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Published in 6 New Zealand Business Law Quarterly (November 2000) 336-347. Reproduced with the kind permission of Brooker's Ltd. To order Brooker's publications on New Zealand Legal, Tax, Accounting, Human Resources, and Business Information, go to Brooker's online homepage.

The Future of the International Sales Convention
from a Common Law Perspective

Jacob S Ziegel
Professor of Law Emeritus, University of Toronto [*]

1.  History of CISG and the Hague Conventions
2.  Scope and Structure of CISG
3.  Adopting Jurisdictions and CISG Case Law
4.  Evaluating CISG's Impact

4.1 Number of adopting jurisdictions
4.2 The case law evidence: Why the disparity in numbers?
      4.2.1. Cultural factors
      4.2.2. Economic factors
      4.2.3. Legal factors
5.  Conclusion

The Convention on Contracts for the International Sale of Goods is now 20 years old. Professor Ziegel marks this anniversary by considering the impact of the Convention on common law jurisdictions. Although the Convention is in force in a number of common law jurisdictions, including New Zealand, in Professor Ziegel's view the paucity of reported cases suggests that the Convention has had little impact on the common law. This in turn raises fundamental concerns about the attitudes of contracting parties and lawyers in at least those common law jurisdictions, and whether UNCITRAL had exaggerated expectations about the impact of the Convention on international commerce.


It is now 20 years since the Convention on Contracts for the International Sale of Goods (hereafter "CISG" or "International Sales Convention") was approved at the UN sponsored diplomatic conference held in Vienna in March-April 1980, and 12 years since the Convention came into force on achieving the threshold 10 country ratifications. Since 1988, the number of ratifying or acceding States has grown to 56 and the number of reported cases in which the Convention's provisions have been considered or applied exceeds 600.[1] There are dozens of books and monographs analysing the Convention and its provisions, and hundreds of articles.[2]

Given these important developments, the time seems ripe for an assessment of the current status of the Convention and its future prospects. However, my objectives are much more circumscribed and this short article is [page 336] primarily concerned with evaluating CISG's impact in common law jurisdictions. This narrower focus is dictated by reasons of space and the author's competence, but more particularly by the fact that, judging by the paucity of reported decisions and other available evidence, the Convention appears so far to have had little impact in the principal common law jurisdictions in which the Convention is in force -- the United States, Canada, Australia and New Zealand. This evidence is of major importance and raises fundamental questions about the attitude of contracting parties and lawyers in at least these countries and whether UNCITRAL had exaggerated expectations about the impact of the Convention on international commerce.

My brief presentation is divided into five parts. Part 1 sketches the history of CISG and its chronological and intellectual predecessors, the two Hague Conventions of 1964. Part 2 provides a brief description of the scope and structure of CISG, and proceeds from there to take a closer look, in Part 3, at the geographical distribution of countries that have adopted the Convention and the distribution of reported cases among the adopting jurisdictions. Part 4 addresses the difficult and controversial theme of how successful CISG has been in its goals and focuses in particular on the question of why there are so few reported cases in the common law jurisdictions. Part 5 contains my overall conclusion.

1. History of CISG and the Hague Conventions

The concept of an international sales convention to provide the default rules for sales contracts between parties located in different countries goes back at least to the 1920s, when it was first mooted by a group of European scholars led by Ernest Rabel, an eminent German comparativist who published a multi-volume study of the sales rules in the major legal systems. The reasoning of the scholars was that global trade was greatly complicated by the diversity of domestic sales rules and that greater certainty and predictability would be secured through the adoption of an international convention whose rules would apply unless the parties had excluded them in their contracts.

These proposals were warmly embraced by the newly-founded and Rome-based International Institute for the Unification of Private Law ("Unidroit"). In 1930, the Institute established a working group to prepare specific proposals for an international uniform law.[3] The work was interrupted by World War II but was resumed after the war. In 1964 the Dutch government sponsored a diplomatic conference that led to the adoption of two Conventions:

(1) a Convention relation to a Uniform Law on the International Sale of Goods ("ULIS"); and

(2) a Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods ("ULFC").

