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The United Nations CISG 1980 legislation

“The United Nations Convention on Contracts for the International Sales of Goods 1980 (CISG)” is an international piece of legislation aimed at harmonising international sales laws, in order to provide for easier cross border transactions. It was brought into force in 1988 by the “United Nations Commission on International Trade Law” (UNCITRAL).The Convention is exactly that, a Convention, meaning that it is not a part of domestic laws but its purpose is rather the “standardization of law at a level above that of national law”.[1] In fact this is the purpose behind the convention, the harmonization of international law. its drafters envisaged a less chaotic system of international trade, and this involves a law that would encompass the different nations.

The CISG has now been ratified by 71 countries, which is testimony to the success of the convention, as it now spans numerous different countries, cultures and legal systems, and aims to provide an international umbrella of solutions to sales disputes. The existence of the CISG solves problems which often arise due to questions of which law is applicable to the contract when the parties and contracts are from different legal jurisdictions. Bearing in mind that different countries have different laws, it is ideal to have a piece of legislation which can govern a contract and harmonize the law.

Clearly, with a convention that has been ratified by so many contracting states it is vital to ensure that it is applied accurately and in a uniform manner by each signatory. If the convention were applied in a haphazard manner according to how each contracting state saw fit there would be “jurisprudential chaos”.[2] Therefore, significant regard must be made to Article 7 of the CISG which embodies the spirit of the entire convention and states:

“(1) In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.

(2) Questions 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. “[3]

Essentially, the drafters of the CISG were aiming to create a uniform law which would be applied consistently by all contracting states, which is a considerable task. This essay will consider this aim of uniformity and whether this is truly what the drafter’s envisaged and indeed whether it is even a desirable goal. It will break down and analyse the wording and requirement of Article 7 and will look at the jurisprudence of national courts on the CISG to determine whether the convention is being interpreted uniformly, and in accordance these parts, namely with its international nature and observing the notion of good faith. There will also be considerations of creating an international tribunal or court which would oversee and make binding decisions on issues relating to the CISG and interpretation. This essay will then turn to focus upon Article 7(b) and discuss the options available, and the options frequently used in order to ‘fill the gaps’ in the convention, before drawing conclusions as to the success of the CISG, specifically with regard to Article 7 and its aim of uniformity.

Article 7(1) is concerned with the interpretation of the convention and has three key aspects, which will all be discussed individually here. These aspects are all pivotal to the success of the convention and consequently are all linked together. Firstly, Article 7 (1) states that in the interpretation of the CISG, regard must be had to the international character of the convention. This is a crucial element in ensuring the uniformity of application of the CISG. Essentially, when interpreting the convention a national court should bear in mind that the convention is an international one and look beyond their own domestic law when interpreting it.

The fact that the convention is of an international nature is evident in the simple fact that its jurisdiction is “transaction - focused and not party - focused”.[4] Determining whether the CISG is applicable for example, will not depend on the parties’ nationalities, but rather on the place of business.[5] In addition, the CISG does not cover issues which will be largely domestic law, such as consumer transactions, which is also another indication of the intent for the CISG to have a distinctly international feel.

The international character of the convention should be held in high regard when national courts are interpreting the convention, as is stipulated in Article 7 (1). As Gianuzzi states,

“This means that national courts should apply the CISG in a way that is consistent not only with the intent of the Convention, but also with the manner in which other nations' courts apply the CISG”.[6]

Therefore, although there is no binding appellate court or tribunal to consider the cases that arise under the CISU, there should still be an impetus upon national courts to look upon the decisions of courts in other legal jurisdictions and essentially consider them persuasive, if not binding precedent. This would seem obvious and necessary in order to have a uniform approach to the CISG, however it is not so clear-cut in practice. National courts have difficulty in looking at the approach of other courts for several reasons. Firstly there is an obvious language barrier between many of the contracting states which would render this difficult. Translations are of course not always accurate and some nuances of language which are so very important in interpretation may be lost. Secondly, there is no guarantee that the national courts have correctly interpreted the CISG and there is no precedent system or court supreme to decipher correct decisions from the incorrect. There is therefore clearly a daunting amount of research for the national courts to undertake should they look at the decisions of the courts of other contracting states.

