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Petar Sarcevic & Paul Volken eds., International Sale of Goods: Dubrovnik Lectures, Oceana (1986), Ch. 1, 1-17. Reproduced with permission of Oceana Publications.

The Vienna Sales Convention: History and Perspective

Kazuaki Sono
Secretary of UNCITRAL, Vienna

1. Introduction
2. Predecessors: The 1964 Hague Conventions
3. Interaction of UNCITRAL and the 1964 Hague Conventions
4. UNCITRAL work toward a new convention
5. Adoption of the Vienna Sales Convention; a tribute to the Hague Uniform Laws
6. Essential characteristics of the Vienna Sales Convention
7. Prospects for global implementation
8. Its sister convention: Prescription Convention
9. A prologue: Toward a global restoration of the rule of reasons

1. Introduction

With bright prospects for the entry into force of the United Nations Convention on Contracts for the International Sale of Goods of 1980, now popularly known as the Vienna Sales Convention,[1] unification at a global scale is finally in sight in this field after over half a century of efforts. The Vienna Sales Convention now enjoys praise throughout the world as a workmanlike attempt to devise legal rules and practical procedures for international sales transactions. Once the Vienna Sales Convention enters into force, it will assist to smooth the process of international sales.

The Convention will be made applicable to the sales contract concluded between parties having places of business in different Contracting States. Nationality of parties has no relevance to the application of the Convention. Freedom of contract has been retained. Most of the provisions of the Convention are supplementary to [page 1] agreements between parties. Detailed practical and basic rules are provided to assist parties in cases where their agreements do not otherwise provide.

2. Predecessors: The 1964 Hague Conventions

The attempt to unify the law of international sale of goods is not new in the international arena. Indeed, the work of the United Nations Commission on International Trade Law (UNCITRAL), which resulted in the adoption of the Vienna Sales Convention was the culmination of a long process of unification in this area, whose origins go back to a decision of the International Institute for the Unification of Private Law (UNIDROIT) in 1930 to proceed with the preparation of a uniform law on the international sale of goods under the auspices of the League of Nations. As is well known, Professor Ernst Rabel's report submitted to UNIDROIT suggesting both the feasibility and the desirability for the unification was instrumental to this move. This unification effort, with an interruption between 1939 and 1951 due to the Second World War, carried on into the early 1960's, and resulted in the convening of a diplomatic conference at the Hague in 1964. The conference adopted the two uniform laws, one on the international sale of goods (ULIS) and the other on the formation of contracts for international sales, annexing them to two international conventions.[2] These conventions are presently in force but the number of Contracting States is limited and they are mostly from Western Europe.[3] [page 2]

3. Interaction of UNCITRAL with the 1964 Hague Conventions

When UNCITRAL, which was created by the United Nations General Assembly in 1966 to promote "the progressive harmonization and unification of the law of international trade,"[4] held its first session in 1968, it of course considered if there was any way to promote wider acceptance of the two Hague Conventions which were, after all, precious products of international endeavours since 1930. By that time, three States had ratified the Hague Conventions, and the Conventions had thus not yet come into force. The Commission therefore considered it desirable first to inquire about the intentions of States to adhere to the Hague Conventions and the reasons there against in case of a negative attitude.

The received replies, together with an analysis thereof, were considered by the Commission at its second (1969) and third (1970) sessions. At the second session, some representatives expressed the view that the Hague Conventions were suitable and practical instruments, and that an effort should not be undertaken at that time to revise them. Other representatives, however, believed that the Conventions were not suitable for worldwide acceptance. Above all, the responses to the questionnaire were mostly too pessimistic to promote the Hague Conventions. The reasons were diverse: The Hague Conventions were too dogmatic, complex, predominantly of the European civil law tradition and lacked clarity even for ordinary lawyers. Moreover, the Hague Conventions had no global representation in the rule making. In fact, at the 1964 Hague Conference, Latin America was only represented by Colombia, Asia by Japan, and Africa by Egypt. [page 3]

4. UNCITRAL work toward a new convention

The Commission accordingly decided to create a Working Group on the International Sale of Goods, consisting of 14 (later increased to 15) States chosen from its members, and instructed it to ascertain whether the Hague uniform laws might be modified so as to render them capable of wider acceptance by countries of different legal, social and economic systems, or whether it would be necessary to elaborate a new text. The Working Group was also instructed to consider ways and means by which a more widely acceptable text might best be prepared and promoted.