The two Uniform Laws only attracted 10 adherents between 1964 and 1980 and generated only a small, mainly German, body of case law. The United Kingdom was one of the adopting States.[4] However, the salience of the UK's adherence was greatly diluted by the fact that the UK's version of ULIS restricted its application to cases where the parties had chosen that law as the law of the contract. This led to the unsurprising but nevertheless very significant result that there were no reported British cases where the parties had chosen [page 337] ULIS as the governing law. The lack of success of the Uniform Laws is generally ascribed to the fact that the Laws were primarily a European creation and to the fact that ULIS was too long [5] and too complicated.[6] Nevertheless, the Uniform Laws exerted great influence on the drafting and contents of the CISG and they continue to be an important source of historical and doctrinal research.

UNCITRAL was established by the General Assembly of the United Nations in 1966. One of UNCITRAL's first major projects was to establish a Working Group to review ULIS, with a view to preparing a revised text that might render the Uniform Law more acceptable than the 1964 Law had been to countries with different legal, social and economic systems. A revised text was completed and approved by the Commission in 1977. The Uniform Law on Formation was exposed to a similar review and both draft Conventions were merged into a single draft Convention in 1978: the Convention on Contracts for the International Sale of Goods. As I have already mentioned, the draft Convention was approved at the Vienna diplomatic conference in April 1980 after detailed discussion and many minor amendments.

2. Scope and Structure of CISG

CISG has 101 articles and is divided into four principal parts. Part I deals with the Convention's scope and contains general provisions applicable to the rest of the Convention. Part II is concerned with rules for the formation of contracts of sale, and Part III with the rules governing the seller's and buyer's substantive obligations. Part IV contains the final provisions on adherence to and ratification of the Convention by Contracting States, including, importantly, the reservations that may be made at one of several stages to the Convention's applicability to a Contracting State.[7]

In the space at my disposal, I cannot hope to provide an adequate summary of the Convention so I will limit myself to a few highlights. CISG applies to most sale contracts for goods between parties whose places of business are in different States:

(a) when the States are Contracting Parties; and

(b) when the rules of private international law lead to the application of the law of a Contracting State.[8]

Consumer contracts are completely excluded, as are contracts involving the sale of securities, ships, vessels, hovercraft or aircraft, and electricity.[9] Questions involving the validity of the contract are also outside the Convention, as is the effect which the contract may have on the property in the goods sold [10] and any liability of the seller for defective goods causing death or personal injury to any person.[11] Apart from these exclusions, the Convention's dominant motif is freedom [page 338] of contract and so the parties may exclude the Convention altogether or, with one exception,[12] derogate from or vary the effect of any of its provisions.[13] Importantly, the onus is on the parties to contract out of the Convention if they do not wish to be bound by it.[14] Unlike ULIS, CISG contains no provision allowing a State to add a reservation that the Convention is only to apply where the parties so provide in their contract.[15]

The CISG provisions are logically arranged and, on the whole, the drafting style is lucid and the wording simple and uncluttered by complicated subordinating clauses. One does not have to be a sales expert to grasp the general sense of the Convention even on a first reading. This does not mean that the concepts themselves are always simple or consistent. The UNCITRAL Working Group was challenged throughout the drafting process to reconcile divergent common law and civil law concepts and to mediate differences within each of these major camps. Sometimes the nod was given to one side and sometimes to the other; where an acceptable compromise could not be reached the drafters unhappily had to seek refuge in vague or obfuscatory language.[16]

Let me quickly give a few examples of each. The delegates could not agree on the acceptability of a substantive doctrine of good faith in the performance of the parties' obligations. As a result, we have the heavily debated provision in art 7(1) providing that, in the interpretation of the Convention, regard is to be had to its international character, the need to promote uniformity in its application, "and the observance of good faith in international trade". The Vienna diplomatic conference also reached a near-deadlock with the requirement in art 14(1), insisted on by the French representatives, that an offer had to include the price of the goods if it was to meet acceptable Convention standards. This difficulty was eventually compromised by the addition of art 55, which seems to neutralize art 14(1), although one cannot be sure.

