(A/CONF.97/C.1/L.249, L.250, L.251)
1. The CHAIRMAN reminded the Committee that at the previous meeting it had decided to reopen consideration of articles 62 and 63 [became CISG article 71 and CISG article 72 ]. That would bring the Committee to the end of its substantive work, and no more amendments would be accepted. The text of article 62 [became CISG article 71 ] as adopted at the 26th meeting consisted of the UNCITRAL text with an amendment by the Federal Republic of Germany (A/CONF.97/C.1/L.187) to paragraph 1. The Committee had adopted the UNCITRAL text of article 63 [became CISG article 72 ] unchanged. The Committee now had before it Egyptian proposals for articles 62 and 63 [became CISG article 71 and CISG article 72 ] (A/CONF.97/C.1/L.249, L.250) and an Italian proposal for article 62(1) [became CISG article 72(1) ] (A/CONF.97/C.1/L.251).
2. Mr. SHAFIK (Egypt), introducing his delegation's amendments (A/CONF.97/C.1/L.249, L.250), said that he considered the criterion for avoidance given in the adopted text of article 63 [became CISG article 72 ] to be clearer and less subjective than the criterion for suspension of performance given in the adopted text of article 62(1) [became CISG article 71(1) ]. In his amendment to article 62 [became CISG article 71 ], therefore, he had taken the wording used in article 63 [became CISG article 72 ] as the basis for dealing with the whole question of suspension or avoidance of contract. However, the remedy in article 63 [became CISG article 72 ] as adopted whereby a party might proceed directly to avoidance of contract was rather drastic; even if the other party had already been declared bankrupt, his creditors might still be prepared to fulfil the contract. He therefore proposed that notification should be given in all cases. The Egyptian proposal for article 63(1) [became CISG article 72(1) ] was virtually identical with the adopted text of article 62(2) [became CISG article 71(2) ] and the proposal for article 63(2) [became CISG article 72(2) ] was on the same lines as the adopted article 62(3) [became CISG article 71(3) ].
3. Mr. BONELL (Italy), introducing his delegation's amendment (A/CONF.97/C.1/L.251), said that he was not satisfied with the Egyptian proposals. As the title of the chapter indicated, articles 62 and 63 [became CISG article 71 and CISG article 72 ] dealt with problem common to both seller and buyer, and the Egyptian proposal was likely to upset the balance achieved in the original text. His delegation had difficulty in accepting the idea of suspension of performance in the extreme case of fundamental breach, as in the Egyptian proposal for article 62(1) [became CISG article 71(1) ]. It had always considered suspension of contract a purely precautionary measure which was expected to be the same as under the article as adopted, but the Egyptian text was unnecessarily complicated. The Italian proposal was therefore to restore the original text of article 62 [became CISG article 71 ] as adopted by UNCITRAL, which his delegation had always supported.
4. Mr. ROGNLIEN (Norway) said that there seemed to be a discrepancy in the Egyptian proposal for article 62 [became CISG article 71 ] (A/CONF.97/C.1/L.249) between the reference in paragraph 1 to intended suspension of performance and that in paragraph 2 to avoidance of the contract. It would be better to deal with suspension and avoidance of contract in separate articles, as in the adopted text. The Egyptian wording for article 62(1) [became CISG article 71(1) ], moreover, did not enumerate the reasons for concluding that one of the parties would commit a fundamental breach of contract, an enumeration which seemed useful to tighten up conditions for suspension. However, the main problem with the Egyptian text was that suspension of performance seemed to be subject to prior notice with a reasonable period allowed for the other party to respond. In some cases that would be too much to ask. When a serious deficiency in the other party's ability to perform had become apparent, the first party should have the right to hold back his own performance. A seller should have the right to refuse to dispatch the goods and a buyer the right to refuse to pay the price even if advance payment was stipulated in the contract, without either declaring the contract avoided or himself committing a breach of contract. It was true that under the Egyptian proposal for article 63(1) [became CISG article 72(1) ] (A/CONF.97/C.1/L.250) the seller could prevent the goods from being handed over, but that was too limited. He suggested that interested delegations should work out a joint proposal with the Egyptian representative for submission to the plenary.
5. Mr. SCHLECHTRIEM (Federal Republic of Germany) supported that suggestion. The remedies of suspension and avoidance of contract should not be lumped together.
