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Reproduced with permission of Camilla B. Andersen & Ulrich G. Schroeter eds., Sharing International Commercial Law across National Boundaries: Festschrift for Albert H. Kritzer on the Occasion of his Eightieth Birthday, Wildy, Simmonds & Hill Publishing (2008) 600-626

CISG, CIETAC Arbitration and the
Rule of Law in the P.R. of China:
A Global Jurisconsultorium Perspective

Fan Yang [*]

INTRODUCTION

A global jurisconsultorium, or a comity of nations, is
the proper setting for uniform international sales law.

-Albert H. Kritzer

In October 2007, the Institute of International Commercial Law of Pace University School of Law and the Wuhan University Institute of International Law jointly hosted an international conference on "The Application and Interpretation of the CISG in Member States With Emphasis on Litigation and Arbitration in People's Republic of China" in Wuhan, China. The conference attracted leading scholars and jurists from around the world to present and discuss a wide range of complex issues concerning the rights and obligations of buyers and sellers in international sales transactions under the CISG (The United Nations Convention on Contracts for the International Sale of Goods). Professor Albert H. Kritzer, globally recognized for his work on the CISG, presented a paper on "Application and Interpretation of the CISG in the P.R. of China -- Progress in the Rule of Law in China,"[1] in which he shared his vision of China in a global consultorium of prominent nations, [page 600] each acting respectfully of one another, in concert with one another; and each striving to improve trade in its own country and with other countries.

Over the years, Professor Kritzer has identified and shared with the world CISG community a wealth of information on the CISG, in particular, a bibliography of 8,000 citations, 1,100 texts of scholarly writings and 2000 court and arbitral decisions on the CISG from around the world, published and accessible for free access on the renowned Pace CISG online database.[2] His achievements in marshalling case reports, translations and secondary literature, and in promoting the cause of uniform law, command the highest respect. His efforts have earned the gratitude of scholars, practising lawyers, judges and arbitrators across the globe. They have benefited immensely from his distinguished achievements and invaluable inspirations.

Among the 70 contracting states of the CISG,[3] China is Professor Kritzer's favourite. He pointed out that, of all reported cases, China is among the top adherents to the CISG. At the current rate, China will soon surpass all other nations in its support for a uniform international sales law under the CISG.[4] The Pace CISG database [5] currently reports 320 CISG cases from the People's Republic of China,[6] of which 268 are arbitration awards from the China International Economic and Trade Arbitration Commission ("CIETAC").[7] For article-by-article case law annotations of the CISG by courts and arbitral tribunals of the People's Republic of China, see <http://cisgw3.law.pace.edu/cisg/text/PRC-anno.html>. This resource hosts an immense amount of material. For example, damages is the most important remedy under the CISG (indeed, under any sales law), and Article 74 contains the CISG's general rules on damages. The Pace CISG database presents 189 Chinese court and arbitral interpretations of Article 74. See <http://cisgw3.law.pace.edu/cisg/text/PRC-74.html>. There is also an abundance of Chinese scholarly writings [page 601] on the CISG; over forty pages of citations to such writings may be found at <http://cisgw3.law.pace.edu/cisg/biblio/biblio-chi.html>. Through this database, Professor Kritzer has made vast volumes of court and arbitral decisions rendered under the CISG in China and elsewhere, as well as an enormous amount of international scholarly writings on the subject, more readily available and accessible.

Professor Kritzer commented that a number of the world's arbitral institutes do not make their CISG decisions readily available, and hence they do not appear on the Pace website. For instance, the Pace website currently does not report any arbitral awards on CISG proceedings from the American Arbitration Association (AAA), although the AAA has handled a number of them. Likewise, the Pace website reports only three arbitral awards from the Stockholm Chamber of Commerce (SCC), although Professor Kritzer believes there have to be many more CISG proceedings from SCC. Professor Kritzer further believes that the number of awards reported on the Pace website from the International Chamber of Commerce is only a fraction of the CISG cases processed by ICC arbitral tribunals. Thus, the 2,000 or more cases reported in the Pace CISG database likely understate the total of CISG proceedings that have so far taken place.

In contrast with most of the world's arbitral institutes which do not report or rarely report their awards, CIETAC provides extensive redacted reports on arbitral proceedings. In keeping with the principle of confidentiality, a basic feature of commercial arbitration, all of the awards that CIETAC has published have been redacted to avoid identification of parties. Also, as a general rule, CIETAC does not report arbitral awards until they are three years old. In Professor Kritzer's words, CIETAC has become a world leader in transparency of awards, in the sense that CIETAC has shared with the world trade community the full texts of more uniform international sales law awards than any other arbitral institute.[8]

In promoting the study of Chinese CISG case law, Professor Kritzer initiated "The Professor Tang Houzhi Program"[9] in honour of China's leading arbitration scholar. Professor Tang Houzhi has received a medal of honour [page 602] from the King of Sweden for his distinguished contribution and devotion to international arbitration. Working together, Professors Kritzer and Tang committed themselves to set in place a Chinese CISG case translation project to make more Chinese cases and arbitral awards available to the world CISG and arbitration community. The importance of this project is to promote rigorous legal reasoning and standards of legal interpretation,[10] and to serve as a useful guide for judges and arbitrators to encourage consistency and predictability.[11] To date, 200 Chinese CISG cases have been translated and earned the seal of the Professor Tang Houzhi Program.[12] These case translations provide a basis for further research in the application and interpretation of the CISG in China, as well as for further study among all contracting states of the CISG. Moreover, Professor Kritzer supports and assists Wuhan University School of Law's creation of a CISG-China online database, which will be available in both Chinese and English and will make more Chinese CISG case law and commentary globally available.

In pursuit of the rule of law in China, one still encounters concerns of transparency. But in the field of CISG, thanks to Professor Kritzer, the reported Chinese court cases and CIETAC arbitral awards in particular have shown dramatic progress with respect to transparency. As a result of Professor Kritzer's work in making these decisions available, traders, practitioners and scholars are better able to understand the progress of the rule of law in China.[13] Based on the reported Chinese court cases and CIETAC arbitral awards so far available, it is observed that the CISG has been popularly applied in litigation and arbitration in China.[14] There are many cases in which the contracting parties or the Chinese tribunal elected to apply the CISG in a [page 603] situation in which, by its terms, it would not otherwise apply.[15] CISG is highly relevant to the law of international and foreign-related sales contract under  the current PRC law and arbitration practice.[16] Whether Chinese tribunals have shown a bias toward applying CISG for its own sake is an understanding of the substance and elaboration of CISG concepts and provisions as applied in actual cases. It remains fundamental that tribunals in China as well as in any other contracting states must in fact understand, apply and interpret CISG concepts and provisions correctly and in line with the uniform goal of the CISG. In this regard, the value of global jurisconsultorium [17] in the application and interpretation of CISG in all contracting states, is self-evident and extends far beyond China or the territory of any state. Courts, arbitral tribunals, practitioners, legal scholars and institutions are all called to promote the global harmonization of international rules of law so as to facilitate and safeguard the development of international trade and commerce.

In her new book, "Uniform Application of the International Sales Law: Understanding Uniformity, the Global Jurisconsultorium and Examination and Notification Provisions of the CISG",[18], Dr Camilla Baasch Andersen demonstrates the considerable value of the global use of CISG precedents and analyses in particular the idea of the "jurisconsultorium" as the heart of a new discipline of uniform law. Although there are well-acknowledged concerns that the concept of a global jurisconsultorium may well raise numerous issues of comparative law and legal theory, such as reconciliation of legal traditions in drafting, the comparative use of precedents, sources of law, and the discipline of uniform law as such,[19] the present article endeavours [page 604] to demonstrate the approach of jurisconsultorium by way of a comparative case study of the application and interpretation methodology of Article 14 in the CIETAC Pig Iron case (25 December 1998)[20] and some other selected cases in the following 9 other contracting states: Austria, Belgium, Canada, France, Germany, Hungary, Russia, Switzerland and the United States. The author advocates for the participation of the People's Republic of China (PRC) in the exercise of global jurisconsultorium.