The Working Group devoted its first seven sessions to the consideration of the Hague Uniform Law on the International Sale of Goods (ULIS), and by 1974 had considered and prepared a number of revisions of articles of that uniform law. At its sixth session (1975), the Working Group decided to draft the revised text of ULIS in the form of an "integrated" convention rather than in the form of a uniform law annexed to a convention (as was the case with ULIS) in order to make the substantive provisions of the uniform law applicable even without resort to a further domestic legislation whenever feasible (i.e., self-executory), and, at its seventh session (1976), the Working Group adopted its draft text as well as a commentary thereon prepared by the Secretariat: the Commission, on the basis of the draft text prepared by the Working Group, subsequently approved a draft Convention on the International Sale of Goods in 1977.

Thereafter the Working Group devoted its final two sessions to a consideration of the formation and validity of contracts for the international sale of goods. It based its deliberations on the [page 4] 1964 Hague Uniform Law on the Formation of Contracts for the International Sale of Goods and a draft prepared by UNIDROIT of a law for the unification of certain rules relating to the validity of contracts of international sale of goods. In 1977, the Working Group adopted the text of a draft Convention on the Formation of Contracts for the International Sale of Goods and upon its request a commentary thereon was subsequently prepared by the Secretariat.

In 1978, the Commission decided to integrate the draft Convention on the Formation of Contracts and the draft Convention on the International Sale of Goods into a simple text and adopted the UNCITRAL Draft Convention on Contracts for the International Sale of Goods. At the same time, it recommended to the General Assembly that a conference of plenipotentiaries be convened for adoption of the Convention. It is noteworthy that, throughout the above process, at each stage of the adoption of a draft text of a convention either at the level of the Working Group or of the Commission, the text was sent with the accompanying commentary to Governments and interested international organizations for their comments and proposals, and that they were carefully analysed and considered in improving the text.

5. Adoption of the Vienna Sales Convention; a tribute to the Hague Uniform Laws

Careful preparation for the holding of a diplomatic conference ensued thereafter including the preparation of a commentary, draft provisions for the Convention concerning implementation, reservations and other final clauses, as well as [page 5] solicitation of comments on the draft Convention from Governments and interested international organizations and the analysis thereof. At the United Nations Conference on Contracts for the International Sale of Goods, held from 10 March to 11 April 1980 at the Hofburg in Vienna, the Vienna Sales Convention was adopted unanimously on 10 April with 62 States participating. There were relatively few amendments to the UNCITRAL draft text, which attested the soundness of the preparatory work.

Retrospectively observed, it was indeed bad luck for the Hague Conventions to have been adopted in 1964, which was the wrong time. Although the legislative process was open to all States, the newly emerging developing countries were not yet necessarily at the forefront of the international scene. Socialist countries were almost about to join or even to initiate the global unification effort of the law of trade, perhaps partly based on the then new trend for the strengthening of the East-West economic relations, but the timing was still a few years short. The United States decided to join in the unification movement in 1964 for the first time, but was not well-prepared for the Hague Conference although it participated. While definitely, not fair at all to the authors of the Hague Uniform Laws, particularly in light of the fact that many of their substantive approaches have indeed been retained in the Vienna Sales Convention in a simplified and practical fashion, the adoption of the Hague Conventions setting forth the uniform laws for the "international" sale of goods predominantly by Western European countries was politically an unintended act of intellectual imperialism for those who did not participate in the legislative process.[5] [page 6]

6. Essential characteristics of the Vienna Sales Convention

Besides retention of the principle of the freedom of contract in international sales, the essential characteristics of the Vienna Sales Convention are simplicity, practicality and clarity. It is free of legal short hand, free of complicated legal theory and easy for businessmen to understand.

The use of any legal short-hand expression, such as force majeure, tends to produce different meanings depending upon which legal system applies. Therefore, the Convention avoids the use of any short-hand terms which might be susceptible to receiving different interpretations. In cases in which a short-hand expression had to be used, such as the word "delivery," the drafters of the Convention provided a clear definition. That the Convention is free from dogma is important because it is, after all, businessmen who must understand the meaning of the provisions. The Convention is written in businessmen's language with practical details. In a dogma-oriented jurisprudence, a rule tends to be drafted in an abstract way so as to cover all possible situations. This was the approach of the 1964 Hague Conventions. However, the Vienna Sales Convention is modest in this respect. It even admits that some matters are not covered and are left to be resolved by the law applicable under the traditional rules of private international law. Paragraph (1) of article 7 of the Vienna Sales Convention reads in part: "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 ..." This provision discourages any resort to domestic [page 7] legal concepts and tries to free judges, particularly in countries of the common law tradition, from the iron chains of precedents, thus permitting them to examine foreign cases as well in order to attain uniformity in the application of the Convention.

