Cisg Scope Of Application Exclusions And Effects International Law Essay

Part I

Literature Review

In the early 1930s, there were attempts to develop a uniformed contract law in which a group of European scholars formed the International Institute for the Unification of Private Law (UNIDROIT).The conflict that made their efforts suspended was the refusal of the United States, socialist nation and the Third World Nations to ratify and the sign the Convention for the reason that it was based on European civil law traditions. By time there were efforts put in drafting The Hague convention in which later on the United Nation Commission on International trade law was formed (UNICTRAL) .This figure was made to implement the coordination and unification of international trade law.

By time the UNICITRAL was able to create a really international figure that is related to contract law. It considered every large legal system that would be important to be present in figure which is called the CISG. CISG was approved in 1986 in Diplomatic conference in Vienna. It got ratified after the signing of 10 nations with the United States in 1986.

In 1988 the CISG was internationally effective. It has been created from four parts and 101 articles that were designed in the assistance of the buyers and the sellers in making, accomplishing and implementing contracts related to sales of goods. It was made with the concerns of having fairness and equity between the buyers and sellers without being biased to one side in its contracts.

What weakened the CISG was the presence of some limitations in its scope of application. Those limitations were in concerns of the consumer’s transactions in which they were left to each nation’s domestic law, mainly it was about agreements between buyers and sellers and freedom of contract, abundantly permits buyers and sellers through their contract to expressly exclude any or all of the CISG’s provisions and to permit acceptance .This has created some issues in which they will be discussed in a broader way.

Chapter I

Exclusions in CISG application

National laws differ from one another .When it comes to certain matters, it is controversial for the CISG to include it in its provisions and scope of application creating some gaps in its contracts. The main problems that lay down are mainly within article 4 and 7.Kroll (2000) has stated the problems and issues that lie beneath the convention saying that the first thing that should be considered is the lack of In-Depth Analysis. Meaning that if we look at a lot of the cases happened; they are all referred to article 4.There was no in-depth analysis of the provisions and thoughts present in disputes (Geneva Pharmaceuticals Tech v .Barr Leh). Unfortunately, some of the provision should be interpreted solely. Supporting that , in some cases Kroll has showed that the courts had to give decisions based on interpretation of the three concepts present in article 4"formation of contract, " “rights and obligation of the sellers and buyer" or “validity" (2000). He also said that on exception that has occurred to the rule of validity in one of the cases is that the CISG has looked at it from the perspective that it would solidify the contract void, voidable, or enforceable. This model issue has showed that even a solo interpretation of a concept in article 4 may not be enough to guarantee a one constant application of the CISG. An important point was stated too was that if the issue related to qualification of specific legal concepts is left to each country’s national law then consequently the CISG scope of applications will be determined by each case relevant to the national laws. All these qualifications should be governed by the article 7.

Another thing that Kroll talked about was the Lack of distinction between Article 4 and the second alternative of Article 7(2).It sounds unclear but his main point was that the courts found some difficulties or rarely explained the reason for choosing national law. The courts haven’t found an expressed or implied regulation for some of the unclear matters regarding article 7(2) in the CISG because issues of national laws go outside the CISG scope of application. The last result maybe the same under these two articles but the reasoning differ from one law another.

He also mentioned that in practice the exception of certain matter from the scope of the Convention is often assumed from the problem of the lack of regulations guarding particular issues questions. Also Huber (2006) added to that, the drafter of the convention could’ve left the gap filing to the applicable domestic law but the decided on convention based approach stated in article 7(2). Questions related to matters that are governed by CISG but not expressly stated in it are to be established in conformity with the main principles of the convention. In the absence of such principles, then it will go with the orthodoxy of the law principles of private international law.

I wouldn’t want to forget how Kroll (2000) brought up that how in contracts rights of buyer and seller are the only thing mentioned, and unfortunately the rights of the third party were not meant to be covered. This shows that there is no universally accepted explanation of what is meant by the notion of “rights and obligations" that has been developed in case law. The following section mainly concentrates on considerable practice importance in which the law seems to be less clear.