6. Mr. SEVÓN (Finland) said he was not entirely convinced by the objections raised to the adopted text of article 62(1) [became CISG article 71(1) ]. In any case the Egyptian text for that paragraph was not clear. It would appear that a party who wished to suspend performance of his obligations could do so, but the text said only that he could notify the other party of his intention to suspend. As to the "reasonable period of time", it presumably could not extend beyond the period during which performance was supposed to take place. Although he had difficulties with the Egyptian proposal, he too supported the suggestion of a working group to consider the matter.
7. Mr. KRISPIS (Greece) said that he too was not convinced that article 62(1) [became CISG article 71(1) ] as adopted failed to define objectively the conditions for suspension of performance because of anticipatory fundamental breach. It amplified the word "reasonable" by referring to "a serious deficiency" and to "good grounds" which seemed to imply that parties who wished to suspend must have some prima facie evidence to act on.
8. Mr. SAMI (Iraq) said there might be reasons which had caused a party to fail to perform but which were not considered adequate to prevent the other party from meeting his obligations. There should be well-defined criteria to cover such a situation, which would offer a guarantee to a party in doubt as to the performance of a contract by another party. If the party in doubt did not receive notification from the other party guaranteeing performance of the contract, he might under article 62 [became CISG article 71 ] suspend performance of his obligations and thus avoid the contract. The other party would moreover have been given a chance to avert the serious consequences that would arise from refusal to perform. The two proposals submitted by the Egyptian representative thus permitted a better balance between the interests of the two parties.
9. Mr. HONNOLD (United States of America) said that the adopted text of articles 62 and 63 [became CISG article 71 and CISG article 72 ] seemed less harsh on the non-performing party than the Egyptian amendments. For example, should some natural disaster occur after the contract had been concluded making it seem likely that one party would be unable to perform, it would seem desirable that the other party should have the option of suspending performance. However, he was not sure that if assurance was not forthcoming suspension should necessarily lead on to avoidance. Article 62(1) [became CISG article 71(1) ] as adopted did not refer to "fundamental breach", whereas article 63 [became CISG article 72 ] did; he assumed that the difference was intentional. He was therefore somewhat concerned that the Egyptian proposal made use of the term "fundamental breach" in article 62 [became CISG article 71 ] instead of the more flexible formula in the adopted text.
10. Mr. ZIEGEL (Canada) pointed out that in the Egyptian amendment to article 62 [became CISG article 71 ] (A/CONF.97/C.1/L.249), the phrase "il est manifeste" in the original French version of paragraph 1 had been translated into English as "it becomes apparent", which was not a proper equivalent. He had much sympathy with the aims behind the Egyptian proposal and supported the suggestion that a working group should be set up to find ways of reconciling different views on the question.
11. Mr. SHAFIK (Egypt) said that his proposal had been based on the UNCITRAL text of article 63 [became CISG article 72 ], which in English read "it is clear that". The English version of his proposal should be brought into line with the French.
12. Mr. HJERNER (Sweden) said that he did not find the solution proposed by the Egyptian representative entirely acceptable. The essence of the proposal was that a party who acted on the assumption of an anticipatory breach would need to prove that the breach was clearly going to happen. However, to establish an obligatory procedure of waiting for adequate assurances might prove too stringent, because in such a situation quick action might be necessary. In addition, the right of suspension of performance was also a very important remedy, which was not covered in the Egyptian proposal. He could therefore not support it in its present form, but would be willing to participate in a working group to draft a new compromise version.
13. Mr. DABIN (Belgium) said that the Egyptian formulation was more restrictive than the adopted text and hence clearer. Phrases such as "gives good grounds to conclude" made article 62 [became CISG article 71 ] as adopted far too subjective. Since the article had no equivalent in national legislation, its meaning needed to be made clear beyond all doubt. He supported the suggestion that the Egyptian proposal should be considered in a working group, which should report to the plenary.
14. Mr. PLANTARD (France) said that article 62 [became CISG article 71 ] in the form in which it had been adopted would raise considerable political and economic problems for his country, which would as a result have great difficulty in acceding to the Convention. He preferred the Egyptian proposal for two reasons: first, the criteria it offered were more objective than in the adopted text; and secondly, the system of obligatory notification gave the non-performing party an opportunity to defend its position. The proposed article 62(2) [became CISG article 71(2) ], however, seemed somewhat too stringent in creating automatic avoidance when the party in default had failed to provide assurances.