A simpler solution was found in resolving the basic difference between common law and civil law jurisdictions over the availability of specific performance as a party's primary remedy for breach of the other party's obligation. The aggrieved party's right to specific performance is recognized in many civil law systems; the reverse of course is true in common law jurisdictions where it is treated as an exceptional remedy. Article 28 of the Convention neatly cuts this Gordian knot by providing that a court is not obliged to enter a judgment for specific performance unless the [page 339] court would do so under its own law in respect of similar sales contracts not governed by the Convention. Another key remedial issue concerns the circumstances under which a party should be able "to avoid" the contract [17] for breach by the other party. There seems to have been a broad consensus from the beginning to reject the American-style perfect tender rule in the Uniform Commercial Code [18] and equally the "a priori" system of classification of the seller's implied obligations into conditions and warranties in the British Sale of Goods Act and its Commonwealth counterparts. Instead, the remedy of avoidance is generally only made available where the guilty party's failure to perform its obligations amounts to a "fundamental breach" of the contract.[19] Much metaphysical ink was spilled at Vienna in the search for an acceptable definition of "fundamental breach" in Art. 25 of the Convention!

3. Adopting Jurisdictions and CISG Case Law

I have previously mentioned that as of June 2000, 56 States had adopted the Convention. However, the geographical spread of these countries is far from even. All the European countries, eastern and western, are among the adopting jurisdictions, with the exception of the United Kingdom and Ireland. In Asia, the Russian Federation, Mongolia, China, Australia, New Zealand and Singapore are subscribing members, but not India or (surprisingly) Japan.[20] Only a handful of African States have joined.[21] South American countries are also poorly represented and Brazil, the largest State among them, is not a member. On the other hand, all the member countries of the North American Free Trade Area, including pre-eminently the United States, have joined the Convention. Some of these numbers are counterintuitive. During the drafting process it was expected that CISG would have a particular appeal to developing countries without modern sales laws of their own. However, it does not appear to have had this effect.

The fact that a country is a CISG member does not entitle one to assume that the Convention plays an important role in its international trade. It could be that the Convention is regularly excluded by the parties in their contracts or (even more likely) that the Convention is simply overlooked by the parties and their lawyers. Unfortunately, we have no empirical data, but only a great deal of hearsay and subjective impressions, to tell us about CISG's role in practice. It is the absence of this hard data that makes the reports of decided cases an important source of information -- if obviously fragmentary and very incomplete. The cases tell us how often CISG issues arise for decision before arbitral tribunals and the regular courts, how the cases were disposed of, and how succesful the adjudicators were in their understanding of the CISG provisions.[page 340]

As I have previously indicated, a growing number of agencies and individual investigators, national and international, are busily engaged in the collection of CISG decisions. The challenges are formidable. Many CISG members have no established systems for the reporting of cases and the decisions themselves vary widely in the amount of detail of the facts and the tribunal's reasons for judgment. On closer examination, it may also be found, contrary to first impressions, that the case had no CISG relevance,[22] or if it did that the parties simply ignored the Convention, or that the tribunal, having cited the CISG provisions, proceeded to interpret or apply them without reference to their international character and the decisions of courts in other CISG jurisdictions or the writings of acknowledged CISG experts.[23]

Subject to these important caveats, I present the following findings by Professor Will from his analysis of the CISG case law over the 10-year period 1988-1998.[24] There were 108 arbitral awards and 568 court decisions, for a total of 676 decisions. The Russian Federation easily led the number of arbitral awards at 68, with the International Chamber of Commerce being a distant second at 22. The People's Republic of China was in third place with nine awards. The remaining awards were distributed among eight other jurisdictions, and the Iran-US arbitral tribunal sitting at The Hague. Only one arbitral award was reported from the US itself. Among the court decisions, Germany easily led the field with 209 cases, or 36.8% of the total number of cases. The Netherlands was second with 91 cases, and Switzerland was third with 65. Austria was next with 39 and France stood in fifth place with 30. Among common law jurisdictions, Professor Will found 18 US cases, two cases in Australia,[25] one in Canada,[26] and none in New Zealand.

4. Evaluating CISG's Impact

There are a variety of ways to determine how successful CISG has been in contributing a major building block in the construction of an international lex mercatoria. The most reliable means, in my view, would be through multi-country surveys, interviews, and questionnaires among merchants and different classes of merchants, to determine their attitudes to the Convention and their contractual practices, how much they know [page 341] about the Convention, and whether the Convention has assisted them in their sales practices and in resolving differences.[27] Unfortunately, this information does not appear to be available on a significant basis although there is a lot of hearsay evidence and casual data. I have heard it said often that large companies routinely exclude the Convention from their contracts as the governing law [28] but it is not clear what motives inspire this practice - whether it is based on distrust of the Convention or ignorance of its provisions, whether it is based on preference for a familiar domestic law that will apply to all aspects of the contract, or whether (let us be frank) it is based on counsel's advice.