It is submitted that when examining the convergence or divergence among national courts in interpreting the CISG, national notions or terminologies of different languages used in various contexts may or may not be evident, but what really counts should be the understanding of the substance, the comprehension and the elaboration of those terms in actual cases instead of the name or the mere appearance of the language text. The fundamental issue therefore is not which Chinese words or calligraphy characters have been adopted to translate/refer to their English counterparts, but whether those concepts and provisions in fact have been interpreted and applied by the PRC tribunals differently. By way of example only, the question is whether the CIETAC Pig Iron case (25 December 1998)[21] would be decided differently in other CISG contracting states.

The answer to the above question could only be hypothetical. It is unlikely that there could be two identical cases to provide the answer, but by comparing various approaches of tribunals in some selected cases in 10 different contracting states, it is hoped that the present article, can contribute as an example and/or a pattern for the methodology of global jurisconsultorium in the application and interpretation of the CISG. The selected cases will not be explored fully, but with a focus on the methodology and approaches adopted by various tribunals for the purpose of the discussion in this article. [page 605]

Austria

The Austrian courts in the Chinchilla furs case [22] relying on the wording of Article 14(1) recognised "implicit determination" of the quantity and price of the specified goods. In deciding whether the required minimum content of an offer can be understood as being sufficiently definite, the Austrian courts referred to Article 8(2) CISG and interpreted "sufficiently definite" as understood by "a reasonable person of the same kind' as the other party (offeree) would have "in the same circumstances".[23] The Austrian courts, albeit without explicitly referring to Article 9, referred to Article 8(3) CISG in determining the intent of a party or the understanding a reasonable person would have had, and considered that due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.[24]  [page 606]

Thus, the buyer's later conduct of selling on the delivered goods apart from a small number, without raising any objection as to the quantity of the goods delivered, has been taken as a primary point by the Supreme Court in concluding that the order of "a larger number of furs" must have been seen as sufficiently definite.[25]

Belgium

The Belgian court in the Scaforn International BV & Orion Metal BVBA v. Exma CPI  SA case [26] appeared to rely largely on the textual language of the CISG with a modest cross-reference to Article 23. The Belgium court in this case has correctly identified three conditions of a valid offer under Article 14 CISG, but in applying Article 14 CISG to the facts of the case, the reasoning for how the so-called "purchase orders" in the case should be considered as an offer appeared to be rather thin. There appeared to be a lack in the analysis of the intent of the parties. The reference to Article 23 may be relevant,[27] but some other perhaps more relevant and important articles, such as Article 8 CISG which provides methodology for interpreting intent in determining whether a term is sufficiently definite under Article 14,[28] has not been considered. [page 607]

Canada

It is submitted that the approach taken by the Canadian court in the Cherry Stix Ltd. v. President of the Canada Borders Services Agency case [29] in comparing and concluding that the offer under the CISG is the same as that under the common law is, in the author's opinion, not convincing. One commentator wrote that "[t]he Convention is meant to be interpreted based upon its uniqueness and not its similarities to anyone of the legal systems from which it was created."[30] It is submitted that the CISG provides a self-contained interpretive methodology for interpreting and applying its rules.[31] The spirit of this methodology is that of excluding recourse to domestic legal methodologies.[32] Professor Michael Bridge pointed out that "it is immensely difficult to coin anational uniform law that is free from national bias. Indeed, since the process of uniformity often entails selecting the best from a range of competing solutions and ideas, it is impossible to efface national experience. [page 608]

The skill lies in being able to stand outside one's national legal culture."[33] Professor Franco Ferrari also observes that the CISG directs decision-makers to develop autonomous interpretations of CISG provisions.[34] Therefore, it is submitted that although a comparative and analogy approach should be used to find a solution consistent with the purposes and policy of the codifying Convention,[35] the analogy and extrapolation should best be confined within the CISG provisions and the general principles underlying those provisions in order to fill in a gap or ambiguity in the CISG itself. Reasoning by analogy particularly when a solution provided in one provision is analogous to an issue presented under another provision [36] should be encouraged and promoted, but analogical reasoning or application of general principles to assimilate the CISG provisions to the familiarity of domestic rules [37] should not, for the latter poses the threat of homeward trend [38] which is contradictory to the uniformity goal of the CISG. [page 609]

France

In the first decision of France's Court of Cassation applying the CISG in the Fauba v. Fujitsulaw [39] case, although the courts rightly held that a term specifying revision of price according to market trends was sufficiently definite,[40] they did not indicate whether the price was found determinable pursuant to French national law or to Article 14 CISG.[41] Noting that "traditional French case law is very demanding with respect to the determinable character of price"[42] but that it is in the process of abandoning "this harsh position",[43] Witz has criticized the court's failure to take the opportunity to rule once and for all that French internal law with respect to price is inapplicable to sales [page 610] governed by the CISG, and that France's more stringent internal laws do not in any way vitiate the existence of a valid offer pursuant to the CISG, provided that, pursuant to Article 14, the "proposal ... expressly or implicitly fixes or makes provision for determining the ... price".[44]

Germany

The German courts in the OLG Frankfurt/M 10 U 80/93, Mar. 4, 1994 (F.R.G.) screws case [45] held that some items in the order contained prices but as buyer insisted on delivery of total order, the offer was not sufficiently definite under either German Civil Code or CISG Article 14 because special screws did not contain a price. It appears that when the German courts in this case referred to Articles 14(1) and 19(1), they also simultaneously referred to relevant provisions of the German Civil Code, i.e. § 145 and § 150(2) of BGB (German Civil Code). It is submitted this approach is problematic for all the reasons which have already been discussed above. Emphasis here is put to the fact that this is a case where there is no dispute that the CISG should apply; thus, the constant recourse to the national German Civil Code cannot advance the Courts' position in applying and interpreting the CISG any further, but rather on the contrary can compromise the autonomous interpretation methodology of the CISG. It is submitted that the German courts in this case should have resorted to Article 8 CISG, for example, in determining the intent of the parties. The result decision of the case may or may not be much different, but the approach, the reasoning of the courts may well reveal a lack of proper understanding of how the CISG should be applied and interpreted so as to promote and achieve its ultimate goal of uniformity in international sales law. The importance of deterring interpreters from acting on the temptation to resort to domestic law has been emphasized and re-emphasized by numerous scholars and experts in this field, including, for example, Professor Bonell, who rightly stressed that "the use of domestic law represents under the  ... uniform law a last resort to be used only if and to the extent a solution cannot be found either by analogical application of specific provisions or by [page 611] the application of general principles underlying the uniform law as such."[46] Furthermore, it is submitted that the so-called last resort to a specific domestic law should only be used when private international law (conflict of laws) lead to the application of that specific domestic law. Thus the Author is of the opinion that the German courts in this case should have refrained from even mentioning the positions under the German domestic law, which are irrelevant in every aspect. In this regard, the German court in the other case, Germany 8 February 1995 District Court München Standard Software case [47] appeared to be more rational in confining the application and interpretation of the CISG within its provisions without referring or comparing to any German domestic law positions. The court pointed out that "decisive is the fact that the parties had agreed on the necessary minimum content that they were looking to agree upon",[48] but when determined the intent of the parties, perhaps Article 8 CISG should have been relevant and discussed to support the court's determination of intent has based upon totality of the circumstances analysis [49] (prior dealings, course of performance, usage), as well as Article 9 (usage, prior dealings), and by doing so, the whole judgement would have been more convincing.