Chapter II

Vagueness of Burden of Proof

As it is know that the burden of proving is not mentioned explicitly, but as Huber mentioned that such an issue of proofing falls with the scope of the convention but it is not settled in its provision. He also said that it is such a big gap that exists in the internal part of the general principles of the CISG. The main party wishing to proof is the party who wants to use one of the CISG factual requirements of its conditions (2006).Kroll stated that no general provisions were met for this issue because burden of proofing exists in conflicting of laws, and it is hard to find an explicit law for such an issue. Two cases supporting this argument which are Clout case No.261 (Bezirksgericht der Sanne (District Court), Switzerland, 20 February.1997) based its proof on the Swiss burden of proof rules on the second concept of Article 7(2).This showed that it is within the matter of the CISG scope of application general principles. The falling of the burden of proof within the burden of proof of the CISG scope of application and assumed from the general principles in which the CISG based on in the concept of Article 7(2) is the prevailing and correct view of the issue. The reasoning of dominant case law is we summarized by the Tribunal de Vigevano which held:

“To support the argument that the burden of proof issue is not excluded from the reach of the Convention, so that issue of the burden of is not beyond the scope of the regime of the regime of international sales law introduced by the Convention, these authorities refer (correctly, in the view of this Tribunal) to Article 79(1) of the Convention, which expressly refers to the burden of proof concerning the exemptions from damages for breach. According to this provision, “A party is not liable for failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences." Thus, the issue of the burden of proof cannot be deemed beyond the ambit of the Convention, in contrast to e.g., the issue of set-off…."

Moving to another point related to the burden of proof, is that the burden falls on the one who has to prove the facts of the issue in which it lies outside the CISG’s scope of application.

Baum (1994) added that Article 16 tries to settle the different rules of variation of rules regarding the burden of proof (revocation of offer). However, it contains deceptions for the incautious common law attorney. Bell said that when it comes to the burden of proof on one party’s back is that in article 1(2), there is undisclosed principle issue. Also there might be some words such as “appear" may be present in the article with no objective meaning is meant to be. He also said “Assume that a foreign-accented buyer, listed in the Yellow Pages under "Export Agent," arrives at seller's place of business and specifies packing requirements which suggest long travel, and requests delivery f.a.s or f.o.b. a port. Is the seller put on notice that the sale might be subject to the Convention?" concluding that the better idea is that no duty should be considered to be an enquiry, but parties can show that the other seller was aware of the international sale in which it will apply to the enquiry. In addition to that the burden of proof was put upon the party who is seeking to apply the Convention (1996).

Chapter III

Validity and Formation Regarding Vienna convention

Saf (1999) came with the clarification that in accordance with Article 4 `formation´ of international sales contracts falls within the scope of the Convention also as regards to validity it is so far true and effective as long as it falls within the convention. The convention is mainly concerned about the way or the mechanism of consent and not with how the defense of the enforcement of the agreement applies. Such as mistake, fraud, threat or abuse of unequal bargaining power, and nor with the validity of its substantive contents, such as invalidation of a sales contract where specified products are being sold.

Nevertheless she has pointed out that a really good distinction made between formation and validity in Article 4, the two concepts are overlapping. The presence of prime facia contract will not exist unless rules governing formation of contract are met. Since rules governing the formation are expressly provided in the Convention, this particular part of validity is within the scope of the Convention. Yet, it is important to remember that this particular part of validity does not link to the concept of validity of consent (1999). Nir Bar& Mss Natanella Har-Sinay both came out with the statement that the exception of validity was included to protect the different interest that supported by the different domestic laws. In addition to that they said that the formation of Article 4 was for the purpose of creating a loophole in which it will extend to apt the needs of different domestic laws. Further complications have come out although it was mainly created to provide flexibility of rules for merchants and traders. They both clarified that the vagueness of some provisions in the Convention including validity has made judges and arbitrators to refer to each disputes domestic law instead of having a general concept for all. An important point was said too that sometimes “when carrying out a simple conflict of laws analysis to determine which state's validity rules apply evades the ambiguity created by Article 4(a); a problem arises when the causes of invalidity proscribed by domestic law deal with circumstances that also give rise to remedies under the CISG."(2008)

In conclusion the CISG convention has been an effective source for commercial contracts yet the gaps that are present in this convention need to be filled with the proper approaches. The reason that the vagueness of the provisions need to overcome is that because each buyer and seller must have a fair relation and proper standards to move along and apply. By providing such clear image of the CISG provisions the world will have an easier trade transaction between each other where everyone will know on what position they stand on.

Part II

Analysis

No doubt that the CISG had a purpose for not fulfilling all the gaps in its scope of application, yet this has caused it to be somewhat weak. It is for sure that a lot of people tried to dig deep and find out what was this purpose. In my analysis to this provision I will be discussing the issue of the exclusions made in the CISG application and the vagueness of burden of proof.

