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Reproduced with permission from 74(9) The Law Institute Journal, Victoria (2000) 73-74

excerpt from

The CISG - Getting off the Fence

Bruno Zeller, Victoria University

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Questions of application

What standing has the CISG within our domestic law? Von Doussa J. explained this clearly when he said: " the Convention, which is now part of the municiple law of Australia, the meaning of that law, and its application to the facts, is to be determined by this Court. It is not a matter for expert evidence. The Convention is not to be treated as a foreign law which requires proof as a fact."[4] Within the Sale of Goods (Vienna Convention) Act 1987 s.6 in the enabling part states that" The Provision of the Convention prevail over any law in force in Victoria to the extent of any inconsistency."[5] This is supplemented by article 1, which states:

"(1) This Convention applies to contracts of sale of goods between parties whose place of business are in different States:
(a) when the States are Contracting States; or
(b) when the rules of private international law lead to the application of the law of a Contracting State."

At first glance, it appears that the interpretation of this article does not pose any problem. In an ICC arbitration case the arbitrator ruled that the CISG, which is the law of California, applies to matters governed by the CISG pursuant to article 1(1)(a).[6] A second case also indicates a correct application of article 1.

An arbitrator had to decide the choice of law in a contract which was silent on this issue. The seller was from Russia the buyers from Argentina and Hungary and the stipulated forum was Zurich in Switzerland. The Arbitrator applied the law of the forum namely Swiss law. According to Swiss domestic law he had to apply the Hague Convention which led him to apply Russian domestic law. As the CISG is part of Russian domestic law, the arbitrator could apply the CISG as the governing law.[7]

Not all interpretations followed the same line of reasoning. Two Italian decisions illustrate this clearly. The dispute was between an Italian seller and a Japanese buyer. The contract was subject to Italian law. The majority of arbitrators, with one dissenting, came to the conclusion that the choice of law amounted to an implicit exclusion of the CISG.[8] Such a conclusion is patently wrong. The court correctly stated that the conflict of law rule leads to the application of Italian law and should have applied article 1(1)(b) as Japan is not a Contracting State. If a country accepts the CISG, that is ratifies the Convention, it becomes part of its own body of law. If a matter falls within the sphere of application of the CISG then the Convention must be applied.

The second case from the Tribunale Civile di Monza is similar.[9] The court correctly found that article 1(1)(a) is not applicable, as Sweden was not a Contracting State. They went on to reject the applicability of article 1(1)(b) on the grounds that the article only operates in the absence of a choice of law by the parties. The court read the sub-section far too narrowly. Clearly the two Italian cases illustrate that the tribunals did not interpret the CISG correctly.

The adoption of uniform rules has been achieved by introducing the same rules into various domestic systems replacing domestic rules. In Australia the CISG would have replaced in parts the Goods Act, the Trade Practices Act and the law on Contracts. The CISG promises to take into consideration the variances and differences encountered through different social, economic and legal systems which would as a result advance different solutions to potentially the same problems. With such a system in place the legal barriers to international trade would be removed hence reduce or manage cross border legal risks faced by Australian firms.

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Go to enitre Zeller commentary


FOOTNOTES

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4. Roder Zelt und Hallenkonstruktionen GMBH v. Rosedown Park Pty Ltd. (1995) ACSR 153, op cit.

5. S.6, Sale of Goods (Vienna Convention) Act 1987 (No 35).

6. ICC Arbitration Case No. 7399 of 1993 [http://cisgw3.law.pace.edu/cases/937399i1.html].

7. Zürich Chamber of Commerce, Arbitration award ZHK 273/95 of May 31, 1996.

8. As hoc Arbitral Tribunal - Florence, [www.cisg.law.pace.edu/cisg/wais/db/cases2/940419i3/html].

9. Nuovo Fucinati S.p.A. v. Fondmetal Interantional A.B. , Tribunale Civile di Monza, 14,01,1993. [it140193 Abstract Unilex Database].

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Pace Law School Institute of International Commercial Law - Last updated March 21, 2001
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