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Remarks on whether the Principles of European Contract Law
may be used to interpret or supplement Articles 28 or 62 CISG

Jarno Vanto [*]
September 2004

a. Article 28 of the CISG does not have a counterpart as such in the Principles of European Contract Law. Article 28 became a part of the Convention because a need was seen to acknowledge the difference in the application of the concept of specific performance in different legal systems.

b. The remedy of specific performance assumes an extensive field of application in civil law countries and its function is primarily in upholding the pacta sunt servanda principle.[1] In common law countries the scope of the remedy of specific performance is more limited and damages are seen as the primary remedy upon a breach of contract.[2] This difference in doctrine led to the adoption of CISG Art. 28, when it was acknowledged that for the Convention to enter into force and for it to become adopted widely, it could not be expected that some of the signatory states would relinquish the fundamental principles of their judicial procedure.[3]

c. Articles 46 and 62 of the CISG give the buyer and the seller, respectively, the right to require the party in breach to perform its duties under the contract or the Convention. CISG Art. 28 provides, however, that if the law of the forum does not require specific performance in similar domestic cases of contract law, the court is not bound to enter a judgment of specific performance.[4]

d. PECL Art. 9:101 provides that even in cases where it is clear that the buyer does not want the goods, the seller may deliver the goods and demand the price unless the seller could have made a reasonable substitute transaction without significant effort or expense or because the circumstances indicate that it would be unreasonable for the seller to perform.

e. PECL Art. 9:102 (2) (a) states that specific performance cannot be obtained where performance would be impossible or unlawful. The Official Comment on PECL Art. 9:102 [5] provides that there is no right to require performance if the performance is prohibited by law, even if this prohibition, or illegality, does not nullify the contract itself. Furthermore, PECL 9:102 (2)(b) provides that performance can not be obtained when it would cause the debtor unreasonable effort or expense or (c) the performance consists in the provision of services or work of a personal character or depends upon a personal relationship; or (d) the aggrieved party may reasonably obtain performance from another source.[6]

f. The language of PECL Art. 9:102 and the commentary to it hint at a different scope of application from that of Art. 28 CISG. The nature of the performance itself is of relevance in the PECL whereas Art. 28 serves as a guideline for the court to uphold the law of the forum with regard to that law allowing, or not allowing, specific performance as a remedy in a domestic sales contract dispute. Article 28 is devoid of a qualitative analysis of the performance as such and serves to exclude specific performance in some jurisdictions as a remedy for a breach of contract governed by the CISG, not because of the circumstances surrounding the claim, but because a jurisdiction does not grant the right to specific performance in similar contracts of sale in the first place. It is a general right under the CISG that the aggrieved party is entitled to specific performance, unless the party has resorted to a remedy which is inconsistent with it. CISG Art. 28 is based on the premise that the party is entitled to specific performance if he fulfills the requirements under the Convention. This right is limited, however, by the rules of the jurisdiction with regard to the remedies available to the aggrieved party. There is no similarity between the approaches of the CISG Art. 28 and the PECL Art. 9:102 because the articles do not serve the same purpose in determining a party's right to specific performance.

g. Articles 9:101 and 9:102 of the PECL lead to largely the same results as other intertwined CISG articles do, but are dissimilar in their effects to Art. 28 of the CISG and consequently the Principles of European Contract Law cannot be used to interpret Art. 28 of the Convention.

h. With regard to Art. 62 CISG, that article provides that the seller may require the buyer to pay the price, take delivery or perform his other obligations, unless the seller has resorted to a remedy which is inconsistent with this requirement.[7]

i. PECL Art. 9:101 [8] may give a hint to the interpreter as to what kind of remedy is of the variety that is inconsistent with the requirement to pay the price. If a seller has entered into a substitute transaction that is reasonable in nature, no right to demand the payment of the price would exist in the meaning of Art. 62. The seller has the right to deliver and demand the payment of the price, albeit limited by the aggrieved party's duty to mitigate her damages. However, the intervening circumstances between the buyer's non-performance and seller's insistence on buyer's performance may warrant the exclusion of the seller's right to demand buyer's performance. Article 62 CISG is one-sided in its approach in that it leaves the application of the remedy of specific performance dependent only on the seller's choice of a remedy and not from extraneous circumstances that might otherwise render the use of that remedy useless. Consequently, Art. 9:102 (2) of the PECL does not provide an interpretive platform to Art. 62 of the Convention.


FOOTNOTES

* Jarno J. Vanto holds a Bachelor of Laws-degree and a Master of Laws-degree from the University of Turku and an LL.M. degree from the New York University School of Law. He is a member of the New York Bar. Mr. Vanto has authored a number of articles on data protection law and on international commercial agreements. He is the Editor-in-Chief and co-author of the International Privacy Guide and Co-Editor and co-author of the International Contract Manual, both published by West, a Thomson-Reuters Business.

1. Huber, Ulrich in Schlechtriem Peter, Commentary on the UN Convention on the International Sale of Goods (CISG), Clarendon Press, Oxford, 1998, p. 199.

2. Ibid.

3. See the Secretariat Commentary and Subsequent Comments by Prof. Eric E. Bergsten on Art. 28 of the CISG (and its draft counterpart, article 26 of the 1978 Draft Convention), available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-28.html>.

4. Bernstein, H., Lookofsky, J., Understanding the CISG in Europe, Kluwer 2003, p. 120.

For relevant case law see

     -    United States 7 December 1999 Federal District Court [Illinois] (Magellan International v. Salzgitter Handel), presentation available online at <http://cisgw3.law.pace.edu/cases/991207u1.html>, where the Court stated that the remedy of specific performance is generally available under the Convention (Art. 46(1) CISG), with the exception that a Court is not bound to enter judgment for specific performance unless it would do so under its own law of contracts;
     -    Switzerland 31 May 1996 Zürich Arbitration proceeding, presentation available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>, where the Arbitral Tribunal, dealing with the remedies claimed by the buyers, stated:348. The Arbitral Tribunal believes that this is primarily a question of the applicable law. It sees no basis for claims for specific performance under Russian law. The Vienna Convention does not provide for this. If the law applicable to the procedure (Swiss law? - again the Vienna Convention) applied, the Arbitral Tribunal sees no basis for specific performance either.
349. Apart from that the Arbitral Tribunal fails to see how specific performance could be an appropriate remedy for [buyers] in this case. They can hardly expect to be able, under the New York Convention or otherwise, to have an award enforced in Russia providing that [seller] must specifically perform its obligations under the various contracts for the next eight or ten years, producing the aluminum and delivering it to [buyers]. The Arbitral Tribunal will accordingly grant [buyers'] "alternative" request for relief in the form of damages.

5. The Official Comment to article 9:102 PECL is available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp28.html#9102>.

6. For an analysis of the manner in which Art. 9:102 PECL may be used to interpret or supplement Art. 46 of the CISG see Jarno Vanto, Editorial Remarks, available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp46.html#er>.

7. See the Secretariat Commentary on Article 58 of the 1978 Draft Convention (predecessor to Article 58 of the CISG) [Art. 58 of the 1978 Draft and Art. 62 of the CISG are substantively the same], available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-62.html>, which provides that in order for the seller to exercise the right to require performance of the contract he must not have acted inconsistently with that right, e.g., by avoiding the contract under Art. 64 CISG.

8. See the Official Commentary on PECL Art. 9:101, available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp62.html#9:101>.


Pace Law School Institute of International Commercial Law - Last updated May 26, 2009
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