7. Prospects for global implementation

The Vienna Sales Convention will enter into force on the first day of the month following the expiration of twelve months after the date of the deposit of the tenth instrument of ratification or accession. Twenty-one States [6] signed the Convention while the Convention was open for signature until 30 September 1981, and at present there are seven ratifications or accessions from the following States: Argentina, Egypt, France, Hungary, Lesotho, Syrian Arab Republic and Yugoslavia. Of course, much time is often needed in many countries for internal processing for ratification or accession even after a substantive decision has been made. However, we have been informed that official steps toward ratification were already being taken in several States and there are clear indications that the Convention will obtain many ratifications or accessions at a truly global scale in the near future.

The following are some indications which attest this prediction: The Attorney-General of Australia announced on 22 November 1984 at the Asian-Pacific Regional Trade Law Seminar the decision of his Government to commence process for accession. Bulgaria and Venezuela announced at the 1983 United Nations General Assembly (Legal Committee) that ratification and accession were favourably being considered. The Convention is before the Parliament of Czechoslovakia. [page 8] Austria and China are reported to be in the process for ratification. The favourable attitude of Canada, Iceland and Sierra Leone is also known. The Scandinavian countries, (Denmark, Finland, Norway and Sweden), which signed the Convention on the same day, are proceeding for ratification again in a concerted manner, together with their effort to establish a common text relating to domestic sales in line with the rules obtained in the Convention. In the United States, after the American Bar Association indicated its support for the Convention, the President recommended its ratification and the Convention is now before the Senate. It is also noteworthy that other European countries, including those which are members of the 1964 Hague Conventions, are strongly in favour of the Vienna Sales Convention. Once the exact date of the entry into force of the Vienna Sales Convention becomes definite, it is expected that these States, particularly those Contracting States of the Hague Conventions, will proceed to ratification jointly by denouncing the Hague Conventions in accordance with the formula as provided in the Vienna Sales Convention dealing with the transition.

On a more general scene, the following movements may also be noted. At the international trade law seminar of the Council of Mutual Economic Assistance (CMEA) held in Moscow in March 1983, where senior officials of ministries of foreign trade of CMEA countries assembled, general approval was given to the Convention as well as to the Prescription Convention. The Asian-African Legal Consultative Committee has recommended that its member States favourably consider ratifying the Vienna Sales Convention. The LAWASIA at the Manila Conference held in September 1983 also adopted a resolution urging [page 9] governments in the region to ratify the Convention within the shortest possible time. The German speaking States -- Austria, Federal Republic of Germany, German Democratic Republic and Switzerland -- have already established a common German text of the Convention. Many other international meetings, including the Asian-Pacific Regional Trade Law Seminar (Canberra, November 1984), the First International Trade Law Seminar (Ottawa, October 1983) and the Andean Regional Trade Law Seminar (Bogota, April 1985), focus on the Vienna Sales Convention because of its importance. The International Chamber of Commerce has urged its national committees to approach their respective governments for ratification within the shortest possible time.

8. Its sister convention: Prescription Convention

Because of the popularity of the Vienna Sales Convention and due to the increasing reputation of the work of the commission in general, its sister convention, i.e., the Convention on the Limitation Period in the International Sale of Goods (New York, 1974) (often referred to as Prescription Convention),[7] is also attracting favourable attention as a useful convention to supplement the Vienna Sales Convention on important aspects of limitation on the assertion of rights and claims arising from international sales. A protocol to this Prescription Convention was adopted in 1980 at the same diplomatic conference which prepared the Vienna Sales Convention in order to align the contents of the Prescription Convention with those of the Vienna Sales Convention particularly in respect of the sphere of application.[8] The Prescription [page 10] Convention will enter into force on the first day of the month following the expiration of six months after the date of the deposit of the tenth instrument of ratification or accession. Fourteen States [9] signed the Convention while the Convention was open for signature until 31 December 1975, and at present there are eight ratifications or accessions from the following States: Argentina, Czechoslovakia, Dominican Republic, Egypt, Ghana, Hungary, Norway and Yugoslavia. It is expected that this Convention will also enter into force in the near future at almost the same time as the Vienna Sales Convention.

