9. Mr. HERBER (Federal Republic of Germany) drew attention to his Government's comments on paragraph 1 of article 1 [became CISG article 1 ] (A/CONF.97/8, pp. 6-7) and said that the proposed redraft therein contained for subparagraph (b) should be regarded as a subsidiary proposal, for the contingency that the Committee wished to retain the subparagraph. He proposed however that paragraph 1 (b) should be deleted altogether. Paragraph 1 would, of course, then have to be redrafted so as to incorporate in the main body of the text the idea contained in subparagraph (a), namely that the different States in which the parties had their places of business must be Contracting States.
10. The provision in subparagraph (b) introduced an unwelcome element of complication. It was contained -- actually in a more complex form -- in the provision on scope of application in the 1964 Sales Convention of the Hague and was, in fact, partly responsible for the reluctance of States to accede to that Convention.
11. The provision in question would involve serious problems of interpretation and application. It was not actually clear what rules were covered by the text. Moreover, it must be remembered that the present draft would replace not only the Sales Convention but also the Formation Convention of the Hague. Now, the national law in question could (and in many cases did) refer to its own application for only part of the current text: a certain rule on conflict of laws might refer only to the conclusion of the contract, or to the rights and duties of the parties thereto, or indeed only to some particular rights and duties. That situation made the provision under discussion very difficult to apply.
12. Lastly, he stressed that it was most unusual in an instrument governed by international law to bind Contracting States to apply the instrument to nationals of States not parties thereto. The inclusion of such an element would make national Parliaments reluctant to ratify the future Convention.
13. Mr. KOPAC (Czechoslovakia) said that article 1 [became CISG article 1 ] provided a better solution to the problem of scope of application than the corresponding text in the Uniform Law on the International Sale of Goods of the 1964 Hague Convention.
14. Nevertheless, he was inclined to agree with much of what had been said by the previous speaker. Apart from the arguments already put forward by that speaker, he pointed out that in his country-- and in some others as well -- there existed special legal rules governing contracts exclusively in international trade, a fact which would create special difficulties in the application of subparagraph (b) -- additional to those which would exist for other countries where internal and international contracts were governed by the same rules.
15. He therefore supported the proposal to delete the subparagraph. If, however, the Committee decided to retain it, he would reserve the position of his delegation.
16. Mr. HJERNER (Sweden) said he agreed with the representative of the Federal Republic of Germany that the deletion of paragraph 1(b) would make the Convention simpler and increase the readiness of States to adhere to it.
17. Mr. STALEV (Bulgaria) said he thought that paragraph 1(b) should be retained. Contracting States should regard the Convention as the general law to apply to the international sale of goods and not as a special law for sales between Contracting States. If paragraph 1(b) were deleted, it would not be possible to apply the Convention to sales to non-Contracting States. The goal should be to have a unified law under which the regulations governing international sales were linked to those governing internal sales.
18. Mr. ROGNLIEN (Norway) agreed with the Bulgarian representative as to the undesirable effect of the deletion of paragraph 1(b). The subsidiary proposal by the Federal Republic of Germany in document A/CONF.97/8 was a complicated one which would require further study in the small working group. It was not desirable to split up the Convention. However, if the rules of private international law would lead to the application of the law of a Contracting State only in the case of formation of the contract (Part II of the Convention), it should not be permissible to apply the rest of the Convention. If, however, Part III of the Convention was applicable under those rules, it should be possible to apply the whole Convention.
19. Mr. PLANTARD (France) said that his delegation was satisfied with paragraph 1 as it stood. From the point of view of a ratifying State, the Convention would constitute the law governing international sales and its sphere of application should therefore be as wide as possible. Without paragraph 1(b), a judge in a Contracting State would be obliged to apply domestic legislation regarding internal sales in cases involving parties situated in a non-Contracting State, instead of the Convention drafted specifically for international trade and hence more suitable for that purpose. Furthermore, parties in non-Contracting States would have the benefit of dealing with a uniform law in all Contracting States.
20. Mr. SHAFIK (Egypt) endorsed the arguments put forward by the Bulgarian and French representatives.
21. Mr. SZÁSZ (Hungary) said he was in favour of retaining paragraph 1(b). Its deletion would limit the application of the Convention, which should be used as widely as possible to settle international trade disputes. It was a logical development of paragraph 1(a). If it was deleted uncertainty would prevail in practical cases which could usefully be solved under it.
22. Mr. BOGGIANO (Argentina) said that his delegation was in favour of retaining paragraph 1(b), which was based on one of the principles of the Convention, namely, co-ordination between uniform rules of law and private international law. Some further clarification might, however, be required. If it was understood that, in applying the Convention, a judge in a Contracting State was applying the law currently in force in that country, it might be asked whether it was clear or just that the law might also be applied retrospectively. On the other hand, it would be detrimental to international harmony if a Contracting State refused to apply the Convention when, according to the rules of private international law, it was competent to do so. The solution might perhaps lie in the interpretation suggested by the representative of the Federal Republic of Germany. Moreover, the allusion to the rules of private international law of the forum (A/CONF.97/5, commentary on article 1 [became CISG article 1 ], paragraph 7) might not suffice to make the Convention applicable in cases where disputes were solved extra-judicially or were brought before an arbitration court.