15. Mr. BENNETT (Australia) said the Egyptian proposal offered an improvement over the remedy now provided in article 63 [became CISG article 72 ] in that it required the grounds for avoidance to be properly established before that drastic remedy was exercised. However, he had some doubts as to whether the remedy of avoidance should be exclusive of the right to suspend, as under the Egyptian proposal for article 62 [became CISG article 71 ]. There would be some value in retaining a flexible right of suspension, exercisable for specifically stated reasons, along the lines of article 62 [became CISG article 71 ] as adopted. Suspension was not the type of remedy which should be circumscribed by notice requirements of the kind set out in the Egyptian proposal.
16. Mr. ADAL (Turkey) said that since the concept of fundamental breach was one of the main issues before the Conference, it was important that article 62 [became CISG article 71 ] should be clarified. The Egyptian amendment would be useful in assisting judges and arbitrators in interpreting the Convention and would also make for a fairer balance between the interests of buyer and seller. He therefore supported it.
17. Mr. GROZA (Romania) said he too supported the proposal. The procedure suggested would be useful in providing the non-performing party with a means of protecting himself against the very serious consequences entailed in avoidance of the contract.
18. The CHAIRMAN suggested that the Egyptian amendments to articles 62 and 63 [became CISG article 71 and CISG article 72 ] should be voted on together. If the proposals were rejected, the Committee would have to consider the Italian amendment too article 62(1) [became CISG article 71(1) ] (A/CONF.97/C.1/L.251).
19. Mr SHAFIK (Egypt) said that he was prepared to accept that suggestion. He asked also that a vote should be taken on the proposal that an ad hoc working group should be set up to produce a generally acceptable text of articles 62 and 63 [became CISG article 71 and CISG article 72 ].
20. The CHAIRMAN put to the vote the Egyptian amendments to articles 62 and 63 [became CISG article 71 and CISG article 72 ] (A/CONF.97/C.1/L.249 and A/CONF.97/C.1/L.250) as revised by the subamendment by the Federal Republic of Germany which had been accepted by the sponsors.
21. There were 19 votes for and 19 against.
22. The amendments were not adopted.
23. The CHAIRMAN put to the vote the proposal that an ad hoc working group should be set up to draft a new text of articles 62 and 63 [became CISG article 71 and CISG article 72 ]. The group would also consider inter alia the Italian amendment (A/CONF.97/C.1/L.251).
24. The proposal was adopted by 23 votes to 11.
The meeting was suspended at 11.25 a.m. and resumed at 11.55 a.m.
25. The CHAIRMAN announced that the delegations of Argentina, Egypt, Federal Republic of Germany, Finland, France, German Democratic Republic, Iraq, Mexico, Republic of Korea and United States of America would take part in the working group.
Report of the Drafting Committee on the articles of the Convention on Contracts for the International Sale of Goods referred to it by the First Committee (articles 1-17) [became CISG article 1 through CISG article 19 ] (agenda item 4) (A/CONF.97/C.1/L.249 and Corr.1 (English only))
26. Mr. KOPAC (Czechoslovakia), Rapporteur of the Drafting Committee, introducing the Drafting Committee's report (A/CONF.97/C.1/L.249, Corr.1 and Add.l), explained that certain words had been placed between square brackets in articles 7 and 8 [became CISG article 8 and CISG article 9 ] because some members of the Drafting Committee felt that inclusion of the words involved an issue of substance outside the jurisdiction of the Drafting Committee. At the same time, the Drafting Committee considered that inclusion of the words made the meaning of the articles clearer and would serve to facilitate the interpretation of their provisions.
27. The CHAIRMAN invited the Committee to consider the Drafting Committee's report article by article.
28. Mr. KRISPIS (Greece) drew attention to the formula "in determining the application of this Convention" which had been added at the end of the text of article 1 [became CISG article 1 ] adopted by the Committee. He did not object to the addition but thought that the word "determining" added nothing to the meaning and should be dropped.