Hungary

The much criticized Supreme Court of Hungary in the Pratt & Whitney v. Malev case [50] overruled the lower court's decision which was much approved [page 612] by Witz, albeit with qualification [51] concerning the lower court's failure to refer to Article 8 when analyzing the clause requiring the approval of the Hungarian and United States governments.[52] Instead, the lower court referred to Article 23, which provides that "[a] contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention". Witz pointed out  that Article 23 was irrelevant in the context of the case, since the court later referred to the Hungarian Civil Code with respect to conditions, stating that the CISG has similar provisions.[53] Witz further noted that Article 23 was irrelevance in this context was confirmed by the interpretation of the Hungarian judges relative to identifying the plaintiff's intent, i.e., that Pratt & Whitney had foreseen the need for the Hungarian government's approval, not to make the conclusion of the contract dependent thereon, but rather to avoid a possible violation of Hungarian law.[54] As to the Supreme Court's progression from (1) reasoning that there was no offer; to (2) reasoning as if there were an offer, but no acceptance, rather, only a statement of intent to conclude a contract at a later date, Witz criticized the Hungarian Supreme Court for making no reference to Article 8, pursuant to which the parties' intent should have been examined, [page 613] and for that the Hungarian Supreme Court's primary motive, on closer analysis, appears to be to find in favour of the Hungarian defendant, and only secondarily to establish connections of logic between the ultimate findings and the CISG.[55] Curran commented that the paradoxes of the Supreme Court opinion are more salient still when viewed in juxtaposition with the disparate mode of reasoning of the lower court, and in all light of CISG Article 65, which, as Witz pointed out, explicitly envisages valid contracts which call for the buyer "to specify the form, measurement or other feature of the goods ..."[56]. In contrast, the decision of the other Hungary case Adamfi Video v. Alkotók Studiósa Kisszövetkezet [57] appears to be much plausible in that the court rightly relied upon a sales contract that had previously been concluded between the parties, in order to determine the price of the goods and the other elements of the contract pursuant to Articles 9(1) and 53 CISG.

Russia

The most interesting issue in the Russian case of 3 March 1995 Arbitration proceeding 304/1993 [58] concerns the application and interpretation of Article 55 CISG by the Russian Tribunal of International Commercial Arbitration. Where the parties agreed to fix a price 'ten days prior to the beginning of the New Year' but were unable to do so,[59] the tribunal considered Article [page 614] 55 CISG but decided that Article 55 was inapplicable because the parties implied the necessity to reach an agreement on the price in the future. In the tribunal's opinion, the subsequent failure of the parties to reach an agreement with respect to price went to the heart of the transaction and specifically defeated the formation of a contract.[60] The decision has in effect rejected the gap-filling role of Article 55.[61] The issue of whether the failure of the parties to state a price prevents contract formation is controversial. Professor Farnsworth maintains that some method of determining the price must be included in the offer for a valid contract to be concluded.[62] Professor Honnold, however, maintains that Article 55 allows "the price generally charged at the time of the conclusion of the contract" to cure the lack of a price or a method for determining the price,[63] and that as long as the parties' intention to contract is clear, the construction of the Convention allows the parties to vary the effect of any of the Convention's provisions, including Article 14's price provision.[64] Professor Schlechtriem comments that "a contradiction remains between [this] requirement  ... on the one hand and the possibility of  [page 615] fixing the price after the contract is concluded on the other,"[65] and concludes that, although most likely unacceptable to many states, this contradiction may be resolved by interpreting the term "validity" in Article 55 to relate to all contractual requirements other than the determination of price; if such an interpretation is adopted, "[a]n offer that is indefinite with respect to the price could then be interpreted ... as an implied reference to the price generally charged for such goods."[66] Professor DiMatteo pointed out that Professor Honnold's view is supported by the Secretariat's Commentary to Article 14 which states that as long as there is intent to be bound, the law of sales can supply missing terms.[67] But what Professor DiMatteo did not point out is the Secretariat's Commentary to Article 55 seems to suggest another story.

The Secretariat's Commentary to Article 55 states:

   1.    Article 51 [draft counterpart of CISG article 55] provides a means for the determination of the price of contract has been validly concluded but the contract does not state a price or expressly or impliedly make provision for its determination.
 
   2.    Article 12(1) [draft counterpart of CISG article 14(1)] provides that the proposal for concluding a contract is sufficient definite so as to constitute an offer if, inter alia, "it … expressly or impliedly fixes or makes provisions for determining … the price", Therefore, article 51 [draft counterpart of CISG article 55] has effect only if one of the parties has his place of business in a Contracting State which has ratified or accepted this Convention as to Part III (Sales of goods) but not as to Part II (Formation of the contract) and if the law of the State provides that a contract can be validly concluded even though it does not expressly or impliedly fix or make provisions for determining the price. [Emphasis added]

Time of calculation of price [page 616]

   3.    The price to be determined by the application of article 51 [draft counterpart of CISG article 55] is that charged at the time of the conclusion of the contract. It is the price which would presumably have been agreed upon by the parties at the time of contracting if they had agreed upon a price at that time. Moreover, if a contract had been validly concluded even without specification of the price, the article recognizes that the seller should not later be able to claim that the price was that prevailing at the time of the delivery of the goods, if that price was higher than the one the seller was charging at the time of the conclusion of the contract.

Returning to the Russian case, does the above Secretariat's Commentary raise a perhaps critical/interesting question that the tribunal should have considered that whether the law of Russia actually requires the setting of a specific price in order for an enforceable contract to be formed? If Russian law indeed so requires, would the decision of the Russian tribunal that Article 55 could only be used to set a price after an enforceable contract had been determined to exist be more understandably sympathetic?

It is submitted, however, that the above Secretariat's Commentary to Article 55 seems to suggest that Article 14 and Article 55 should be used as an alternative, in particular for those contracting state which has partly ratified or accepted the CISG as to Part III (Sales of goods) but not as to Part II (Formation of the contract), but it provides no answer for those majority contracting states which have wholly ratified and accepted the convention as to both Part III (Sales of goods) and Part II (Formation of the contract), such as Russia.

On the balance, it is submitted that the approach suggested by Professor Schlechtriem and Professor Honnold should be adopted in the application and interpretation of Articles 14 and 55 CISG, in particular, for the benefits of those majority contracting states which have adopted the CISG as a whole. It is submitted that in reconciling the obvious contradictions between two CISG provisions, the approach and methodology should be the same as in filling the gaps of the CISG, i.e. an autonomous interpretation. Regards should therefore be given to both the meanings of  those provisions themselves and the general principles underlying those provisions in order to reconcile the conflicts in the CISG itself. Professor Schlechtriem's interpretation is most convincing in that it puts emphasis right on the provisions themselves by suggesting that the contradiction should be resolved by interpreting [page 617] the term "validity" in Article 55 CISG to relate to all contractual requirements other than the determination of price. It follows "[a]n offer that is indefinite with respect to the price could then be interpreted  ... as an implied reference to the price generally charged for such goods."[68] Moreover, it is submitted that this interpretation is also supposed by the general principles [69] underlying these provisions, including, but not limited to, the principle of reasonableness under Article 8 CISG.[70] Article 8(2)'s emphasis on the reasonable person's interpretation of statements and conduct and Article 8(3)'s inclusion of subsequent conduct to determine intent can be readily used and reasonably lead to the reasonable conclusion that a reasonable person must have intended the price generally charged for such goods. The seemingly contradiction thus can be resolved autonomously within the CISG without difficulty. Last but not the least, this interpretation has also been favoured by several national courts, which have shown general flexibility in applying and interpreting Articles 14 and 55 in practice.[71] [page 618]