Yes, it is for sure somewhat hard to find common provisions for a lot of countries together, but that doesn’t mean it is impossible. Mainly the exclusions that were made in the CISG are present in article 4 and 7. For instance, when it comes to the point where there is no deep analysis that used for each case. Consequently, cases will not be looked at solely. Meaning that, they take all cases together and apply superficial analysis on them leading to have no fairness in the ruling. When I say no fairness in the ruling I mean that if the courts look at the provisions deeply and just referred to the provision present in article 4. I think that is what best that should’ve been done was that they analyze things individually and interpret their provisions and add more helpful ones in order to reach into a better settlement in the disputes.

If we take for example, the validity part in article 4 that doesn’t mean formation of contract and rights of buyer and seller are just fine and has no gap. No, it is just in the validity section some cases were referred to by the domestic law of the disputed country. How? Well, in Geneva Pharmaceuticals Tech. v. Barr Lab the issue of consideration was governed by the applicable national law. This is because the courts thought or we can say concluded that even the solo interpretation of the provision in article 4 will not suffice to give the full proper ruling which will consequently ring a bell that the CISG application is not uniform and hard to be uniformed. Cases, issues and other matters will be governed by the national domestic laws not the CISG.

What has created all these confusions and gaps is that article 4 and article 7 provisions are so similar. It is not proper or logical because by such, misleading will occur in the CISG affecting the general coherency of the CISG application. This is one of the important reasons that the CISG always refers to the national domestic laws of other countries not their own applications and provision alone. This is mainly when it comes to article 4 and the provision of article 7(2) because of their ambiguity. All these reasons and conclusions lead us to understand that if the CISG had a proper and clear applications and articles, it would’ve not gone and excluded some of the important matters that might affect a lot of the important things that reasoning would need in many cases.

The last thing that I would like to mention in the exclusion in CISG application is that the third party’s right is not considered in any of the articles. This is something that should be present because of the international notion of rights and obligations that states that all parties’ rights should be considered no matter what. A convention like that should be covering all these important sensitive matters. This also might affect the world trade because when there is no general, unified provisions, traders and merchants will not feel secure enough to through such big deals. So, eventually their fear of not having a clear provision to follow when they are in dispute if it happens makes them not take a stance on whether to go into business or not.

Moving to the next point, which is the vagueness of burden of proof. This is such a controversial issue because in any case or dispute between the parties always the burden of proof lies on the back of one of them. In the CISG burden of proof is not mentioned alone or concentrated on. It is just falls between the lines of the convention. This is one of the weak points that the CISG has in its application because if such detailed provision was present in it, it wouldn’t make it hard for the party to look through and try figuring out the requirements of the case’s condition.

Again the reason that the CISG wasn’t able to create anything that is common between all different countries is that because of the conflicting laws. This is such a sensitive issue in the CISG. (Bezirksgericht der Saane (District Court), Switzerland, 20 Feb. 1997) is a real life example of the issue related to burden of proof. In this case, the burden of proof is under the general provision or the lines of the convention scope of application, and unfortunately it is assumed from the general principles that are in article 7(2) in the Swiss burden of proof and some other articles too. In this case, they also tried to hide or support the issue that there is burden of proof, and it is not excluded from the scope of the CISG application. The idea of thinking about how to show that burden of proof does exist in the convention and trying to bring up articles related to that proofs that it is a big gap that is hard to be filled in a blink of eye. Going back to the case in giving out the ruling they used the view of Article79 (1) of the convention. This article refers to breach exemption from damages. By reading all that, we all go back and conclude that burden of proof is so ambiguous to the extent where some started to relate things to different articles in order to proof that somewhere in the convention this provision do exist in the convention.

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Eric L. (1994). Law for Global Business. USA: Richard Irwin, NC. p113-195.

Huber, P., & Mullis, A. (2007). General issues concerning the application of the convention. The CISG: a new textbook for students and practitioner (pp. 9-21). MuÃànchen: Sellier.

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Nir Bar &Ms Har-Sinay . (2008). Contract Validity and the CISG: Closing the Loophole. Available: http://www.articlesbase.com/law-articles/contract-validity-and-the-cisg-international-treaty-closing-the-loophole-315561.html Last accessed May 2,2011.

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Ronald A. Brand & Harry M. Flechtner. (1993). Arbitration and Contract Formation: First Interpretations of the U.N. Sales Convention. Available: http://www.cisg.law.pace.edu/cisg/wais/db/articles/journal1.html.Last accessed May 2,2011

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Stefan Kroll. (2000). Selected Problems Concerning The CISG's Scope of Application. Available: http://www.uncitral.org/pdf/english/CISG25/Kroll.pdf Last accessed April 20,2011.