In the absence of the best source of information, what inferences can we draw (a) from the number of countries that have adopted the Convention, and (b) from the reported cases with respect to CISG's impact?

4.1 Number of Adopting Jurisdictions

The number of CISG adopting countries (56) compares very favourably with the success rate of most other UN and Unidroit sponsored initiatives in the commercial law area: as of 8 June 2000, only the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards had fared better with 121 ratifications.[29] Nevertheless, we must not be carried away. Adherence to the Convention commits a country to very little. It provides moral support for this branch of international commercial law and it authorizes [30] the adopting jurisdictions' tribunals to apply the CISG rules if they have not been excluded by the contract. There are [page 342] also some additional considerations. First, major powers, such as the Russian Federation and the People's Republic of China, that lack a credible domestic sales law of their own and are hostile to accepting the domestic sales law of the other contracting party as the proper law of the contract, have little option but to ratify the Convention, since otherwise there would be no body of sales rules acceptable to both parties. Secondly, there are still important industrialized powers -- the United Kingdom, Japan, Brazil and India readily come to mind -- that have not ratified the Convention. The UK's position is particularly puzzling. The UK is one of the founding members of UNCITRAL and its representatives played an active role in the drafting of CISG. It has a much-admired legal system and of course gave birth to the common law.

The United Kingdom has never officially explained the reasons for its reluctance to embrace the Convention. It is safe to assume that it has taken its cue from the coolness and, in some cases, hostility of members of the legal profession and the judiciary who worry that ratification may jeopardize London's pre-eminent role as an international arbitration and litigation centre, or who believe that international traders can develop a superior regime of international sales law through contractual practices and trade usages without the straitjacket of confining Convention rules.[31] The Blair-led Labour government has indicated its willingness to make the Convention part of British sales law when parliamentary time can be found for the legislation, so British courts may have an opportunity in the foreseeable future to bring to bear their very considerable forensic skills in developing the CISG jurisprudence. Finally, the fact that a State has ratified the Convention tells us nothing about how its merchant community has reacted to the event. Ratification itself may have had negligible effect. In the absence of superior empirical evidence, we must turn to the country's case law and the records of judicial proceedings to provide us with this information.

4.2 The Case Law Evidence: Why the Disparity in Numbers?

I have suggested that a study of the Convention's case law is valuable in telling us about the types of cases that have come before the adjudicators, how well the tribunals are coping in interpreting the Convention, and those provisions (or the lack of them) that have given the judges the most difficulty. I have also indicated my belief that it is dangerous to extrapolate from the frequency or paucity of reported cases in a CISG jurisdiction, given the fact that so many of the decisions seem to involve smaller companies whose contracts may not have excluded the Convention or may have done so unsuccessfully. Nevertheless, how do we explain the wide disparity between the number of cases reported in Western Europe and the paucity of reported cases in common law countries? In particular, what is the reason for the enormous disparity between the number of German cases and the mere score of US decisions?

I have no authoritative answer to the question but I believe there are a number of reasonably persuasive hypotheses. Before I turn to these, let me dispose of what appear to me to be some false trails. So far as I am aware there is no essential difference between the ease or difficulty of litigating in Germany and the US. If anything, there is a greater incentive to litigate in the US because US State law permits contingency fees whereas, I understand, litigation fees are regulated under German law. Also, under US law each party is [page 343] usually responsible for its own attorney's fees, whereas under German law an unsuccessful party must also absorb at least part of the costs of the other party. Jury trials and punitive damages are also available under the US law [32] but again (if my understanding of the position is correct) unknown in German law. The incentives to litigate may be smaller in the other common law CISG jurisdictions (principally Canada, Australia and New Zealand), but again not so much smaller as to explain the enormous disparity between the number of Convention cases in their countries and those decided in Germany.

I believe instead that the paucity or frequency of CISG litigation in Western European countries and overseas common law States can be ascribed to one or more of the following factors:

(1) cultural factors;

(2) economic factors; and

(3) legal factors endemic to the Convention.

I am sure other CISG commentators can readily add to this list.