Switzerland

The Swiss District Court St. Gallen in the Switzerland 3 July 1997 Textile case [72] rightly considered Article 11 and applied Article 8(2) and (3) to determine the intent of the offeror to be bound upon acceptance, taking into account all relevant statements and conduct according of the understanding of a reasonable person of the same kind as the other party in the same circumstances. The court also used Article 55 to interpret the price stated in a seller's corrected invoice to be the price generally charged under comparable circumstances in the trade.[73] The lack of definiteness of the price term was therefore not fatal but determinable because the court was convinced that the parties had manifested their intent to be bound.[74] The only pity, if one has to be picky in seeking the perfect formula, is perhaps that when the court decided that there was not any relevant circumstance or practice existing between the parties before or at the time the contract was concluded, the court could have also referred to Article 9 CISG for relevant authority and by doing so would have completed the whole picture of cross-reference and interrelation among Articles 8, 9, 11, 14 and 55. Nonetheless it is submitted that the overall reasoning of the Swiss court in this case is not only logic, coherent and precise but also, perhaps more importantly, demonstrates the court's comprehensive understanding of the subject matter and its willingness to make the decision in line with the uniformity/harmonisation goal of the CISG. Therefore it is submitted that the Swiss court decision in this case [page 619] should be recommended as the much plausible approach and methodology in applying and interpreting Article 14 CISG.

United States

The U.S. court in the Geneva Pharmaceutical  Tech. Corp. v. Barr Labs., Inc. case,[75]  in deciding the issue concerning Article 14 CISG, although not explicitly cite Article 8 CISG, the court did consider Article 7 on interpretation of the CISG in a liberal manner. Article 9 on trade usages and practices of the parties and/or the industry, and Article 11 on recognition of a contract that may be proven by a document, oral representations, conduct, or some combination of the three were considered. Therefore the U.S. court's approach in this case seems fairly complete. The inclination of the U.S. court to respect industry practice and custom as reflected in this decision is particularly welcomed.[76]

In this regard, attentions are also drawn to one particular case cited by the U.S. court in its decision, i.e. MCC-Marble Ceramic Cente1, Inc. v. Ceramica Nuova d'Agostino, S.p.A.[77] In this case, the U.S. Court of Appeals for the Eleventh Circuit reversed the district court's grant of summary judgment and held that Article 8(3) CISG precludes the application of the parol evidence rule.[78] It is noted that the majority of U.S. courts have resisted the [page 620] temptation of homeward trend in barring the application of the parol evidence rule to contract disputes governed by the CISG.[79] More importantly, the CISG-AC,[80] in response to a request by the Association of the Bar of the City of New York Committee on Foreign and Comparative Law, issued its [page 621] Opinion No. 3 dealing with Parol Evidence Rule Plain Meaning Rule, Contractual Merger Clause and the CISG.[81] The opinion of the CISG-AC supports the argument that application of nation-specific rules like the American parol evidence rule is antithetical to CISG's general principles of uniformity and international character.[82]

Based on Article 11, which clearly recognizes the validity of oral contracts, and Article 8(3), which directs courts to give "due consideration  ... to all relevant circumstances of the case including the negotiations ..." to determine the intent of the parties, the general rejection of the parol evidence rule by U.S. courts in dealing with CISG cases must be correct. Therefore, parol evidence even in cases where there is a formal written contract should be admissible under the CISG.[83] It is submitted that the effect of accepting parol evidence on applying and interpreting Article 14 therefore further supports [page 622] and enhances the cross-reference and interrelations between Articles 7, 8, 9, 11 and 14 CISG.

PRC CIETAC award

The CIETAC tribunal in that Pig Iron case [84] has rightly identified "sufficiently definite" as a key criterion for a valid offer under Article 14(1) CISG; however, the tribunal did not touch upon the other indispensable issue of "intention" at all. According to the Secretariat Commentary on Article 12 [draft counterpart of CISG Article 14], in order for the proposal for concluding a contract to constitute an offer it must indicate "the intention to the offeror to be bound in case of acceptance."[85] The Secretariat Comment further stated that whether there is the requisite intention to be bound in the case of acceptance it will be established in accordance with the rules of interpretation contained in Article 7 [draft counterpart of CISG Article 8].[86] Therefore, the intention of the parties under Article 14 CISG should have been examined pursuant to Article 8 CISG, The tribunal held that “... according to Article 14(1) CISG, this ["10,000 MT basic pig iron, price to be mutually agreed"] should be regarded as a "sufficiently definite" "proposal" an constitutes an offer,"[87] But the tribunal did not attempt to explain why that should be regarded as a "sufficiently definite" "proposal" and thus constitutes an offer, but merely stated that it was.[88]

Having found that part of the contract concerning the "10,000 MT basic pig iron, price to be mutually agreed" has been validly concluded, the tribunal, however, rejected to apply Article 55, holding that the condition for Article 55 [to apply] is: no expressly or implicitly fixed price, or no provision [page 623] for determining the price.[89] Therefore, the tribunal decided that Article 55 is not applicable and that the price can only be determined by both parties' negotiation."[90] Unlike the Russian Tribunal of International Commercial Arbitration in the Russian case of 3 March 1995 Arbitration proceeding 304/1993 [91] in which the tribunal rejected the application of Article 55 CISG on the ground that the subsequent failure of the parties to reach an agreement with respect to price went to the heart of the transaction and specifically defeated the formation of a contract,[92] the CIETAC tribunal in rejecting the application of Article 55 based on a strict literature reading of the text of the Article 55 CISG, which states exactly that: "Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price, the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned." What could be wrong with such a decision in the Pig Iron case [93] based exactly on the literature wording of Article 55 CISG?

Indeed it appears more difficult to criticise the rejection of applying Article 55 CISG by the CIETAC tribunal in the Pig Iron case [94] than that by the Russian Tribunal of International Commercial Arbitration tribunal in the Russian case of 3 March 1995 Arbitration proceeding 304/1993 [95], One may say that a strict literature interpretation of Article 55 by the CIETAC tribunal was hardly wrong in rejecting the application of Article 55 CISG in the Pig Iron case,[96] however, it is submitted that a more desirable result would be to accept the gap-filling role of Article 55 in the Pig Iron case.[97] Given the discussion above regarding how the obvious contradictions between Articles 14 and 55 CISG should be resolved in favour of the uniformity goal and the [page 624] autonomous interpretation methodology of the CISG, bearing in mind that both the meanings of those provisions themselves and the general principles underlying those provisions have been reflected in the gap-filling and/or the conflict-solving, the CIETAC decision in the Pig Iron case [98] would have been more favourable in reflecting the legislation spirit of the CISG as a uniform sales law convention. Last but not the least, the CIETAC decision in the Pig Iron case [99] could have made the PRC interpretation of Article 55 CISG in line with those of several other contracting states, which have shown general flexibility in applying and interpreting Articles 14 and 55 in practice.[100]

As to the tribunal's decision that the "10,000 MT basic pig iron or foundry pig iron as to be mutually agreed, price also to be mutually agreed"[101] should not be regarded as a "sufficiently definite" "proposal" under Article 14 CISG, it appears to be a lack of substance in the reasoning of the tribunal's decision. Again, it was a pity and a disappointment that there was not at all any analysis of the intentions of the parties, neither any reference to any other crucial and highly relevant Articles 7, 8, 9 and 11 CISG.

