveness must be determined by reference to the Convention and not by reference to the law otherwise applicable to the contract.
Art. 22(3), finally, contains a special rule for arbitration proceedings. It takes the place of a more broadly formulated provision in the UNCITRAL draft  which was in part duplicative of Art. 1(2) and therefore superfluous. To the extent it related to arbitration proceedings, it was retained in reformulated form. The purpose of Art. 22(3) is to permit the parties to shorten the limitation period for the commencement of arbitration proceedings. Many arbitration clauses require submission to arbitration within a relatively short period, such as 6 months, and it was thought undesirable for the Convention to affect such clauses. It should be stressed, however, that Art. 22(3) is very narrowly drawn. It applies only when the clause requiring submission within the shorter time is contained in the contract of sale, not when arbitration is subsequently agreed upon. Furthermore, the clause must be valid under the law applicable to the contract of sale, irrespective of whether the competent tribunal would, under the applicable choice of law rules, apply another law to determine the [page 346] validity of the clause. In its formulation at least, Art. 22(3) thus seems to be wedded to the notion, prevalent in civil law countries, that limitation problems are problems of substance that are to be resolved under substantive law applicable to the contract of sale. It may be persuasively argued, however, that the courts should not heed Art. 22(3)'s language, but follow its spirit. The designation of the applicable choice of law rule does not appear to have been advertent and was not made in the similar reference contained in Art. 14(1). Since the intention was to have the validity of a clause shortening the period depend on the applicable law, a strong argument could be made for the proposition that the applicable law should be determined by the forum rather than the Convention.
VII. OVERALL LIMITATION
Application of Arts. 13-22 may lead to what in effect amounts to unduly long extension of the limitation period. In order to render this impossible, earlier drafts had provided for specific cut-off, times in particular cases. These are combined in one cut-off time in Art. 23, which provides that, notwithstanding any other provision in the Convention, the limitation period shall expire in any event ten years after it commenced to run under Arts. 9-12.
Under Art. 23, the limitation period may expire while proceedings are pending, especially in states in which litigation is time-consuming. However this need cause no problems since, according to Art. 25(1), the consequence of expiration is that no claim shall be recognized in any proceedings commenced thereafter. A prior draft of Art. 25(1), which provided that no claim should be recognized after expiration of the period, was amended so as to ensure that the limitation defense would not become available while the proceedings were pending. Thus, in effect, the same result was reached in this respect that would have been reached if the Convention had adopted the American rule on the effect of the commencement of proceedings on the running 0£ the limitation period.
The overall cut-off of Art. 23 may lead to earlier expiration of the limitation period than that prescribed by Arts. 17-20. However, the debtor, who is supposed to know the law, will be able to anticipate this. Only in the case of Art. 21 may a creditor, as a result of Art. 23, find himself in the position of confronting an expired limitation period before he has had a chance to initiate proceedings. Since the overall period is long and this is therefore not too likely to occur, the drafters of the Convention were willing to accept that risk. It would, [page 347] however, have been preferable to exempt Art. 21 from the operation of Art. 23.
VIII. CONSEQUENCES OF EXPIRATION OF THE APPLICATION PERIOD
Athough a fair number of states favored permitting the court to rely on the expiration of the limitation period on its own motion, the rule prevailing in most legal systems, that the defense of limitation must be invoked by a party, was eventually adopted in Art. 24. This was facilitated by the statement on the floor of the Conference that nothing in the Convention prevented a national court from suggesting to a party that the defense of limitation appeared to be available. In addition, Art. 36 was inserted to permit a State to declare, upon ratification of or accession to the Convention, that it will not apply Art. 24.
Art. 25(1) formulates the principal consequence of expiration of the limitation period, viz. that no claim may be recognized or enforced in legal proceedings commenced after the period expired. Art. 25(1) is not perfectly congruent with Arts. 13-16. The latter declare the date on which the claim is asserted in legal proceedings the one on which the period ceases to run, while Art. 25(1) makes the time of commencement of the proceedings the crucial one. As a consequence, it is possible that a limitation period continues to run after commencement of the proceedings and expires before the claim is asserted, but that nevertheless the expiration of the limitation period cannot be invoked because the proceedings were commenced before it expired. Art. 21(1) thus has the practical effect of extending the limitation period in those cases in which the claim is not asserted at the beginning of the proceedings by the timespan that elapses between the commencement of the proceedings and the assertion of the claim. No doubt that result was not intended. The courts should therefore be inclined to read Art. 25(1) as providing that no claim shall be recognized in any legal proceedings when it is asserted in such proceedings after the period has expired. Even if the courts were unwilling to do so, since most claims are asserted when the proceedings are commenced, the lack of congruity will probably not prove to be a serious deficiency.