4.2.1 Cultural factors

The importance of cultural factors was brought home to me when I emailed a long query at the beginning of September 2000 to the subscribers to the University of Freiburg's CISG website, asking them to explain the disproportionate number of German CISG cases. Without exception, all seven respondents [33] stressed the fact that the Convention was much better known in Germany than it was in North America. One or more pointed to the important role that German scholars (particularly Ernst Rabel) had played in the evolution of the international sales conventions, to the fact that German courts had already developed a substantial corpus of case law on ULIS while Germany was an adherent to the Hague Conventions, and to the fact that there was a vast body of CISG literature in German, including at least 10 texts. I was told that every German law student would be exposed to at least some discussion of CISG during his law school career (as compared to the paucity of discussion of the Convention at most US law schools) and that many graduate theses at German law schools were devoted to the Convention.

So far as the US position was concerned, Albert Kritzer, director of the excellent Pace University law school CISG website, emphasized his own belief that lack of familiarity with the Convention was at the root of the paucity of US cases. However, this observation needs to be qualified. There is no shortage of US literature on CISG, US scholars [34] played leading roles in the drafting of CISG, and one of them wrote what is probably the best known commentary on the Convention.[35] I believe, therefore, that we must also look to non-cultural factors to explain the small number of US cases.[36] [page 344]

4.2.2 Economic factors

Lawyers do not litigate for altruistic reasons. Even if they appreciate that the Convention applies to their sales transaction, they may have no incentive to plead the Convention unless they believe it will strengthen their claim or defence. Making that determination may not be easy for a host of reasons. The main issue may turn on questions of fact (for example, whether or not the goods were defective) and the parties may not find it an economical use of scarce resources (their time and their clients' money) to become familiar with a different body of law in case their expectations turn out to be wrong. Their reluctance may be particularly strong if the amount involved is small (less than US$50,000) and where neither counsel has had much experience with international sales litigation. Even if counsel feel obliged to plead the CISG, constraints of time and resources may limit the amount of research they are willing to do. It also explains why in many of the US cases there is little, if any, reference to earlier CISG case law and the abundant literature, and even fewer citations to non-US sources, and why US courts appear so ready to interpret the CISG provisions through common law lenses.[37]

4.2.3 Legal factors

What I describe as legal factors come into play at two different levels. At one level, legal factors explain why the sales cases often do not refer to CISG, even though the Convention clearly applies. This is because the parties may not have appreciated that the Convention applies unless they have contracted out of it, or because the parties may have thought they had excluded the Convention when the language they used was insufficient to do so. At the second level, legal factors explain why, when they focus on the question, the contracting parties frequently decide to exclude the Convention and do so successfully. The net result in both types of case, at least in common law jurisdictions, is often the same: whether through misunderstanding or by calculation, the case is not argued before the tribunal as a CISG case.

Though CISG enthusiasts may regard systematic exclusion of the Convention as antithetical to the development of a strong international law merchant, the parties may often have convincing reasons for the exclusion. The reasons are largely internal to the Convention itself. A far from exhaustive list would include the following reasons:

(1) CISG does not govern the validity of the contract or the property effects of the contract. The exclusion of validity issues, though based on sound considerations, is particularly serious. This is because the Convention does not define "validity" and because the German Supreme Court, with little hesitation, has recently held [38] that the validity of a clause excluding the seller's liability for damages falls outside the Convention. Limitation of liability clauses are so common in sales contracts that this feature alone seriously impairs the utility of the Convention. This is because a seller that exports to many countries will never know for sure which of them will uphold a limitation of [page 345] liability clause and which of them may find it repugnant.

(2) The case law shows that a substantial number of issues are not dealt with by the Convention at all or are dealt with inadequately. Particularly troublesome is the failure of art 78 to indicate how the rate of interest which a successful party may be entitled to recover, is to be determined.

(3) Some of the formational rules in Part II of CISG were already dated when the Convention was approved in 1980;[39] others have become so in the light of subsequent developments, particularly those related to electronic contracts.[40]

(4) The CISG contains no mechanism for updating its provisions and there is no international tribunal competent to resolve conflicting interpretations of important provisions.

(5) The Convention allows for too many reservations (5) by adhering States. A State may also have adopted more than one reservation. The cumulative effect is to impose a substantial burden on the parties' legal advisers where their clients have customers in many different countries.

Given these weaknesses, the contracting parties may often find it more attractive to choose a municipal law with a well developed and balanced sales law to govern their contract, because it will provide greater certainty and because they hope the chosen law will be able to resolve all future disputes arising between the parties, procedural as well as substantive.