23. Since, however, the Hague Conference on Private International Law had decided that a revision of the rules of that law relating to international sales should be undertaken, it was perhaps unnecessary for the present conference to be more specific and paragraph 1(b) might be left as it stood, although some States wishing to become contracting parties to the Convention might have to enter reservations regarding the article in order to safeguard their positions.
24. Mr. WAGNER (German Democratic Republic) said that his delegation's position was similar to that of the Czechoslovak delegation. Deletion of paragraph 1(b) would avoid the same internal problems in his country. If the subparagraph were not deleted, reservations on the part of Contracting States were likely.
25. Mr. BENNETT (Australia) said that paragraph 1(b) should be retained. He agreed with the French representative that when a Contracting State had a law specially designed for international trade, its right to apply it, in preference to less appropriate legislation, should be recognized.
26. Mr. HERBER (Federal Republic of Germany) said he agreed with the French representative that, generally speaking, it was desirable for a country to apply the same national legislation to all external sales. If it ratified the Convention, the Federal Republic would in fact apply its rules even to parties located in non-Contracting States. Most Contracting States would similarly extend the Convention's sphere of application. However, the discussion had shown that the inclusion in the text of a provision like paragraph 1(b) was likely to cause Governments to enter reservations, as had happened in the case of the 1964 Hague Convention.
27. Mr. BLAGOJEVIC (Yugoslavia) said that it should be left to the individual Contracting State to decide whether or not to apply the Convention to non-Contracting States. It was not always true that international law, which necessarily involved compromises, was better than domestic law.
28. At the request of the representative of the Federal Republic of Germany, the CHAIRMAN put to the vote the proposal to delete paragraph 1(b).
29. The proposal was rejected by 25 votes to 7, with 10 abstentions.
30. Mr. HERBER (Federal Republic of Germany) asked whether his delegation's subsidiary proposal (A/CONF.97/8) should be discussed in a small working group, as some delegations had suggested, or through informal contacts.
31. The CHAIRMAN said that there was no objection to the representative of the Federal Republic of Germany sounding out other delegations with a view to producing an alternative text to paragraph 1(b). However, the proposal in document A/CONF.97/8, represented a limitation of paragraph 1(b), which the majority had preferred to retain, since it related only to sales of goods and not to the formation of the contract.
Article 1, paragraph 2
32. Mr. SHAFIK (Egypt) proposed that paragraph 2 should be deleted on the grounds that it dealt with a question of fact which should be left to the judge or arbiter to determine.
33. Mr. ROGNLIEN (Norway) said that, if paragraph 2 were deleted, that would mean that the Convention would apply whenever the parties were located in different States regardless of the awareness of the parties of the location of one another's places of business. If that was indeed the intention of the Egyptian representative, an expansion of the text of that paragraph would be preferable to its deletion.
34. Mr. BENNETT (Australia) said that it would be most undesirable to delete paragraph 2 since the seller should be protected against a situation in which he did not know whether or not the buyer came from another country and thus whether or not the Convention was applicable, since it was realistic to assume that not all countries would become contracting parties.
35. The CHAIRMAN said that the proposal to delete paragraph 2 did not appear to be supported.
Article 1 [became CISG article 1 ], paragraph 3
36. The CHAIRMAN said that, in the absence of any comments, he took it that paragraph 3 was acceptable to the Committee.
37. He further assumed that the Committee wished to adopt article 1 as a whole, on the understanding that at a later stage, an alternative draft of paragraph 1(b) might be proposed.
38. It was so agreed.
39. Mr. KOPAC (Czechoslovakia) said that he had no objection to the principle behind the paragraph but felt the wording could be improved. The crucial part of the provision was the clause beginning "unless the seller . . .", and in the form in which it was currently worded it implied that there was an obligation to prove an absence of knowledge that the goods were bought for personal, family or household use. Since it was difficult to furnish proof of the non-existence of knowledge, it would be better if the paragraph were worded more positively, along the lines: ". . . if the seller . . . knew or ought to have known that the goods were bought for any such use".
40. Mr. MATTEUCI (UNIDROIT) associated himself with that view. While it was right that the "shopping" or retail type of sales should be excluded from the application of the Convention, the existing wording might well give rise to difficulties. It would be simpler merely to refer to retail sales or sales in shops accessible to the public, and thus to avoid the implication that it was incumbent on the seller to ascertain the intentions of the buyer.
41. Mr. PLANTARD (France) said he, too, was concerned lest the double negative used in the paragraph should give rise to confusion. Since the problem was chiefly one of drafting, he suggested that it be referred to the Drafting Committee.