Art. 25(2) provides for exceptions to the rule laid down in Art. 25(1) by permitting certain claims to be asserted by way of defense or set-off even after expiration of the limitation period. Art. 25(2) was taken over in basically unchanged form from a prior draft of Art. 25, which provided that no claim could be recognized after the limitation period had expired. It fitted well within the structure of such a rule, but would have a much narrower reach if Art. 25(1) were given [page 348] a literal reading. For, as indicated, under the text of present Art. 25(1), it is not the time at which the claim is asserted as a defense or set-off that is crucial, but the time at which the proceedings were commenced. If the proceedings in which the claim is asserted as a defense or set-off were commenced before the period expired, it would make no difference, according to the literal text of Art. 25(1), whether the period expired subsequently and before the claim was asserted, and Art. 23(2) would not be needed to provide relief. This unanticipated consequence provides an additional argument for not giving Art. 21(1) a literal construction. However, even if given such a construction, Art. 25(2) could still perform a useful service, although in a smaller number of cases. For it would still provide relief when the limitation period in regard to the claim asserted by way of defense or set-off had already expired at the time the proceedings in which the claim is asserted for that purpose were commenced.
The escape from the rule of Art. 25(1) is available not only when the claim asserted by way of defense or set-off relates to the same contract or transaction to which the principal claim relates, but also when there is no relationship between the two claims, as long as they could have been set-off before the expiration of the limitation period. Conjunction of these conditions would have been more in line with the prevailing rule in the U.S.A., but the disjunction, and consequently the considerable broadening of the exception, was made deliberately.
In many civil law countries, expiration of the limitation period is not considered to abate the claim, but only its enforceability in legal proceedings. The claim itself continues its existence after expiration of the period in the form of an obligatio naturalis. A characteristic of this obligation is that its satisfaction cannot be regarded as undue. Without explicitly subscribing to this conceptual construction, Art. 25 endorses its result: no restitution is due of satisfaction of a claim solely because it occurred after the limitation period had expired. However, Art. 25 leaves unaffected any claim for restitution that is based on facts other than the mere satisfaction of the claim. This is made clear by the use of the words "on that ground."
In order to avoid uncertainty that might result from the contention that a claim for interest is independent of a claim for principal, Art. 26 provides that expiration of the limitation period in regard to the claim for principal shall have the same effect in regard to the claim for interest.
IX. CALCULATION OF THE PERIOD
The provisions of Arts. 28 and 29, regulating how the period is to be calculated and how official holidays and other days on which the courts are not open for business affect this calculation, are [page 349] self-explanatory. The basic method is not to exclude the first day and to include the last, and to have a period end on the calendar day corresponding to that of its beginning.
X. INTERNATIONAL EFFECT
In the course of the debates at the UNCITRAL sessions, the question arose whether the Convention should serve merely the purpose of unifying the law in the ratifying States or whether it would provide truly international regulation. Art. 29 makes clear that the second solution was chosen. It requires each Contracting State to give the prescribed effect to the acts or circumstances referred to in Arts. 13-19, even if they occurred in another Contracting State. The practical consequence of this provision is to extend what is in effect the prolonging effect of these acts or circumstances to all Contracting States.
Since Arts. 20 and 21 are excluded from Art. 30's coverage, not all acts or circumstances that in effect prolong the period are given international effect by Art. 30. This exclusion makes sense insofar as it applies to Art. 21, for Art. 21 will, of itself, operate internationally in all appropriate circumstances. When a circumstance beyond the control of the creditor prevents him from causing the cessation of the limitation period in one Contracting State, but not in another, that circumstance should reasonably not be given effect in the latter State. But if that circumstance also prevents cessation of the limitation period in another Contracting State, it has international effect of its own accord.
