Reproduced with permission from 15 Journal of Law and Commerce (1995) 175-199

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The Preliminary Application of Private International Law

In the majority of cases applying the CISG, the CISG is reached through the preliminary application of international law. This is of particular interest in light of the fact that Article 1(1)(b) was the subject of much controversy, leading the drafters to decide to permit Contracting States to opt out of it.[6]

Witz confronts the problem of courts inappropriately applying or failing to apply the CISG, as where (1) a German court failed to apply the CISG in a 1989 case [LG Bielfeld 23 June 1989],[7] applying instead the 1964 Hague Convention relating to a Uniform Law on the International Sale of Goods, despite the CISG's having replaced that Convention at the time the contract was concluded[8] (p. 25); (2) another German court in a 1993 case [OLG Düsseldorf 2 July 1993] [9] incorrectly applied the CISG to a dispute involving a U.S. seller and a German buyer, simply ignoring the fact that the U.S. has opted out of Article 1(1)(b), precluding a legitimate application of the CISG by way of private international law (p. 25 ); and (3) the Paris Court of Appeals in 1992 [Cour d'appel de Paris 22 April 1992] [10] erroneously applied the CISG where private international law led to its application, but where the parties did not have their places of business in different states. The court thus ignored the preliminary condition of different states set forth in the first sentence of Article 1 (pp. 28-31).

While the failure to apply and the inappropriate application of the CISG produce undesirable precedents, they do not present conceptual difficulties. More complicated is the situation, also arising under Article 1(1)(b), in which an action is brought in a country whose conflicts of laws rules designate the law of a CISG Contracting State, but where the latter's private international law would require the court to apply the law of a country which has not ratified, and therefore would not apply, the CISG. Witz suggests that judges in Contracting States should not apply the national law of a non-Contracting State in such cases, on the ground that CISG Article 1(1)(b) refers to substantive law, to the exclusion of conflicts of laws rules (pp. 26-29).[11]

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6. No European state has opted out of the provision, although both the United States and China have (p. 24 n.1).

7. LG Bielefeld, 23-06-1989, IPRax 1990, 316.

8. The Convention relating to a Uniform Law on the International Sale of Goods was appended to international conventions adopted at The Hague in 1964 [hereinafter "ULIS"], and was superseded by the CISG. See Peter Winship, The U.N. Sales Convention: A Bibliography of English-Language Publications, 28 Int'l Law. 401, 403 (1994).

9. OLG Düsseldorf, 02-07-1993, RIW 1993, 845 et seq., EWIR 1993, 1075 et seq., obs. P. Schlechtriem.

10. Paris, 22-04-1992. The English translation of this case, along with the English translation of an extensive commentary of the case by Witz, will appear in Volume 16, Issue 1 of this journal.

11. In support of this argument, Witz cites the CISG drafters' wish to confer the widest possible scope to Article 1 § 1(b), as well as the view that unification of the law precludes the application of the law of non-Contracting States (p. 29).

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Questions Not Governed by the CISG

Section III of the book concerns maters not subject to the CISG. Article 4 specifies that the CISG "is not concerned with . . . [t]he validity of the contract . . . ." A hotly disputed area among academics, but one which has arisen only once in CISG case law, concerns mistakes about a substantial characteristic of the goods, and whether that issue goes to the validity of the contract, or, rather, to lack of conformity.

Witz is of the view that the CISG deals exhaustively with the consequences of lack of conformity of goods. The buyer has a number of remedies, the conditions and realization of which are strictly regulated, such that the CISG would be undermined if the buyer could avoid the contract for an error concerning a substantial characteristic of the goods (p. 38). Thus, a contract would only be avoidable for nonconformity as the CISG defines it. Witz rejects the view, for example, that a buyer should be able to avoid the contract where the error claimed is that the goods proved not to be amenable to resale, even if the obstacle to resale were a regulation or ordinance banning the sale of the goods or products in question (p. 39) [LG Aachen 14 May 1993]. [15] The problem, however, is that one can argue that such a contract is invalid, and, therefore, that Article 4 removes the issue from the CISG's scope.

Where a German court adjudicated two issues pursuant to the CISG, Witz notes a violation of Article 5 in the court's deciding not only a claim for the amount expended on repairing a machine sold under an international contract, but also a claim regarding injuries caused by the machine (pp. 39-40) [OLG Düsseldorf 2 July 1993]. [16]

[q]uestions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.

The CISG envisages two sorts of lacunae: one where the CISG governs the issue, but does not specify a resolution, and the other where the CISG does not govern. Witz sees the particular role of CISG commentators as being to exert a restraining influence on the inclination of judges to bypass the CISG's underlying principles in order to proceed to national laws (p. 42).

The most common internal CISG gap which judges have had to fill concerns interest rates. The general trend has been to supply national interest rates, a tendency of which Witz is not critical, given the apparent absence of a related underlying CISG principle to resolve the matter (p. 42).[17] He does criticize, however, an arbitral ruling for looking to national law rather than governing CISG principles with respect to the issue of the joint and several liability of the two signatories to a sales contract (pp. 42-43). He also criticizes a Stuttgart court which valorized a buyer's argument that the CISG should be considered in conjunction with German national law with respect to the issue of the timing of the buyer's giving notice of alleged lack of conformity of the goods. [LG Stuttgart 31 August 1989] [18] Witz reasons that the court was in error in failing to adjudicate solely on the basis of the CISG, where Article 38 and 39 controlled, given that they do not leave any gaps which might justify recourse to domestic law (p. 43).

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15. This was the case in LG Aachen, 14-05-1993, RIW 1993, 760 et seq.

16. The case was OLG Düsseldorf, 02-07-1993, RIW 1993, p. 845 et seq., n. P. Schlechtriem. The English text of Article 5 is as follows: "This Convention does not apply to the liability of the seller for death or personal injury caused by the goods to any person."

17. Witz similarly approves an arbitrator's decision to look to national law to determine the scope of a penalty clause, nothing that the CISG drafters intended penalty clauses to come within the purview of national law (p. 42). He takes the position, however, that although recourse to national law is warranted with respect to penalty clauses, judicial interpretation nevertheless should be guided by the general principles underlying the CISG (p. 102).

18. LG Stuttgart, 31-08-1989, RIW 1989, p. 984 et seq.; Rev. dr. uniforme 1989, II, p. 853 et seq.

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