The Prescription Convention establishes unified rules for the operation of the limitation or prescription period in the international sale of goods. The Convention attempts to avoid the sharp contrast in approaches between common law countries and civil law countries, i.e., between the common law "statute of limitation" approach at the procedural law level and the civil law "prescription" approach at the substantive law level. Besides regulating the limitation period (which is four years as a general rule) for rights and claims arising from international sales contracts, the Convention touches upon the interesting question of international res judicata or the international effect of prescription, a legal aspect on which solution can be found only through a convention.

9. A prologue: Toward a global restoration of the rule of reasons

However, why are we undertaking such an exercise? About two years ago I wrote a commentary on the Vienna Sales Convention in Japanese. I asked my wife to help me in straightening the [page 11] manuscript. Since she would read the paper in that case, I was expecting that she would understand what an important work I was doing. She did the work but kept silent, but I was curious to hear her reaction to the work. She said, "What you wrote is very easy to understand and makes sense." I smiled at her. "But," she continued, "it's all common sense. Do you really have to spell out all those details as to the rights and duties of the seller and buyer, including the seller's obligation to deliver the goods in conformity with the contract and the buyer's obligation to pay the price, which are so obvious?" I told her that it took fifty years to reach this legal text. Her response was, "It's unbelievable." I felt sorry for her because her message was apparent that she thought I had been doing something more intelligent. However, this is unfortunately the reality of international life.

In the medieval age in the Mediterranean area, there existed a lex mercatoria which knew no boundary in its application. However, as the modern notion of sovereignty became crystallized, the localization of the law of trade commenced through the intervention of national legislatures. The trend was further intensified particularly after the Industrial Revolution as each sovereign State endeavoured to strengthen its own national legal system to appear as a modern industrial nation. The commercial law of each State became sophisticated as legal theories refined it. The complexity was further aggravated as lawyers, sometimes for the pure sake of logic whether based on the reality of life or not, assisted in the expansion of the jungle of technicalities within each State to the exclusion of laymen. The lawyers, as specialization and division of work within the law developed, sometimes [page 12] even neglected the need to reflect upon the raison d'être of the law. Geldart wrote on the first page of his famous book, Elements of the English Law, that lawyers speak of the law while laymen speak of laws. However, we might have often been indeed such laymen.

The last fifty years, which were necessary to come up with the present text of the Vienna Sales Convention, represented a series of precious efforts to unwind such sophisticated localization of the law in favour of delocalization and the restoration of the rule of reasons in order to eliminate unnecessary legal obstacles to the flow of trade. When delegates participate in the elaboration of international legal texts, it is understandable for them first to compare a proposed rule with their domestic counterpart. However internationally minded they may be, their basic commitment is after all to their sovereign, particularly when they represent their governments. Those who concentrate on nothing but how the reasonable global rule should be must learn the need for patience when they hear such statements as "My delegation fully supports the proposed rule because it corresponds to our law." At the same time, however, the "compromise in the constructive spirit" has been one of the important driving forces for delocalization.