The same is not true, however, of Art. 20. Whether acknowledgment by the debtor of his obligation, which under Art. 20 results in the beginning of a new limitation period, has that effect not only in the Contracting State in which it is made, but also in another Contracting State, does depend on whether the latter State wishes to give it that effect. Consequently, it would have been preferable to include Art. 20 among those mentioned in Article 30. Nevertheless, its exclusion should not be construed as reflecting an intention to deny an acknowledgment international effect. The debates on the floor of the Conference make clear that Art. 20 was not mentioned in Art. 30 solely because the drafters of the Convention thought that an acknowledgment would have international effect of its own accord. Accordingly, an acknowledgment should be given international effect notwithstanding its omission from Art. 30. Indeed, acts or circumstances of the kinds described in Arts. 20 and 21 should be given international effect even if they occur in a Non-Contracting State. [page 350]
Part II of the Convention, entitled Implementation, deals with problems likely to occur when a Contracting State has a federal structure and with application of the Convention in time.
Art. 31 leaves a federal Contracting State the choice of limiting the effect of the Convention to such territorial units as it may designate. When no choice is made, the Convention is effective within all territorial units. To the extent federal law regulates the issue concerned, the federal state is to be considered the proper territorial unit.
Art. 32 seeks to cope with the problem that arises when the Convention refers to the applicable law of a State and different systems of law apply in that State. Included in the latter description are not only federal states such as the U.S.A., but also non-unitary States, such as the United Kingdom. In the situation contemplated by Art. 32, the reference is to "the law of the particular legal system concerned." Which legal system that is depends on the nature of the issue and the law of the State involved. While this direction is not particularly clear, it has the merit of recognizing the problem and of indicating the proper approach towards its solution.
Since consideration of the applicable limitation may form part of contractual planning, Art. 33 prescribes that the Convention shall not apply to claims arising from, or relating to, contracts concluded before the Convention becomes effective.
XII. DECLARATIONS AND RESERVATIONS
In Part III, the Convention regulates which reservations and qualifications to the Convention are permitted.
When two or more Contracting States already apply the same or similar rules to the matters governed by the Convention, they may declare at any time that they will not apply the Convention to contracts of sale between a seller in one of these States and a buyer in another.
As a concession to those States that considered actions for annulment to be of a different species and as not properly includable in the category of claims covered by the Convention, Art. 25 permits a Contracting State, by appropriate reservation, to declare that it will not apply the Convention to such actions. [page 351]
Art. 36 permits a similar reservation in regard to the rule contained in Art. 24.
Art. 37 gives prevalence to both prior arid subsequent conventions dealing with the same subject matter, as long as the buyer and the seller have their places of business in States that are parties to such a convention.
Art. 38 permits a Contracting State, which is a party to an existing convention relating to the international sale of goods, to declare upon ratification or accession that it will apply the Convention exclusively to contracts of international sale of goods as defined in such existing convention. A declaration to this effect automatically becomes ineffective 12 months after a new Convention on the international sale of goods, concluded under the auspices of the United Nations, shall have entered into force. This provision, continually urged upon the Conference in one form or other by states that were or were contemplating becoming parties to the Convention of 1964, containing the Uniform Law on the International Sale of Goods, was inserted at the last stages of the Conference. The proponents of this provision argued that their local courts could not be expected to apply one definition of international sale of goods for the purpose of determining the substantive law applicable to the contract and another for the purpose of determining the applicable law of limitation.. The opponents argued that there was no good reason why courts should not be able to make this distinction and that it was most undesirable to vary the scope of the Convention in so basic a respect, depending on the Contracting State involved. Although the opponents seemed to have the better arguments and were steadily supported by the requisite majorities on the floor, in the end most of them voted for, or did not oppose, the very limited version contained in Art. 38. Their change of position was inspired by the hope that the concession made would significantly enhance the chances of ratification of the Convention by the largest possible number of states.
In view of the many efforts spent on its production, Art. 38 appears on closer study to be of relatively little practical significance Of course, its significance can lie only in the opportunity it afford a Contracting State to limit the scope of the Convention. For, since a state always remains free to legislate in an area not covered by a convention to which it is a party, nothing in the Convention precludes [page 352] any Contracting State from applying it not only to the contracts which it must be applied by virtue of its terms, but also to additional contracts.