Some of the difficulties listed above can be addressed fairly easily if (and it is an important if) there is a political will to do so. For example, an amendment could be added to CISG requiring a conference to be convened at stipulated intervals to consider amendments to the Convention and deeming the amendments to have been adopted if they have been approved by a two-thirds majority of the UN members present and voting on the amendments.

So far as the resolution of conflicting interpretations is concerned, the UN could establish an international commercial law tribunal with regional branches to whom national tribunals could refer questions of interpretation for an authoritative opinion. The members of the European Union could act even earlier by giving the European Court of Justice jurisdiction to decide CISG disputes involving sellers and buyers in the EU member countries.

5. Conclusion

Writing in 1989, Barry Nicholas expressed the view that CISG was the best possible product in the circumstances.[41] An observer commenting in the year 2000 could fairly conclude that during its first 12 years of operational effect the Convention has, overall, performed as well as one could reasonably expect -- significantly better with respect to the number of adherents to the Convention and less well with respect to the Convention's use in practice. Some of the Convention's early supporters may have had exaggerated expectations of its performance. The drafters may also have erred in making the Convention the default rule instead of limiting its [page 346] applicability to cases where the parties had consciously chosen CISG as their governing law. That would have been a better test of the Convention's acceptability.

In any event, I believe the Convention must prove itself through its own intrinsic merits and that it will do so if it can overcome some of the existing weaknesses to which I have alluded. [page 347]

This article was accepted for publication on 1 September 2000


FOOTNOTES

* This is the written version of a seminar presented by the author at the Faculty of Law, The University of Auckland, on 20 March 2000.

1. There is no single official centre for the collection of judgments and decisions but there is a rapidly escalating number of websites for the collection of this data at the national, regional and international levels. The three best known sites are those operated by the Pace University Law School (<http://www.cisg.law.pace.edu>), the Faculty of Law of Freiburg University (<http://www.jura.uni-freiburg.de/ipr1/cisg>), and the United Nations Commission on International Trade Law (UNCITRAL) (<http://www.un.or.at/uncitral>). For further details see M R Will (ed), Twenty Years of International Sales Law Under the CISG[:] International Bibliography and Case Law Digest (1980 - 2000), Kluwer Law International, 2000, Pt II, p 6.

2. See M R Will (ed), Twenty Years of International Sales Law Under the CISG[:] International Bibliography and Case Law Digest (1980 - 2000), Kluwer Law International, 2000. The two best known texts are those by J O Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (3rd ed), Kluwer, 1999, and P Schlechtriem (ed), Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd ed), English transl, Oxford, Clarendon Press, 1998. The excellent Pace University website maintains an up to date list of publications in many languages.

3. See R H Graveson, E J Cohn and D M Graveson, Uniform Laws on International Sales Act 1967, London, Butterworths, 1968, pp 1ff.

4. See Uniform Laws on International Sales Act 1967. The UK's adherence was inspired by its joining the Common Market and was apparently regarded by the British government of the day as a gesture of goodwill towards its new economic and political partners.

5. It contained 101 articles.

6. J O Honnold, "The Uniform Law for the International Sale of Goods: the Hague Conventions of 1964" (1965) 30 Law & Contemp Probs 326.

7. Articles 91(2) and 96.

8. Article 1(1). Under art 95, at the time of adoption of the Convention a State may exclude para 1(b). A number of States, particularly the US, have done so because they believe that to apply the Convention, where the proper law of a contract leads to a Convention State, will catch a party not carrying on business in that State, by surprise. The meaning of "sale" and "goods" in art 1(1) is not defined, but art 3(2) excludes contracts of work and materials where the preponderant part of the obligations of the party furnishing the goods consists of the supply of labour or other services.

9. Article 2.

10. Article 4. The reasons for the exclusion were that the domestic rules in these areas differed too widely to lend themselves to uniform treatment.

11. Article 5.

12. Article 12, allowing a Contracting Party to stipulate that, in deviation from the Convention's general rule, contracts of sale, and any modification of a contract, must be in writing or evidenced in writing. The Soviet bloc countries (as they then were) insisted on this reservation.