CONCLUSION

It is believed that the quality of CIETAC awards can be tremendously enhanced by engaging in the exercise of global jurisconsultrium by way of a [page 625] comparative study of cases and awards of other contracting states. By sharing and exchanging ideas, approaches and interpretation methodologies of an international uniform law instrument such as the CISG, the reasoning of CIETAC awards can be enriched which in return will reinforce the persuasiveness of the awards and the observance of the rule of law in the CIETAC arbitration practice.

Moreover, the participation of the PRC in global jurisconsultorium will promote the study and review of the PRC court cases and arbitral awards on an international level, which would be useful for CIETAC, for the PRC and for the world trade community at large.

Finally, it is hoped that by embracing and promoting the concept and methodology of "Global Jurisconsultorium" in the application and interpretation of the CISG in the PRC, this will make Chinese jurisprudence more valuable in contributing to the global modernisation and harmonisation of the international sales law so as to achieve the uniformity aim of the CISG and the ultimate goal of facilitation of international trade. [page 626]


FOOTNOTES

* Research Fellow, PRC Representative of the Practice & Standards Committee, Arbitration Sub-Committee, Chartered Institute of Arbitrators, MCIArb, LCIA (YIAG), PhD Researcher (London) LL.M. (Birmingham) LL.B. (Shanghai), Certificate in International & Comparative Law, (Cornell University (USA) & Universite Paris I -Sorbonne), Barrister (England & Wales)

1. See Kritzer, Albert (2008), 'Application and Interpretation of the CISG in the P.R. of China -- Progress in the Rule of Law in China', in (40) Uniform Commercial Code Law Journal 2 at 261 to 268.

2. <http://cisgw3.law.pace.edu/

3. As of December 2, 2006, the United Nations reported that 70 States have adopted CISG, see the UN Treaty Section website: <http://untreaty.un.org/ENGLISH/bible/englishinternetbible/partl/chapterX/treaty20.asp>; see also Pace CISG Database: <http://cisgw3.law.pace.edu/cisg/countries/cntries.html>

4. See Kritzer 'Application and Interpretation of the CISG in the P.R. of China' supra fn 1.

5. See <http://cisgw3.law.pace.edu/>

6. See <http://cisgw3.law.pace.edu/cisg/new-features.html>.

7. See <http://cisgw3.law.pace.edu/cisg/text/CIETAC-awards.html>

8. See Kritzer 'Application and Interpretation of the CISG in the P.R. of China' supra fn 2.

9. See <http://cisgw3.law.pace.edu/cisg/text/Tang_Houzhi_Program.html>

10. Ibid.

11. Ibid, see also D'Souza (2007) 'The Recognition and Enforcement of Commercial Arbitration Awards in the People's Republic of China' in (30) Fordham Int'l L.J. 1318, at 1350-51. 

12. For a schedule of Professor Tang Houzhi's case translations, go to <http://cisgw3.law.pace.edu/cisg/text/TangHouzhi.html

13. See Kritzer  'Application and Interpretation of the CISG in the P.R. of China’ supra fn 2; and 'Creating The Framework For Trading Relationships With China' in IACCM August 2007 Newsletter, available at: <http://www.iaccm.com/newsletters.php?id=61&PHPSESSID=all6afda6410c8abb250dlb275188cd0#333>

14. See Yang, F (2006) The Application of the CISG in the Current PRC Law and the CIETAC Arbitration Practice, (2/2006) Nordic Journal of Commercial Law available at: <http://cisgw3.law.pace.edu/cisg/biblio/yang2.html>; and Yang, F (forthcoming) CISG in China and Beyond, to be published in Uniform Commercial Code Law Journal 2008.

15. Ibid.

16. Ibid.

17. See Rogers, V and Kritzer, A (2003) A Uniform International Sales Law Terminology, in Ingeborg Schwenzer/Günter Hager ed., Festschrift für Peter Schlechtriem zum 70. Geburtstag, Mohr Siebeck at 223-253, also available at: <http://cisgw3.law.pace.edu/cisg/biblio/rogers2.html> ; see also Andersen, CB Uniform Application of the International Sales Law: Understanding Uniformity, the Global Jurisconsultorium and Examination and Notification Provisions, Wolters Kluwer 2007.

18. See Andersen, CB Uniform Application of the International Sales Law ibid.

19. See Andersen, CB (2005), The Uniform International Sales Law and the Global Jurisconsultorium, (24) Journal of Law and Commerce (2005) 159-179, also available at: <http://cisgw3.law.pace.edu/cisg/biblio/andersen3.html>

20. See CIETAC Arbitration proceeding, China 25 December 1998 (Pig Iron case) available at: <http://cisgw3.law.pace.edu/cases/981225c1.html>]

21. Ibid.

22. See Supreme Court of Austria (Chinchilla furs case) 10 November 1994 available at: <http://cisgw3.law.pace.edu/cases/941110a3.html>

23. See Honnold, J (1999) Uniform Law for International Sales at 157, 360; Van Alstine, M (1998) 'Dynamic Treaty Interpretation' in (246) University of Pennsylvania Law Review (1998) 772 n.354, Bonell/Ligouri (1996) 'The UN Convention on the International Sale of Goods: A Critical Analysis of Current International Case Law' Uniform Law Review 1996-1 at 147, 159 n. 62; T.S. Simmons, (1996) 'Commenting on OGH 27 October 1994, BGH 8 March 1995 (VIII ZR 159/94), Cour de Cassation 4 January 1995, OGH 10 November 1994, OLG München 8 March 1995' in (1) The International Legal Forum 89-90; Karollus (1995) Cornell Review of the CISG at 60; Spanogle/Winship, International Sales Law: A Problem Oriented Coursebook (West 2000); Gabuardi, C (2001) Open price contracts available at: <http://cisgw3.law.pace.edu/cisg/biblio/gabuardi.html>; Posch, W & Petz, T (2002), 'Austrian Cases on the UN Convention on Contracts for the International Sale of Goods' in (6) Vindobona Journal of International Commercial Law and Arbitration 1-24 at nn. 15-17, 53-55 and 97; Bernstein, H & Lookofsky, J (2003) Understanding the CISG in Europe, 2d ed., Kluwer 3-2 n.20; 3-3 n.31; DiMatteo et al. (2004), 'The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence' in (34) Northwestern Journal of International Law & Business 299-440 at nn.207, 219-222, 227; Schlechtriem & Schwenzer ed. (2005), Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 8 paras. 47, 51 Art. 14 paras. 3, 5 Art. 55 para. 7 Art. 57 para. 3; Henschel, R (2005) The Conformity of Goods in International Sales, Forlaget Thomson at 27, 151, 157.

24. See an analysis of Austrian case law in Posch & Petz supra fn 23. The ruling of 10 November 1994 of the Supreme Court of Austria is analyzed at pages 4, 11 and 19 of this commentary. The commentary also contains other analyses of Austrian case law on CISG issues addressed. Also available at: <http://cisgw3.law.pace.edu/cases/941110a3.html#ce>

25. See original language text at <http://www.cisg.at/2_54793.htm>; CISG online.ch website <<http://www.cisg-online.ch/cisg/urteile/117.htm>; Österreichisches Juristische Blätter 1995, 253-254; Praxis des internationalen Privat- und Verfahrensrecht 1996, 137-139; Österreiches Juristen Zeitung (ÖJZ) 422-423 EvBI 87; Zeitschrift für Rechtsvergleichung, Internationales Privatrecht und Europarecht (ZtRV) 36 (1995) 79-81; 67 Sammlung zivilrechtlicher Entscheidungen (SZ) No. 197; ecolex (1995) 94 at page 150-151, see also Unilex database <http://www.unilex.info/case.cfm?pid=l&do=case&id=110&step=FullText>

26. See Commercial Court Tongeren 25 January 2005 (Scaforn International BV & Orion Metal BVBA v. Exma CPI SA) available at <http://cisgw3.law.pace.edu/cases/050125b1.html>

27. See Article 23 of the CISG: A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention.

28. See DiMatteo et al. supra fn 23 at 336.

29. See International Trade Tribunal (Canada) 6 October 2005 (Cherry Stix Ltd. v. President of the Canada Borders Services Agency), available at: <http://cisgw3.law.pace.edu/cases/051006c4.html>

30. See DiMatteo, L (1997) 'The CISG and the Presumption of Enforceability: Unintended Contractual Liability in International Business Dealings" in (22) Yale Journal of International Law 111, at 133 available at <http://cisgw3.law.pace.edu/cisg/biblio/dimatteo.html>.