Consequently, Art. 38 could serve a practical purpose only to the extent definition of international sale in the pre-existing convention is narrower than that in the Convention. The extent to which this is the case depends on the definition of an international contract of sale in the Uniform Law on the International Sale of Goods (ULIS), annexed to the preexisting convention that was the primary concern of the proponents of Art. 38. If read literally, ULIS does not even give such a definition, for it provides only that it "shall apply to contracts of sale of goods entered into by parties whose places of business are in the territories of different States," when any of three additional requirements is met. However, even if this definition of the applicable sphere of ULIS is regarded as embodying a definition of a contract of international sale of goods, it is apparent that the substance of the definition is the same as that in Art. 2(a) of the Convention. Although, under Art. 1(1) of ULIS the requirements of one of the three subparagraphs of paragraph 1 must be met, it would appear that in most cases this will not drastically limit the main thrust of the definition. Furthermore, even if the ULIS provision could be substituted for the one in Art. 2 of the Convention, the State availing itself of the opportunity afforded by Art. 38 could most probably not achieve the objective sought, namely one definition of a contract of international sale of goods in both conventions. For according to Art. 3(1) of the Convention, the limitation convention will apply only if [page 353] the seller and buyer have their places of business in different
Contracting States, while Art. 1 of the ULIS applies "as soon as they are in different States.
Special problems present themselves when a state that has ratified ULIS has availed itself of the opportunity to apply it only when its application is chosen by the parties to the contract and/or when the parties have their places of business in different Contracting States. The United Kingdom has made both reservations. As a result, the question arises whether it would be permitted by Art. 38 of the Convention to substitute the more limited definition of contract of international sale of goods for that in Art. 2 of the Convention notwithstanding the fact that the sales convention applies only then the parties have selected it, while the limitation convention would apply of its own force. The language of Art. 38 would indicate an affirmative answer, and this would also seem to further Art. 38's objective of avoiding different definitions. Indeed, it may well be argued that this objective would be realized to the furthest possible extent, since the United Kingdom's definition of a contract of international sale of goods includes the limitation that results from application of Art. 3(1) of the Convention. This result would also appear unobjectionable, since the modified ULIS definition has found its way into other areas of the law of the United Kingdom. For it is, after all, the intention of Art. 38 to permit Contracting States to preserve a measure of internal and international harmony.
Art. 39, excluding reservations not explicitly permitted by Arts. 34, 35, 36, and 38, was also the subject of rigorous dispute. Initially eliminated, it was restored by a large majority. [page 354]
Art. 40 regulates the manner in which declarations under the Convention are made and withdrawn. Neither it nor the final clauses contained in Part IV appear to raise substantial questions.
One of the merits of this Convention is that it has prompted detailed and intensive consideration on an international level of an area of the law that has not enjoyed the substantial interest of scholars. It is a complex area, presenting many difficult questions, and the Convention makes a valiant effort to deal with as many as were discerned. Although the solutions finally chosen will undoubtedly not please all, it would seem that on the whole, the Convention represents a very creditable effort to deal with a difficult subject matter. Its ratification should be seriously considered, not only because of its intrinsic merits, but also because it would represent a significant affirmation of a commitment to a continued seeking of solutions to international problems on an international plane. [page 355]
* Professor of Law, Columbia University. The author participated in the drafting of this convention as an adviser to the U.S. delegation to UNCITRAL and as a member of the U.S. delegation to the U.N. Conference on Prescription (Limitation) in the International Sale of Goods. However, the views here expressed are his own and are not necessarily shared by others.
1. U.N. Doc. A/Conf.63/15 of June 13, 1974. The text of the Convention is set forth in the Appendix to this Article.
2. For the text of this draft, see U.N. Doc. A/Conf.63/4.
3. For the text of the commentary, see U.N. Doc. A/CN.9/73 of November 6, 1972. It is also contained in U.N. Doc. A/Conf.63/5 of April 6, 1974, and is hereinafter referred to as "Commentary."
4. The nations that signed the Convention are Brazil, Byelorussia, the German Democratic Republic, Hungary, Mongolia, Poland, U.S.S.R. and Ukrania. Since then, Costa Rica has also signed the Convention. UNCITRAL is presently engaged in drafting conventions on international sales, shipping, international payments, and international commercial arbitration. The birth of its first child will undoubtedly encourage its procreative tendencies.
5. Thus far, the development of conventions in the area of international private law has been primarily the preserve of organizations like the Hague Conference on Private International Law and the Rome Institute on the Unification of Private Law, in which the developed nations have played the predominate role. In UNCITRAL, the less developed nations play a prominent part along with the developed nations.