Many developing countries neither have sophisticated legal systems nor extremely refined legal theories which are beyond the reach of laymen. At the unification forum, they often keep silent when subtle technical points are discussed which can only be comprehended by those who have traditionally been exposed to such arguments by long training, and look at the laws of developed nations with suspicion. They insist on the establishment of a new legal order, which would ensure [page 13] their participation on a fair and equal basis. This is quite understandable. Businessmen are also at a loss when they are told of inscrutable legal logic beyond their comprehension. The jungle of technicalities has well developed to strengthen the lawyers' monopoly of "laws." However, let us forget for a moment that we are lawyers, and read articles 25 to 88 of the Vienna Sales Convention as a businessman who has no legal education. It will be rediscovered that the Convention is clear and easy to understand and, most importantly, it will be realized that the rules are after all full of common sense and spelled out in businessmen's language. If "mutual trust," the need of which is often emphasized by the Chinese delegation in UNCITRAL, prevailed in business, many of the provisions may not even be necessary. What the Vienna Sales Convention has done is therefore in a sense the restoration of the rule of reasons through the delocalization of laws, or the restoration of "the law" in Geldart's sense. This is, however, just the beginning of the global process for the unification of the law relating to international trade. Moreover, practically speaking, the Vienna Sales Convention was rather an easy one to begin with because the parties' autonomy is most respected in the sales area throughout the world and the rules contained in the Convention are only supplementary for those cases where parties did not provide otherwise in their contracts. When it comes to the question of ratification or accession, however, we are still faced with the cool reality: Politicians would straightforwardly ask about the "benefit" which they can expect out of the ratification before acting in its favour. In such a field as the sale of goods and particularly where the rules contained in a [page 14] convention are voluntary in nature as compared to a mandatory character, we cannot expect the emergence of strong lobbying groups. Only when statesmen can foresee the implication in a long- range global perspective of the accession as a vitally important step for the creation of a better international order, the positive step can be expected. Fortunately, however, favourable attitudes prevail all over the world and no seriously critical comments on the Vienna Sales Convention have been heard, and many individuals are now working hard to persuade their governments to move forward. It also seems to be becoming clearer to national legislatures that, to say the least, States will not lose anything by acceding to the Convention because of the very supplementary nature of the rules in the Convention to the parties' autonomy. Whatever motive it may be, by getting on board we can further accelerate the speed of the bandwagon, which has already started rolling. Above all, we know that it is much easier to understand one convention than to understand a great number of foreign laws, the miscomprehension of which has often been the source of unnecessary disputes. [page 15]


FOOTNOTES

The views expressed in this article are those of the author in his personal capacity.

1. Official Records of the United Nations Conference on Contracts for the International Sale of Goods (United Nations Document A/CONF.97/19; United Nations Sales Publication No. E.81.IV.3) (Text of the Convention also reprinted in UNCITRAL Yearbook (1980), Vol. XI, Part three, I (United Nations Sales Publication No. E.81.V.8)).

2. Convention relating to a Uniform Law on the International Sale of Goods, The Hague, 1 July 1964, and Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods (Both texts are reprinted in Register of Texts of Conventions and Other Instruments Concerning International Trade Law, Vol. I, Chapter I (United Nations Sales Publication No. E.71.V.3)). For the historical detail of the process which led to the adoption of the Hague Uniform Laws, see P. Winship, "The Scope of the Vienna Convention on International Sales Con tract," in N.M. Galston and H. Smit, eds., International Sales: The United Nations Convention on Contracts for the International Sale of Goods (New York 1984) pp. 1-1,1-4 to 1-13.

3. Belgium, Federal Republic of Germany, Israel, Italy, Netherlands, San Marino, The Gambia and United Kingdom. Israel ratified only ULIS.

4. General Assembly Resolution 2205 (XXI) of 17 December 1966 (reprinted in UNCITRAL Yearbook (1968-70), Vol. I, Part one, II (United Nations Sales Publication No. E.71.V.1)). The Commission annually publishes a Yearbook relating to the work carried out by the Commission during the year covered. The Yearbook reproduces nearly all of the documents prepared by the Secretariat over the course of the year for the commission and its Working Groups, and reports of the Commission and its Working Groups. Detailed information at each stage of the development as described below toward the formulation of the Vienna Sales Convention may therefore be found in the UNICITRAL Yearbook of a particular year.

5. E. Bergsten, "Basic Concepts of the UN Convention on the International Sale of Goods," in P. Dora1t, ed., Das UNCITRAL-Kaufrecht im Vergleich zum osterreichischen Recht (Vienna 1985), pp. 15 and 16.

6. Austria, Chile, China, Czechoslovakia, Denmark, Finland, France, Federal Republic of Germany, German Democratic Republic, Ghana, Hungary, Italy, Lesotho, Netherlands, Norway, Poland, Singapore, Sweden, United States of America, Venezuela and Yugoslavia.

7. Official Records of the United Nations Conference on Prescription (Limitation) in the International Sale of Goods (United Nations Document A/CONF.63/16; United Nations Sales Publication No. E.74.V.8); for commentary of this Convention, see United Nations Document A/CONF.63/17 (reprinted in UNCITRAL Yearbook (1979), Vol. X, Part three, I).

8. See note 1, above.

9. Brazil, Bulgaria, Byelorussian SSR, Costa Rica, Czechoslovakia, German Democratic Republic, Ghana, Hungary, Mongolia, Nicaragua, Norway, Poland, Ukranian SSR and the Soviet Union.


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