29. Mr. KOPAC (Czechoslovakia), Rapporteur of the Drafting Committee, said that the words had been added as a consequential drafting change following the adoption of certain other articles of the draft, in particular article 70 [became CISG article 74 ] as amended. The addition was intended to make it clear that the provisions of article 1(3) [became CISG article 1(3) ] were concerned with the question whether the Convention should be applied at all. In considering certain other articles the question whether a party to the contract had a civil or a commercial character might be relevant. For example, in the case of article 7(2) [became CISG article 8(2) ], which provided that statements and conduct of a party were to be interpreted "according to the understanding that a reasonable person of the same kind" would have had, it would be material to know whether the person concerned was a merchant or not.
30. Mr. KRISPIS (Greece) regretted that the explanation made his position more difficult and suggested that an issue of substance was involved.
31. The CHAIRMAN said that if there were no further comments, he would take it that the Committee agreed to adopt article 1 [became CISG article 1 ] in the form proposed by the Drafting Committee.
32. It was so agreed.
33. Article 2 [became CISG article 2 ] was adopted.
34. Mr. ROGNLIEN (Norway) pointed out that the word "obligation" in paragraph 2 should be in the plural.
35. Article 3 [became CISG article 3 ] was adopted subject to that correction.
36. Article 4 [became CISG article 4 ] was adopted.
37. Mr. ROGNLIEN (Norway) proposed that the word "personal" should be inserted before the word "injury" in order to eliminate any possibility of doubt as to whether the provisions of article 4 bis [became CISG article 5 ] covered also damages to property.
38. Mr. PLANTARD (France) remarked that the French text of the article referred to "décès ou lésions corporelles causés à quiconque par les marchandises".
39. Mr. ZIEGEL (Canada) opposed the proposal. The Drafting Committee's wording implied that the injury referred to was personal.
40. Mr. FELTHAM (United Kingdom), supported by Mr. HONNOLD (United States of America) said that although the expression "personal injury" was a satisfactory one its use was not strictly necessary in the context.
41. Mr. ROGNLIEN (Norway) said it was his understanding that a distinction was drawn in English between "injury" and "damage", the former term being normally applied to persons and the latter to property. English was, however, used internationally by many persons unfamiliar with the niceties of the language and it was in the interest of those persons that he had proposed the use of the expression "personal injury".
42. Mr. PLANTARD (France) explained that the words "to any person" were an attempt to render the French "à quiconque". Those words had been introduced in deference to the wishes of certain delegations in order to clarify the meaning of the provisions of article 4 bis [became CISG article 5 ]on the question of a claim by one of the parties to the contract against the other resulting from a claim against the former asserted by a third party.
43. The CHAIRMAN said that as a majority appeared to favour the text of article 4 bis [became CISG article 5 ] proposed by the Drafting Committee, he would, if there was no objection, consider it adopted.
44. It was so agreed.
45. Article 5 [became CISG article 6 ] was adopted.
46. Article 6 [became CISG article 7 ] was adopted.
47. Mr. KOPAC (Czechoslovakia), Rapporteur of the Drafting Committee, said that inclusion of the words in square brackets in paragraph 2 would make it clear that the words "a reasonable person of the same kind" were intended to refer to the party to whom the statement was addressed and not to the party making the statement or performing the conduct.
48. Mr. STALEV (Bulgaria) opposed the inclusion of the words in square brackets.
49. Mr. ROGNLIEN (Norway) said that he saw no reason to replace the word "a" by the word "one" in the first part of the paragraph, but supported the proposed inclusion of the words "as the other party". The addition introduced an important clarification.
50. Mr. HONNOLD (United States of America) strongly supported the inclusion of the words in square brackets. He stressed that a person with technical skill and knowledge was required to make his statement in such a way as to make his meaning clear to a person not possessed of such skill and knowledge.
51. Mr. HJERNER (Sweden) was also in favour of the proposed additions. When article 7 [became CISG article 8 ] had been framed, the general understanding had been that the word "understanding" referred to the interpretation given by the person receiving the statement.
52. The CHAIRMAN said that in the absence of further comment he would take it that the Committee wished to adopt article 7 [became CISG article 8 ] with the words in square brackets included.53. It was so agreed.
54. Mr. KOPAC (Czechoslovakia), Rapporteur of the Drafting Committee, said that the word "impliedly" in paragraph 2 had been placed between square brackets because some members considered it superfluous.