6. The urgency of the need for a convention of this kind has been judged differently. In the U.S.A., statutes of limitation problems in the area of international sales do not appear to have loomed particularly large. However, a substantial majority of the delegations to UNCITRAL agreed that the uncertainties attending problems of prescription in the international arena in general and in relation to international sales in particular created serious problems that were in urgent need of resolution. The problems cited stemmed not only from the different lengths of limitation periods in the different legal systems and the difficulty of determining under a particular national law which period was applicable, but also from the different choice of law rules applied by the different legal systems. See Commentary p. 6-7.
7. Indeed, even personal injury claims based on privity of contract were specifically excluded. See Art. 5(a) of the Convention.
8. Similarly, the Convention does not explicitly side with either those systems that view expiration of time as extinguishing the substantive right or with those that view it as extinguishing only the enforceability of the right in legal proceedings. But cf. Arts. 25(1) and 26 of the Convention, discussed infra.
9. See Arts. 1(2), 2 and 3.
10. See Arts. 4, 5 and 6.
11. Art. 21(3) of the UNCITRAL draft, U.N. Doc. A/CN.9/73.
12. See text infra at n. 16
13. For another possible escape afforded by Art. 22(3), see text infra at n. 4.1-44. The Report of the Australian Delegation on the Convention (Australian Government Publishing Service, Canberra 1974) defends a construction of Art. 1(2), which would limit its applicability to provisions in the applicable law requiring notice of a claim within a specified period (at p. 8). However, neither the text of this provision nor its legislative history is sufficiently ambiguous to support this construction.
14. See infra n. 59.
15. Probably the most important exclusions are that of claims for wrongful death and personal injury and that of sales of securities and negotiable instruments. See Arts. 4(a) and 5(a).
16. See supra text at n. 11-13. See also Art. 22(3) and text infra at n. 41- 44.
17. Art. 8.
18. Art. 9(1).
19. See Commentary p. 28.
20. See Commentary p. 29.
21. Art. 10(3).
22. See infra n. 39.
23. See infra text at n. 45-46.
25. In exceptional cases, American law resorts to suspension. See, e.g., American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974).
26. Arts. 13-16.
27. See Arts. 17(1) and 18(3).
28. Art. 13.
29. Art. 14.
30. Art. 15.
31. Art. 16.
32. It may be noted that the formulation of Art. 18 in this respect does not follow the pattern established in Arts. 13-16. It would have been more appropriate if the text had read "where a claim has been asserted in legal proceedings." Undoubtedly, this would have better reflected the legislative intent. In any event, the courts should interpret Art. 19(1) and (2) as if it contained this language. See also the discussion of Art. 25(1), which raises a similar problem, infra.
33. This, for example, would be the applicable law in the United States, if a subsequent action were brought in the United States and the prior judgment had been rendered abroad. For authorities, see Smit, "International Res Judicata and Collateral Estoppel," 9 U.C.L.A. L. Rev. 44 (1962).
34. Art. 30 of the Convention ensures that this circumstance shall be given international effect.
35. The UNCITRAL draft did contain a provision coping with this problem; See Art. 16, U.N. Doc. A/Conf.63/4.
36. See Commentary pp. 44-45.
37. It also conforms to the general policy of the Convention not to permit the debtor to extend the limitation period after it has expired. See Art. 22(2) of the Convention.
38. See Commentary p. 47.
39. This may occur when the debtor conceals the defects from the creditor or by concealment of his whereabouts prevents the creditor from commencing proceedings against him. See Commentary p. 47. Prior drafts of the Convention contained provisions specifically dealing with these possibilities, but were omitted on the ground that the general language of Art. 21 adequately seems to cover them.
40. For an example of a rule to that effect, see AKU v. Stalen Steiger "Holland," Hoge Raad, 17 June 1949, 1949 N.J. no. 544. The Austrian Delegation's Report, supra n. 3, does consider Art. 21's language sufficiently broad to cover personal disability. However, its belief that it also covers frustration seems to go too far. Frustration covers circumstances that do not make performance impossible.
41. See Art 21(3) of the Draft. U.N. Doc. A/Conf.63/4.
42. See supra text at n. 11-13.
43. See Commentary pp. 49-50.
44. Of course, when arbitration is agreed upon during the running of the limitation period, the debtor may extend the period by a declaration in writing pursuant to Art. 22(2).