31. For discussion on whether the CISG mandates or should mandate absolute uniformity of application, see generally, Van Alstine 'Dynamic Treaty Interpretation' supra fn 23 at 687, Diedrich, F (1996) 'Maintaining Uniformity in International Uniform Law via Autonomous Interpretation: Software Contracts and the CISG' in (8) Pace International Law Review 303 available at: <http://cisgw3.law.pace.edu/cisg/biblio/Diedrich.html>, Ferrari, F (1994) 'Uniform Interpretation of the 1980 Uniform Sales Law', (24) Georgia Journal of International and Comparative Law 183 available at: <http://cisgw3.law.pace.edu/cisg/biblio/franco.html>, Rosenberg, M (1992) 'The Vienna Convention: Uniformity in Interpretation for Gap-Filling --An Analysis and Application' in (20) Australian Business Law Review 442 available at: <http://cisgw3.law.pace.edu/cisg/biblio/rosenberg.html>, Kastely, A (1988) 'Unification and Community: A Rhetorical Analysis of the United Nations Sales Convention' in (8) Northwestern Journal of International Law and Business 574 available at: <http://cisgw3.law.pace.edu/cisg/biblio/kastely.html>, Sturley, M (1986) 'The 1980 United Nations Convention on Contracts for the International Sale of Goods: Will a Homeward Trend Emerge?'  in (21) Texas International Law Journal 540.

32. See DiMatteo et al. supra fn 23 at 314.

33. See Bridge, M (2001) 'The UK Sale of Goods Act, the CISG and the Unidroit Principles', in Sarcevic & Volken (eds) The International Sale of Goods Revisited, Kluwer Law International, at 130.

34. See Franco Ferrari, 'Uniform Interpretation' supra fn 31 at 198-201.

35. Professor Scott defines a code as "a pre-emptive, systematic, and comprehensive enactment of a whole field of law", see Scott, R (2000) 'The Uniformity Norm in Commercial Law' in Kraus & Walt (ed.) The Jurisprudential Foundations of Corporate and Commercial Law 149 at 171. Thus, problems of interpretation such as gaps in the code are to be solved by means internal to the code. A court or arbitral panel is given the duty "to use the processes of analogy and extrapolation to find a solution consistent with the purposes and policy of the codifying law. In this way, the code itself provides the best evidence of what it means."

36. "If the Convention failed to anticipate and thus provide a specific solution to an issue, an analogical extension from the existing provisions to the new situation is then appropriate." See Koneru, P (1997) 'The International Interpretation of the UN Convention on Contracts for the International Sale of Goods: An Approach Based on General Principles', (6) Minnesota Journal of Global Trade 105 at 122 available at: <http://cisgw3.law.pace.edu/cisg/biblio/koneru.html>, citing Honnold, J (1991) Uniform Law For International Sales (2d ed.) at 3; see also Rosenberg, M supra fn 31.

37. The use of domestic law "represents under the  ... uniform law a last resort to be used only if and to the extent a solution cannot be found either by analogical application of specific provisions or by the application of general principles underlying the uniform law as such." see Bonell, MJ (1987) 'Introduction to the Convention', in Bianca & Bonell, (eds.) 1987 Commentary On The International Sales Law at page 83.

38. See Miller, F (1998) 'Realism not Idealism in Uniform Laws -- Observations from the Revision of the UCC', in (39) So. Texas Law Rev. 707 at 722-23. Professor Miller states the importance of deterring interpreters from acting on such temptation. Uniformity is especially important "where the uniform provision perhaps represents a less desirable position but nonetheless forms an important part of a compromise reflecting a desirable, overall balance and where, if one provision is altered by non-uniformity, significant threat to the overall consensus is posed."

39. See Appellate Court Paris (France) 22 April 1992 (Fauba v. Fujitsu), available at: <http://cisgw3.law.pace.edu/cases/920422f1.html>, see also Supreme Court of France (Fauba v. Fujitsu) 4 January 1995 available at: <http://cisgw3.law.pace.edu/cases/950104f1.html>

40. Ibid.

41. See Claude Witz (1995), 'Case Commentary, The First Decision of France's Court of Cassation Applying the U.N. Convention on Contracts for the International Sale of Goods' in (16) Journal of Law and Commerce 345, available at: <http://www.cisg.law.pace.edu/cisg/wais/db/cases2/950104f1.html#ta>; Ferrari, International Legal Forum (4/1998) 138 at 158 n.177; Honnold, Uniform Law supra fn 23 at 33, at 185 and at 357; Bonell/Liguori, Uniform Law Review (1996-1) 147 [163 n. 75, n. 76]; Curran, V (1995) 'The Interpretive Challenge to Uniformity' in (15) Journal of Law and Commerce 175 at 179-180 and 187-192; Lookofsky, J (1996) Understanding the CISG in Scandinavia (1996) 12 n. l ; Bernstein/Lookofsky (1997), Understanding the CISG in Europe at 10 n. 1; Schlechtriem, P (1998) in Schlechtriem, Commentary on the UN Convention on the International Sale of Goods at 108 n. 24; Petrochilos, G (1999) 'Arbitration Conflict of Laws Rules and the CISG' in (52) Revue Hellenique de Droit International 191at n.7; Spanogle/Winship, A Problem Oriented Coursebook supra fn 23 at 65-67 [the place of  business criterion, this case at 67] and at 110-113 [buyer's performance: paying the price, this case at 112-113]; Bernstein & Lookofsky, (2003) Understanding the CISG in Europe, Kluwer §: 2-2 n.1; DiMatteo et al. supra fn 23 at n. 197 stating: "term specifying revision of price according to market trends was sufficiently definite".

42. See Claude Witz, 'The First Decision' supra fn 41.

43. Ibid.

44. Ibid.

45. See Appellate Court Frankfurt (Germany), 4 March 1994 available at: <http://cisgw3.law.pace.edu/cases/940304g1.html>]

46. See Bonell, 'Introduction' supra fn 20 at 83, also cited in Ferrari 'Uniform Interpretation' supra fn 37.

47. See District Court München (Germany), 8 February 1995 available at: <http://cisgw3.law.pace.edu/cases/950208g4.html>]

48. Ibid

49. For a discussion of the "totality of the circumstances analysis" approach to contract interpretation see generally, DiMatteo, L (1997) 'The Counterpoise of Contracts: The Reasonable Person Standard and the Subjectivity of Judgment' in 48 S.C. L. Rev. 293, at 318-24 and DiMatteo, L (1998) Contract Theory: The Evolution Of Contractual Intent 56-60.