Critics argue that the CISG, whilst boldly declaring that heed must be paid to its international nature, it is silent on how one actually does this. Sunil Harjani states:

“In general, while the Convention stresses the importance of the international character of the CISG, it is short on advice for how to achieve this uniformity. Commentators vary greatly on their understanding of Article 7 and provide different solutions to promote uniformity and international character”.[7]

This is an issue which is hotly debated by critics and academics alike. Some critics argue that without binding precedent from foreign case law there will be no uniformity, whilst others lean towards the idea of persuasive rather than binding precedent.[8] If the drafters of the CISG had intended for a ‘supranational’ court, they would have provided for one, however it is silent on the practicalities of putting Article 7 into effect. The most sensible position it would seem, in the absence of any guidance from the CISG is for individual courts to give persuasive effect to the cases using “proper interpretive methodology”.[9] If the CISG had intended there to be binding precedents, again it would have provided for them.

One thing that the CISG is clear on is that domestic law should play no part in its interpretation. There are critics who consider the fact no regard should be made to the domestic law is an “aspiration”, failing to understand how such judges can put aside a lifetime of experience of domestic law in order to objectively consider the international nature of the CISG.[10] Whilst it will become apparent that this is definitely sometimes the case, one would hope that a person in such a position as a Judge would be able to put aside any such issues and look at the issues objectively, without recourse to domestic law.

The difficulties the national courts face in interpreting the CISG in accordance with Article 7 (1), particularly the part where they are required to have regard to its international nature are best viewed through an analysis of the case law. We therefore now turn to discuss some case law examples of national courts interpreting the CISG. Italdecor SAS v Yiu Industries[11] is an example where the national court failed to take notice of the provisions of Article 7(1) and paid no attention to the international nature of the convention. This case concerned an Italian buyer who brought a claim against a seller from Hong Kong for refund of a partial payment for goods which were not delivered on time in accordance with the agreed contract. The court neglected to review foreign cases and therefore came to a decision without any guidance from similar cases. As DiMatteo states, “if any semblance of applied uniformity is to be achieved, it is imperative that courts look to relevant foreign decisions for guidance”.[12] This tendency to look only to national law when interpreting the CISG is what Professor Honnold terms the “homeward trend”.[13]

Clearly there will be differences in national laws and approaches. Fletchner exemplifies this as he compares the decisions of two national courts, American and German on seemingly the same issue and we see them come to different conclusions. We see that the American court is more inclined to find that omitting terms from a contract will render them non-binding than the German Court.[14] Fletchner argues that the Judges may not intend to be biased in favour of their home legal rules but this tendency to lean towards what they know can be almost subconscious. He states that

“Even the Drafters of the Convention, who were certainly aware of and sophisticated about the difficulties of communicating legal concepts to members of different legal cultures were probably only dimly conscious of the disparate assumptions they brought to the drafting process.”[15]

Another example of the so called ‘homeward trend’ can be seen in the case of Beijing Metals & Minerals Import/Export Corp. v. American Business.[16] In this case the American Court views its domestic parole evidence rule and Article 8 (3) CISG as essentially the same thing, when in actuality, the CISG does not recognise the parole evidence rule as it is in American law. As the Court viewed the CISG through “its domestic lens”, it produced a “distorted image”.[17] Interpreting the CISG through a “domestic lens” has dangerous repercussions and will threaten to destroy the very nature of the CISG. If numerous courts were to do the same thing there would be a prolific amount of contradictory case law and the principles contained in the convention would be contaminated.

Clearly, therefore there are some natural difficulties that national courts face when interpreting the CISG and taking heed of its ‘international nature’. Nevertheless, there are of course decisions made by national courts which do take into account the international nature of the CISG and consequently look to the jurisprudence of other courts when making their decisions. This is shown in the case of Medical Marketing v. Internazionale Medico Scientifica.[18] In this case the US judge relied on a German case where a judicially created exception to Article 35 of the CISG was made. The case is hailed as being one where the courts do correctly use foreign precedents in interpreting the CISG, therefore paying heed to its international nature, and ultimately hopefully reaching a fair and just conclusion.

Also in the Netherlands the Netherlands Arbitration Institute seeking to define ‘merchantability’ looked to the international nature of the convention and the other articles and general principles of the CISG. They saw that their duty was “not simply to adopt a national law’s definition of merchantability but to seek one out based on the general principles of the CISG”.[19] This is precisely the approach the CISG steers courts to use and it is refreshing to see a court correctly interpret not only the question put to them but also the CISG itself. Many hope that cases like these that have recently been decided hail the beginning of a change in the way that national courts interpret the CISG.