45. See Arts. 18(1). 20, and 21(2) of the UNCITRAL draft. U.N. Doc, A/Conf.63/4.
46. See Art. 24(1) of the UNCITRAL draft, U.N. Doc. A/Conf.63/4.
47. See Art. 24(2) of the UNCITRAL draft, U.N. Doc. A/Conf.63/4.
48. See Commentary p. 58.
50. This is so because in that case the condition for applying Art. 31(1) is not met.
51. See especially Arts. 1(2), 3(3) , 11, and 22(3) .
52. This provision is inspired by Art. II (1) , of the Convention Relating to a Uniform Law on the International Sale of Goods.
53. See also supra the discussion of Art. 24.
54. This rather curious argument was rooted in the conceptual notion that both the law applicable to the contract and the law of limitation were to be categorized as substantive and that the definitions prevailing in both areas therefore had to be the same. Thus conceptualism also retained its grip on international law makers. An additional, more practical, argument was that the courts and citizens would become confused, if they had to apply different definitions.
55. Indeed, some of the delegations that wished to substitute the on the whole much broader description that appears in Art. 1(1) of the Uniform Law on the International Sale of Goods stated on the floor that they would be free to expand the scope of the Convention internally as they saw fit.
56. This is why the United Kingdom, for example, was especially intent upon insertion of Art. 38 into the Convention. See also infra text at n. 60- 63.
57. For the text of the Convention Relating to the Uniform Law on the International Sale of Goods and the annexed Uniform Law on the International Sale of Goods, see Graveson, Cohn & Graveson, The Uniform Laws on International Sales Act 1967 125 (1968).
58. The full text of Art. 1(1) of ULIS reads:
"1. The present law shall apply to contracts of sale of goods entered into by parties whose places of business are in
the territories of different States, in each of the following cases:
(a) where the contract involves the sale of goods which are at te time of conclusion of the contract in the course
of carriage or will be carried from the territory of one State to the territory of another;
(b) where the acts constituting the offer and the acceptance have been effected in the territories of different States;
(c) where delivery of the goods is to be made in the territory of a State other than that within whose territory the
acts constituting the offer and the acceptance have been effected."
59. Uniformity could be achieved only by reading Art. 38 as authorizing substitution of the ULIS description for Arts. 2 and 3(1) of the Convention. That, however, is not what Art. 38 permits. It authorizes only application of the Convention, including Art. 3(1), to contracts of international sale of goods", as defined in ULIS. If, as the United States proposed, Art. 3(1) had been incorporated in the definition of a contract of international sale embodied in Art. 2, Art. 38 would have enabled the reserving state to achieve uniformity. Now this is possible only if the explicit language of Art. 38 is disregarded in favor of the purpose pursued by its proponents. Whether the courts will be willing to deal with Art. 38 so cavalierly, especially since some states may not have, objected to it because they realized that it would have very limited significance, appears far from certain. If the courts will heed the language of Art. 38, uniformity of definition could be achieved only by states, such as the United Kingdom, which have put the limitation of Art. 3(1) of the Convenuon in their ULIS definition. See infra text at n. 60-73.
60. See Arts. III and V of the Convention Relating to a Uniform Law on the International Sale of Goods.
61. See Graveson, Cohn & Graveson, supra n. 57, at v.
62. This question has been raised by Professor Kurt Nadelmann.
63. See also supra n. 59.
64. See Art. 1 in Schedule 1 to the Uniform Laws on International Sales: Act 1967, Graveson, Cohn & Graveson, supra n. 57, at 47, and Art. 1 in Schedule 2 to the same Act, id. at 111.
65. Its elimination had been urged by the U.S.S.R., most probably because of the Russian doctrine that the freedom to make any reservation it wishes is inherent in a state's sovereignty. Of course, even if Art. 39 had not appeared in the Convention, the argument that the explicit allowance of certain reservations excluded all others would have been most persuasive.
66. In the U.S.A., limitation problems are generally considered in the context of other subjects, such as procedure and conflict of laws. In civil law countries, prescription is frequently dealt with in the civil codes. This may explain not only its having been characterized as being of a substantive nature, but also its having received more systematic and comprehensive coverage in the standard commentaries. Very little appears to have been done in the limitation area on a comparative level.