13. Article 6.

14. There is a difference of opinion among scholars and tribunals as to how explicit the contracting out language must be, and in particular whether a choice of law clause in the contract is sufficient to indicate such an intention. The majority view is that it is not and that the choice of law clause must make it clear that only the domestic law of the chosen jurisdiction is to apply. See J Ziegel, "Canada Prepares to Adopt the International Sales Convention" (1991) 16 Can Bus LJ 1.

15. Article 94 allows adopting States, which have the same or closely related legal rules on matters governed by the Convention, to declare that the Convention is not to apply to contracts of sale or their formation where the parties have their places of business in those States. Article 92 also permits a reservation that a State will not be bound by Part II or Part III of the Convention. Both reservations were primarily added at the request of the Nordic countries. On the availability of a declaration under art 94 to contracts between Canadian and US-based parties, see the exchange of views between the author and John Honnold in (1987-88) 13 Can Bus LJ 504.

16. For an excellent treatment of this difficult area, see A M Garro, "Reconciliation of Legal Traditions in the UN Convention on Contracts for the International Sale of Goods" (1989) 23 Int Lawyer 443.

17. "Avoidance" is the term used in the CISG in the common law sense of rightful cancellation or termination of the contract for breach by the other party. "Avoidance" is not used in the common law sense of rescission, since the aggrieved party retains the right to sue for damages and other relief. See arts 45 and 61.

18. See UCC 2-601. The perfect render rule is also retained in revised art 2 approved by the American Law Institute in 1999, but is offset by the revised article's giving the seller a broader right to cure a defective tender.

19. See arts 49(1)(a) and 64(1)(a).

20. "Surprisingly", because Professor Sono, a distinguished Japanese scholar, acted as rapporteur at the Vienna diplomatic conference.

21. Viz: Burundi, Egypt, Lesotho, Syria, Uganda, and Zambia. Professor Eiselen has urged South Africa to adopt the Convention and to provide leadership to other South African States in this area. See S Eiselen, "Adoption of the Vienna Convention for the International Sale of Goods (the CISG) in South Africa" (1999) 116 SALJ 323, also available on the Pace University website. I am indebted to Albert Kritzer for drawing my attention to Professor Eiselen's fine article.

22. Professor Will particularly warns of this danger: M R Will (ed), Twenty Years of International Sales Law Under the CISG[:] International Bibliography and Case Law Digest (1980 - 2000), Kluwer Law International, 2000.

23. American authors have criticized US courts of this national bias, but my reading of the (painfully few) Canadian and Australian cases tells me that Canadian and Australian courts behave no differently from their US peers. Many civilian courts do not appear to behave very differently either. The fault, if fault it is, probably lies with counsel appearing before the tribunal and their unwillingness to spend the time on comparative research when the amount involved does not justify it and the client is unlikely to be willing to pay for the extra work. I return to this issue later in the text.

24. M R Will (ed), Twenty Years of International Sales Law Under the CISG[:] International Bibliography and Case Law Digest (1980 - 2000), Kluwer Law International, 2000, Part II, Awards and Decision, "Overview", p 9. (The additions and deductions are my own.)

25. However, one of the cases only involved a dictum. See Renard Construction (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 (NSWCA). The other case was Roder Zelt-und Hallenkonstruktionen GmbH v Rosedown Park Pty Ltd (1995) 57 FCR 216. For a critique of the decision see J Ziegel, "Comment on Roder Zelt-und Hallenkonstruktionen GmbH v Rosedown Park Pty Ltd" in Review of the Convention on Contracts for the International Sale of Goods, Kluwer, The Hague, 1998, p 52.

26. Nova Tool & Mold Inc v London Industries Inc [1998] OJ 538. There has since been a second Ontario decision, La San Guiseppe v Forti Moulding Ltd 31/8/99, Ont SCJ. Both cases are reviewed in J Ziegel, "Canada's First Decision on the International Sales Convention" (1999) 32 Can Bus LJ 313.

27. It is common for international agencies such as UNCITRAL and Unidroit to send out questionnaires and survey forms before embarking on a new project. In my experience, however, the results are not very reliable. The response rate is often very low, the questionnaires may be limited to governments or major commercial organizations, and most importantly the respondents may not take the questionnaires seriously. It is easy to support a project in the abstract if it is designed to improve the flow of goods and services internationally and if the respondent is not being asked to commit itself to adopting the convention or model international law after it has been drafted.