55. Mr. KRISPIS (Greece) suggested that the word "impliedly" should be dropped, since the will of the party was presumptive it could not at the same time be implied. Moreover, the presumption applied only if the parties had not "agreed" otherwise and "agreement" was taken to be either express or implied.
56. Mr. LEBEDEV (Union of Soviet Socialist Republics) urged the inclusion of the word "impliedly". As the article dealt with situations in which there was no direct agreement, the reference to an implied consent to usage was essential. The substance of the matter was more important than any stylistic difficulties that might be involved in the use of the word "impliedly".
57. Mr. ZIEGEL (Canada) agreed with the Greek representative. The word "impliedly" was superfluous. There was something incongruous in deeming something to take place and at the same time referring to it as being implied.
58. The CHAIRMAN pointed out that the word "impliedly" had been present in the text of article 8 [became CISG article 9 ] when the Committee had discussed and approved it. Any objection to the word at the present stage would constitute an issue of substance and could not therefore be entertained. In the circumstances, he would take it that the Committee approved the article with the inclusion of the word "impliedly".
59. Mr. DABIN (Belgium) pointed out that his delegation had asked if it was necessary to keep the phrase "unless otherwise agreed" in paragraph 2 since those words were unlikely to be applicable to the formation of the contract, except in the case of parties who regularly worked together. The matter had been referred to the Drafting Committee.
60. The CHAIRMAN explained that the Committee had decided to insert the reference to formation of the contract because the rest of the text referred to the contract in general and not its formation. Various delegations had found it particularly important to include the phrase "unless otherwise agreed", which was in the UNCITRAL text.
61. Article 8 [became CISG article 9 ] was adopted.
62. Articles 9-11 [became CISG article 10 , CISG article 11 and CISG article 12 ] were adopted.
63. Mr. HJERNER (Sweden) asked why the provision [became CISG article 13 ] had been inserted after article 11 [became CISG article 12 ] rather than after article 27 [became CISG article 29 ], paragraph 2 of which specifically mentioned a contract in writing.
64. Mr. SEVÓN (Finland) explained that the text of article 11 bis [became CISG article 13 ] had originally been intended to be part of article 9 [became CISG article 10 ]. In any case, it must be included in Part I of the Convention.
65. Mr. KRISPIS (Greece) and Mr. ROGNLIEN (Norway) agreed that the provision must be included in the part of the Convention concerned with definitions.
66. The CHAIRMAN said that if there was no objection, he would take it that the Committee wished to leave the provision as article 11 bis [became CISG article 13 ].
67. Article 11 bis [became CISG article 13 ] was adopted.
PART II -- FORMATION OF THE CONTRACT
68. Mr. BENNETT (Australia) asked why the Drafting Committee had not decided to include in paragraph 2 of the article the Australian amendment (A/CONF.97/C.1/L.69) submitted at the Committee's 8th meeting, proposing the insertion of a reference to the need for the proposal to be "sufficiently definite".
69. Mr. KOPAC (Czechoslovakia), Rapporteur of the Drafting Committee, replied that the amendment had been considered superfluous because the requirements set out in paragraph 1 applied to paragraph 2 also.
70. Mr. BENNETT (Australia) said that the proposal covered in paragraph 2 was a very special case and that it would have been clearer if the reference to its being sufficiently definite had been included. However, he would not insist on that amendment.
71. Article 12 [became CISG article 14 ] was adopted.
72. Articles 13-16 [became CISG article 15 , CISG article 16 , CISG article 17 and CISG article 18 ] were adopted.
73. Mr. KOPAC (Czechoslovakia), Rapporteur of the Drafting Committee, replying to a question by Mr. MlNAMI (Japan), explained that the word "orally" had been inserted in the fourth line of article 17(2) [became CISG article 19(2) ] to bring it into line with article 19 [became CISG article 21 ].
74. Mr. HJERNER (Sweden) asked if the phrase "among other things" in paragraph 3 was necessary in the light of the deletion of the last part of the original paragraph.
75. The CHAIRMAN reminded the representative of Sweden that the Committee had decided to keep the phrase.
76. Article 17 [became CISG article 19 ] was adopted.
The meeting rose at 1 p.m.