50. See Supreme Court Hungary 25 September 1992 (Pratt & Whitney v. Malev) available at: <http://cisgw3.law.pace.edu/cases/920925h1.html>; Hungary Metropolitan Court, (Pratt & Whitney v. Malev) 10 January 1992 available at: <http://cisgw3.law.pace.edu/cases/920110h1.html>

51. The lower court's decision on distinguishing between the insertion of a material, additional term and "a simple request" for a material modification and the finding of an unambiguous acceptance, not an amendment, restriction, or other change that would amount to a rejection under 19(1) seem to have received applause by Larry A. DiMatteo. See DiMatteo et al, supra fn 23 at 356. 

52. See Article 8 of the CISG:

(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.
(2) If the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.
(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiation, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.

53. See Metropolitan Court (Pratt & Whitney v. Malev) supra note 50.

54. See Curran, V (1997) in (16) Journal of Law & Commerce at 347-356 [translation of commentary by Witz in Recueil Dalloz Sirey]; see also Curran, V (1995) 'The Interpretive Challenge to Uniformity' in 15 Journal of Law & Commerce at 191-192 [summary translation of comments on this case and related cases by Witz in Les premières applications], also available at: <http://www.cisg.law.pace.edu/cisg/wais/db/editorial/curran950104f1.html>

55. Ibid.

56. Article 65 CISG states:

(1) If under the contract the buyer is to specify the form, measurement or other features of the goods and he fails to make such specification either on the date agreed upon or within a reasonable time after receipt of a request from the seller, the seller may, without prejudice to any other rights he may have, make the specification himself in accordance with the requirements of the buyer that may be known to him.
(2) If the seller makes the specification himself, he must inform the buyer of the details thereof and must fix a reasonable time within which the buyer may make a different specification. If, after receipt of such a communication, the buyer fails to do so within the time so fixed, the specification made by the seller is binding.

57. See Hungary Metropolitan Court 24 March 1992 (Adamfi Video v. Alkotók Studiósa Kisszövetkezet) available at: <http://cisgw3.law.pace.edu/cases/920324h1.html>

58. See Russian Arbitration proceeding 304/1993, 3 March 1995, available at: <http://cisgw3.law.pace.edu/cases/950303r2.html>

59. See Honnold, Uniform Law supra fn 23 at 156 [Art. 14: definiteness and price (prior to delivery and acceptance)]; Spanogle/Winship, A Problem Oriented Coursebook supra fn 23 at 110-114 [formation of the sales contract: the price, this case at 113-114]; Gabuardi supra fn 23; Perales Viscasillas, P (2004) in Ferrari, Flechtner & Brand (ed.) The Draft UNCITRAL Digest and Beyond, Sellier/Sweet & Maxwell at 277-279 [Art. 55 issues].

60. See DiMatteo et al. supra fn 23.

61. See Honnold Uniform Law supra fn 23 at 156 [Art. 14: definiteness and price (prior to delivery and acceptance)]; Spanogle/Winship, A Problem Oriented Coursebook supra fn 23 at 110-114 [formation of the sales contract: the price 110-114, this case at 113-114]; Gabuardi supra fn 6; Viscasillas supra fn 59.

62. See Farnsworth, A (1984) 'The Vienna Convention: History and Scope', in (18) Int'l Law at 17

63. See Honnold, Uniform Law supra fn 6.

64. See Murray, J (1988) 'An Essay on the Formation of Contracts and Related Matters Under the United Nations Convention on Contracts for the International Sale of Goods', (8) Journal of Law and Commerce 11 at 14-17 available: <http://cisgw3.law.pace.edu/cisg/biblio/murray.html>, Fletchner, H (1999) 'Transcript of a Workshop on the Sales Convention: Leading CISG Scholars Discuss Contract Formation, Validity, Excuse for Hardship, Avoidance, Nachfrist, Contract Interpretation, Parol Evidence, Analogical Application, and Much More', 18 Journal of Law and Commerce 191 at 202-06 available at <http://cisgw3.law.pace.edu/cisg/biblio/workshop.html>. Professor Farnsworth disagrees with this interpretation because Article 55 allows this method of determining a price only when "a contract has been validly concluded." See Farnsworth supra fn 62.

65. See Schlechtriem, P (1986) Uniform Sales Law -- The U.N. Convention on Contracts for the International Sale of Goods, Manz, available at: <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem.html> at 80.

66. Ibid.

67. See Secretariat Commentary to Article 14 CISG, available at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-14.html>; see DiMatteo et al supra fn 23 at 341.

68. Ibid.

69. For general principles, see for example, Kazimierska A (2000) 'The Remedy of Avoidance under the Vienna Convention on the International Sale of Goods', in Review of the Convention on Contracts for the International Sale of Goods: 1999-2000 at 172 available at: <http://cisgw3.law.pace.edu/cisg/biblio/kazimierska.html>; see also Gabriel, H (1994) Practitioner’s Guide To CISG and UCC: "[I]f the express words of a particular article fails to resolve a conflict, the CISG requires the conflict to be resolved by the underlying principles that led to the adoption of the provision in question." See DiMatteo et al. supra fn 23 at 313: "General principles cover all CISG provisions and can be utilized to uncover implied principles that underlie specific provisions. These principles -- express or implied -- are to be used for guidance in the interpretation of specific CISG provisions. This entails analogical reasoning in order to ensure that article-specific interpretations fit within the framework of the CISG as a whole."

70. See Article 8 CISG:

(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.
(2) If the preceding paragraph is not applicable, statement made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.
(3) In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties.

71. See, for example, Fauba v. Fujitsu supra fn 39. [term specifying revision of price according to market trends was sufficiently definite]; see also Austrian Supreme Court 10 November 1994 available at: <http://cisgw3.law.pace.edu/cases/941110a3.html>, in which the Austrian Supreme Court concluded that the agreement of the parties setting a price range for the pelts depending upon quality did not defeat the formation of a contract. In reaching this conclusion, the court held that pursuant to Article 55 if the parties' agreement failed to explicitly or implicitly establish a specific price, then the court could imply an agreement based upon the "usual market price." The court specifically noted that the parties did not object to the price of fifty German marks per pelt established by the court of first instance in its initial review of the case. As such, the court concluded that the price was sufficiently definite as to constitute a contract and make the application of Article 55 unnecessary. See also DiMatteo et al. supra fn 23 at 341.

72. See District Court St. Gallen, Switzerland 3 July 1997 (textile case) available at: <http://cisgw3.law.pace.edu/cases/970703s1.html>

73. Ibid.

74. Ibid. See also DiMatteo et al. supra fn 23 at 341.

75. See Geneva Pharm., 201 F. Supp. 2d at 281. "Prior Proceedings", also available at: <http://cisgw3.law.pace.edu/cases/020510u1.html#cx>; see also subsequent Motion of Reconsideration proceeding of 21 August 2002 available at: <http://cisgw3.law.pace.edu/cases/020821u1.html#cx>; see also subsequent ruling of U.S. District Court, dated 19 March 2003 at 2003 WL 1345136 (S.D.N.Y.)

76. See DiMatteo et al. supra fn 23 at nn.118, 128-129, 169, 202-203, 231, 233-234.

77. See 144 F.3d 1384, 1387 (11th Cir. 1998) (CISG abandons parol evidence rule); See also United States Federal Appellate Court [11th Circuit] 29 June 1998 (MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino) available at: <http://cisgw3.law.pace.edu/cases/980629u1.html>]

78. See DiMatteo et al. supra fn 23:

"Cases involving the application of the parol evidence rule to the CISG have been limited to United States' courts. The United States instituted a statute of frauds and parol evidence rule in Section 2-201 of the Uniform Commercial Code. Virtually all states in the United States apply the UCC to contracts for the sale of goods valued at $500 or more. UCC § 2-201(1) provides:

"a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker."

Consequently, parties bringing cases in the United States have raised the parol evidence rule, attempting to exclude evidence that a contract existed or evidence of unfavourable contract terms."