28. Some of the German respondents to my email queries referred to below volunteered the fact that German companies also follow this practice. It is also significant that few of the reported CISG cases involve well known multinational companies. Many of the CISG cases involve relatively small amounts. This is particularly true of the German cases, some of which appear to relate to claims for less than US$10,000. As one would expect, arbitral awards usually involve substantially higher amounts than those in issue before the regular courts. See M R Will (ed), Twenty Years of International Sales Law Under the CISG[:] International Bibliography and Case Law Digest (1980 - 2000), Kluwer Law International, 2000, Part II, pp 253ff.

29. The numbers for some other conventions and model laws are as follows:

Limitation Periods in the International Sale of Goods -- 17

Hamburg Convention on Carriage of Goods by Sea (1978) -- 26

International Bills of Exchange and Promissory Notes (NY 1988) -- 2

Liability of Operators of Transport Terminals in International Trade (Vienna 1991) -- 2

Independent Guarantees and Standby Letters of Credit (NY 1995) -- 5

Model Law on International Commercial Arbitrations (Vienna 1985) -- 30*

* This number includes subdivisions of federal States.

30. I say "authorizes" because I am not aware of a country where the tribunal is obliged to apply the Convention even though the parties have not pleaded the Convention and they have made it clear that they do not wish the adjudicator to apply the Convention rules. I thought initially that Germany was an exception and that German courts feel themselves obliged to apply the Convention rules if they have not been excluded in the contract. However, German respondents whom I consulted recently through the University of Freiburg CISG website are agreed that a court will respect the parties' wishes if they elect at the trial stage not to be governed by the CISG provisions. Further reflection tells me that this is a logical result. If the parties are entitled to exclude the Convention in the contract they must also be entitled to do so at a later stage. Both exclusions reflect the parties' freedom of contract principle which underpins the Convention.

31. See D Wheatley, "Why I Oppose the Wind of Change: Should we Meddle with a Highly Respected Contracts Procedures?" The Times, 27 March 1990; R M Goode, "Why Compromise Makes Sense", The Times, 22 May 1990; and Sir John Hobhouse, "International Conventions and Commercial Law: the Pursuit of Uniformity" (1990) 106 LQR 530.

32. I am not suggesting that punitive damages are recoverable under the Convention. It seems clear that art 74 of the Convention only permits the recovery of compensatory damages.

33. Four of them were German; one was a young Belgian scholar, Patrick Wautelet of the University of Belgium, currently a BAEF fellow at the Harvard Law School; the sixth was a doctoral student in Dallas; and the seventh was a young Mexican lawyer who had studied the Convention at the University of Pittsburgh Law School. I exchanged several emails with Mr Wautelet and his replies were particularly comprehensive and illuminating.

34. Notably John Honnold, who was the first director of UNCITRAL and a leading international sales law scholar long before he became involved with UNCITRAL; and E A Farnsworth, of the Columbia Law School.

35. See J O Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (3rd ed), Kluwer, 1999.

36. Professor Farnsworth seems to share this view. In responding to my query, he wrote on 10 September 2000: "I would be surprised if, among American lawyers who deal regularly with export/import transactions, there are many who are unaware of CISG. And since these lawyers are more than a few and must generate a considerable number of disputes, why do they not appear in the reports? Arbitration?"

37. These traits are also present in the two Australian cases referred to earlier. In Roder Zelt-und Hallenkonstruktionen GmbH v Rosedown Park Pty Ltd (1995) 57 FCR 216, Van Doussa J appears to have made a serious attempt to understand the concepts of avoidance and fundamental breach in the Convention but was handicapped in not having the relevant literature cited to him.

38. See BGH, 24 March 1999, No VII ZR 121/98 <http://www.cisg.law.pace.edu/cisg/wais/db/cases2/990324g1.html> (the Vine Wax case).

39. For example, with respect to battle of the forms. See art 19(2).

40. UNCITRAL has prepared a Model Law on Electronic Commerce (1996) which has greatly influenced the Uniform Electronic Commerce Act adopted by the Uniform Law Conference of Canada (1999) and the Uniform Electronic Transactions Act adopted by the National Conference of Commissioners on Uniform State Legislation in the US (also in 1999).

41. "The Vienna Convention on International Sales Law" (1989) 105 LQR 201.


Pace Law School Institute of International Commercial Law - Last updated December 11, 2000
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