42. Mr. KOPAC (Czechoslovakia) agreed that the matter could well be referred to the Drafting Committee, but did not agree that the problem was merely one of wording; important legal issues were involved. The existing text implied that the burden of proof of the intentions of the buyer rested upon the seller, whereas it was his view that it should be for the party who wished to exclude application of the Convention to prove both the intended use of the goods and the knowledge of the seller as to that intended use.
43. Mr. FARNSWORTH (United States of America) supported that view. The issue was not merely one of wording but was a question of substance which ought to be decided by the Committee itself. The genesis of the paragraph had been the desire to make an exception for consumer goods, and to make it incumbent upon the seller to show that he did not know that the goods were bought for the purposes referred to. He did not think that the existing text would give rise to difficulties and would prefer to see it retained.
44. Mr. BOGGIANO (Argentina) agreed that the question was a substantive one and not merely one of drafting. It would be very difficult in practice for a seller to furnish proof as to the intentions of a buyer. It would be better to define in as objective a manner as possible what constituted consumer sales.
45. The CHAIRMAN pointed out that it was not the purpose of the provision under discussion to be more or less favourable to either of the parties involved than was the case under the relevant national legislation. The degree to which one or other of the parties would be favoured would vary from case to case.
46. Mr. ROGNLIEN (Norway) stressed that the aim should be to find a formula that was broad enough to be acceptable to those States which already had specific legislation on consumer sales. It would be possible simply to end the paragraph after the word "household use", but the clause beginning "unless the seller" had been introduced to avoid unduly penalizing the seller. The paragraph as currently drafted would be satisfactory in terms of his own country's legislation, but he was not sure whether it would be so if amended as proposed by the Czechoslovak representative.
47. Mr. PONTOPPIDAN (Denmark) and Mr. HJERNER (Sweden) also thought it important that the text should remain unchanged.
48. Mr. STALEV (Bulgaria) was also in favour of its retention, pointing out that if the object was to exclude consumer sales from application of the Convention, it would be better to have a negative formulation than a positive one.
49. Mr. MANTILLA-MOLINA (Mexico) said he agreed with the United States representative that the issue was a substantive one and should be decided by the Committee. The whole question of exclusion from the Convention needed to be considered with due regard for the point of view of the seller.
50. Mr. VISCHER (Switzerland) agreed with the representative of UNIDROIT that the introduction of a subjective element should be avoided. The solution would be to find an objective definition of consumer sales rather than to imply that it was for the seller to ascertain the motives of the buyer.
51. The CHAIRMAN asked whether it was the wish of the Committee to have the Czechoslovak proposal put to the vote or to set up a working group to discuss the question and report the following day.
52. Mr. PLANTARD (France) said he feared that a working group would not be able to reconcile the two opposing views that had been put forward, the first in favour of simply re-wording the paragraph in a positive rather than a negative way, and the second in favour of defining objective criteria for consumer sales, irrespective of the knowledge or lack of knowledge of one or other of the parties.
53. Mr. SEVÓN (Finland) pointed out that the question of defining exceptions to be made for consumer sales had been debated for some considerable time. The difficulty was that each nation's legislation had slightly different definitions of such exceptions. He himself would prefer the existing wording.
54. Mr. ROGNLIEN (Norway) supported that view. Efforts had been made at the various sessions of UNCITRAL to find objective criteria for defining consumer sales, but they had not proved successful, because the various terms suggested had all been found to have different meanings in different countries. The chief criterion should be the use to which the buyer put the goods.
55. Mr. FOKKEMA (Netherlands) agreed. Although the text might not appear to be formulated in objective terms, it did in fact lend itself in practice to objective application.
56. The CHAIRMAN commented that there appeared to be a considerable majority in favour of retaining the existing text. He asked the Czechoslovak representative if he wished his proposal to be put to the vote.
57. Mr. KOPAC (Czechoslovakia) said he would not press for a vote on his proposal.
58. It was agreed that paragraph (a) should remain unchanged.
59. Paragraph (b) was adopted.
60. Mr. ROGNLIEN (Norway) proposed that the Drafting Committee be asked to decide whether the phrase "authority of law" was appropriate, or whether it should be replaced by "operation of law".
61. Paragraph (d) was adopted.
62. Mr. SAMSON (Canada) proposed that the paragraph be deleted on the grounds that questions of registration did not fall within the law of contract. The arguments put forward in the commentary on that question seemed to him to be somewhat weak.
63. Mr. WAGNER (German Democratic Republic) supported that proposal. The registration requirements of ships did not constitute a sufficient reason for their exclusion from the Convention.
64. Mr. PLANTARD (France), Mr. HJERNER (Sweden), Mr. KOPAC (Czechoslovakia) and Mr. STALEV (Bulgaria) also supported the Canadian proposal.
65. Mr. PONTOPPIDAN (Denmark) and Miss O'FLYNN (United Kingdom) were in favour of retaining the text on the grounds that so many special considerations were involved in contracts for the sale of ships, vessels and aircraft that their inclusion was not justified.