See also numerous detailed case commentaries: Kolosky, M (1998) 'Beyond Partisan Policy: The Eleventh Circuit Lays Aside the Parol Evidence Rule in Pursuit of International Uniformity in Commercial Regulation' in (24) North Carolina Journal of International Law & Commercial Regulation at 199-219 [on parol evidence rule]; Flechtner, H (1999) 'The UN Sales Convention and MCC-Marble … The Eleventh Circuit Weighs in on Interpretation, Subjective Intent, Procedural Limits in the Convention's Scope, and the Parol Evidence Rule' in (18) Journal of Law and Commerce 259-287 available at: <http://cisgw3.law.pace.edu/cisg/biblio/flechtner1.html>; Kim, J (1999) 'MCC-Marble  ... Federal Courts Required to Examine Parol Evidence when Interpreting Contracts Governed by the CISG', (12) New York International Law Review 105-110; available at: <http://cisgw3.law.pace.edu/cisg/biblio/kim.html>; Andreason, R (1999) 'MCC-Marble  ... The Parol Evidence Rule and Other Domestic Law under the CISG', Brigham Young University Law Review 351-379 available at: <http://cisgw3.law.pace.edu/cisg/biblio/andreason.html>; Calleo (2000) 'The Inapplicability of the Parol Evidence Rule to the CISG', (26) Hofstra Law Review 799-833; Torzilli (2000) 'The Aftermath of MCC-Marble: Is this the Death Knell for the Parol Evidence Rule?', 74 St. John’s   Law Review 843-873 available at: <http://cisgw3.law.pace.edu/cisg/biblio/torzilli.html>; Farnsworth, A (2002) 'The Interpretation of International Contracts and the Use of Preambles' in International Business Law Journal No. 3/4, 271 at 277-279 [guidance in drafting clauses that will overcome MCC-Marble]. See also Citations to other case abstracts, case texts and commentaries available at: <http://cisgw3.law.pace.edu/cases/980629u1.html#cabc>

79. See DiMatteo et al. supra fn 23. See also Shuttle Packaging Sys. v. Jacob Tsonakis, INA, S.A., No. 1:01-CV-691, 2001 U.S. Dist. LEXIS 21630, a *22 (W.D. Mich. Dec. 17,2001); Fercus v. Palazzo, No.98 CIV. 7728 (NRB), 2000 U.S. Dist. LEXIS 11086, at *11-12 (S.D.N.Y. Aug. 8, 2000); MCC-Marble, 144 F.3 at 1390 & n.17; Claudia v. Olivieri Footwear Ltd., No.96 CIV. 8052 (HB) (THK) 1998 U.S. Dist. LEXIS 4586, at *18 (S.D.N.Y. Apr. 6, 1998); Filanto v. Chilewich Int'l Corp., 789 F. Supp. 1229, 1238 n.7 (S.D.N.Y. 1992). But see Beijing Metals & Minerals Import/Export Corp. v. Am. Bus. Ctr., Inc., 993 F.2d 1178 (5th Cir. 1993) (applying Texas law, stating that it "need not resolve the choice of law issue, because  ... discussion is limited to application of the parol evidence rule (which applies regardless ...).").

80. For the CISG-Advisory Council in general, see Mistelis, L (2001) CISG AC Publishes First Opinion available at: <http://cisgw3.law.pace.edu/cisg/CISG-AC.html>

81. See CISG-AC Opinion No.3, available at: <http://cisgw3.law.pace.edu/cisg/CISG-AC-op3.html>

82. See MCC Marble case, 144 F.3d at 1391; See also United States Federal Appellate Court [11th Circuit] 29 June 1998 (MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino), available at: <http://cisgw3.law.pace.edu/cases/980629u1.html>]; see DiMatteo et al. supra fn 23; see also Fletchner, H (1995) 'More U.S. Decisions on the UN Sales Convention: Scope, Parol Evidence, "Validity" and Reduction of price under Article 50 Recent Developments: CISG", (14) Journal of Law and Commerce 153 at 157, available at <http://cisgw3.law.pace.edu/cisg/biblio/flechtner.html> [criticizing the Beijing Metals opinion and noting that "[c]ommentators generally agree that article 8(3) rejects the approach to the parol evidence questions taken by U.S. domestic law".] But see, David H. Moore (1995) 'The Parol Evidence Rule and the United Nations Convention on Contracts for the International Sale of Goods: Justifying Beijing Metals & Minerals Import/Export Corp. v. American Business Center, Inc.' in 1995 Brigham Young University Law Review 1347 at 1361-63 available at: <http://cisgw3.law.pace.edu/cisg/biblio/beijing.html>. [arguing that the parol evidence rule could be an appropriate way to discern what consideration is "due" under Article 8(3) and that the parol evidence rule discourages perjury and bad faith thereby promoting good faith and uniformity in the interpretation of contracts as expressed in Article 7 CISG). See generally, Hackney, P (2001) 'Is he United Nations Convention on the International Sale of Goods Achieving Uniformity?' in (61) Louisiana Law Review 473 at 481-82 [discussing Beijing Metals and commentators fear that courts will interpret the CISG by reference to domestic law because of the lack of case law].

83. MCC Marble case, 144 F.3d at 1391, See also United States Federal Appellate Court [11th Circuit] 29 June 1998 (MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino) available at: <http://cisgw3.law.pace.edu/cases/980629u1.html>]; see also DiMatteo et al. supra fn 23.

84. See CIETAC Arbitration proceeding, China, (Pig Iron case) 2 December 1998 available at: <http://cisgw3.law.pace.edu/cases/981225c1.html>

85. See Secretariat Commentary to Art. 14, available at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-14.html>;

86. See Secretariat Commentary to Art. 14, available at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-14.html>; see also Secretariat Comment to Art. 8, available at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-08.html>.

87. See English translation of the case in full text at: <http://cisgw3.law.pace.edu/cases/981225c1.html>]

88. Ibid.

89. Ibid.

90. Ibid, see also WU, D (2005) 'CIETAC's Practice on the CISG' in Nordic Journal of Commercial Law (2/2005), at nn. 52, 102, 145, 147, 168 also available at: <http://cisgw3.law.pace.edu/cisg/biblio/wu.html>

91. See Russian Arbitration proceeding 304/1993 supra fn 58.

92. See DiMatteo et al. supra fn 23 at 342.

93. See Pig Iron case supra fn 84.

94. See Pig Iron case supra fn 84.

95. See Russian Arbitration proceeding 304/1993 supra fn 58.

96. See Pig Iron case supra fn 84.

97. See Pig Iron case supra fn 84.

98. See Pig Iron case supra fn 84.

99. See Pig Iron case supra fn 84.

100. See, for example, Fauba v. Fujitsu Microelectronik case supra fn 39 [term specifying revision of price according to market trends was sufficiently definite), available at <http://cisgw3.law.pace.edu/cases/920422f1.html>; See also Chinchilla furs case supra fn 22 in which the Austrian Supreme Court concluded that the agreement of the parties setting a price range for the pelts depending upon quality did not defeat the formation of a contract. In reaching this conclusion, the court held that pursuant to Article 55 if the parties' agreement failed to explicitly or implicitly establish a specific price, then the court could imply an agreement based upon the "usual market price." The court specifically noted that the parties did not object to the price of fifty German marks per pelt established by the court of first instance in its initial review of the case. As such, the court concluded that the price was sufficiently definite as to constitute a contract and make the application of Article 55 unnecessary. See also DiMatteo et al. supra fn 23 at 341.

101. This was referred to as "the third 10,000 MT pig iron" by the tribunal. See pig iron case supra fn 84.


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