It is clear that the goal of uniformity of law will not be complete without this requirement to look at the international nature of the CISG, however there are critics who argue that absolute uniformity is not essential or even desirable. Professor Hackney is of the opinion that the very question of whether the CISG achieves uniformity is improper.[20] Instead perhaps the correct issue to be considering is whether the CISG is functional and whether it achieves a sense of uniformity rather than absolute uniformity. It is here we turn to discuss the second key aspect of Article 7 (1) – the “need to promote uniformity” in its application.

The methods that are used by national courts in interpreting the CISG in order to promote uniformly include having regard to the convention’s international nature and looking at the jurisprudence of other national courts. Where there is a seeming ‘gap’ in the convention, it also means looking to the rest of the provisions of the convention in order to interpret it, looking at the general purpose and principles it contains. This will all take precedence over turning to national legislation, to do which would certainly go against promoting a uniform interpretation, as naturally, local legal systems will all have different approaches to different issues. The notion of gap-filling will be discussed in more detail shortly.

This aspect is inextricably linked to the requirement to look to the international nature of the convention. What the requirement must mean is that there is a goal of identical application throughout the signatory states and that ideally, the CISG would apply uniformly, whatever national court is hearing the case. Obviously this is an area of hot debate for critics and academics and there is prolific discussion on the topic. There is no doubt that uniformity is an ideal set by the CISG but how much of a realistic ideal is it? Surely it is the entire purpose of the CISG – to create an international treaty which would provide a level, and less confusing, legal playing field for international trade. Nevertheless, realistically, the highest expectation one can surely have is that there will be a “relative level of uniformity”.[21]

If one looks at the precise language of Article 7 (1) it states that “regard must be had to its international character”. The language is soft, imprecise and vague. It is guidance only, and there is no clarification as to how this ‘regard’ is to be had. The wording continues to be vague and lacks confidence when it goes on to require any would be interpreters to ‘promote’ uniformity. If complete uniformity were the true goal of the CISG one would envisage stronger, more empowering language and certainly more provisions detailing how this uniformity should be attained. It would seem that even at the drafting stage it was envisaged that complete uniformity would be too difficult an ideal to reach. Nevertheless, there is no doubt that there could be a high standard of uniformity obtained, even if it was not complete. As DiMatteo rightly states,

“If it [the CISG] helps to relieve the impediment...of conflicts of national laws then it is to be considered a progressive, albeit a transitory, step to uniform private national law.”[22]

There are also situations where absolute uniformity would be undesirable. If there were to be absolute uniformity would courts be bound to follow what are blatantly bad decisions which go against the very ethos of the convention? For example the case of Malev[23] is widely criticised but may well have had to have been followed by subsequent cases had there been an absolute principle of uniformity. This case involved a US manufacturer of Jet engines who made a written proposal to Malev Airlines proposing several engines for sale. Malev airlines wrote back pursuant to the proposal that they would purchase one of these, but subsequently three months later changed their mind and withdrew from the sale. The manufacturer made an action against the airline claiming that there had been a contract formed under the CISG, however the Hungarian Court disagreed. Without rules for a precedent system or international tribunal, promoting absolute uniformity could prove counter-productive when signatory states are commonly producing decisions such as this.

Article 7 (1) was seemingly completely disregarded in this decision. Malev were effectively rewarded for their bad faith in this dealing, and it is a decision that has left academics reeling. The international spirit of the convention was also seemingly ignored as the national court “strained” for a decision that favoured the party from their nation.[24] Whilst one hopes that the bias was not purely on grounds of nationality, one cannot understand the reasoning behind the decision and why recourse to international CISG jurisprudence was not considered. Therefore we can understand why Fletchner seems frustrated with advocates of a total uniformity principle when he asks the question:

“Is it now required, in the name of a rigid construction of the uniformity principle of Article 7(1), that the important controversy over open price contracts under the CISG be deemed definitively settled by a decision that seems to flout the principles of internationality and good faith, which share equal place with the uniformity principle in Article 7?”[25]

Fletchner argues that the correct approach to ensuring maximum uniformity without courts having to adhere to clearly incorrect precedents would be to adopt a ‘federalist’ approach, similar to that taken with the United States Commercial Code (UCC). Fletchner ascribes the success of the UCC to the judges who interpret it, stating that:

“Respect for the demands of uniformity... is balanced against a regard for proper results, and the balance sometimes favours a departure from the approach in other jurisdictions.”[26]

This would arguably be the most sensible approach – one that understands the limits of an international law without its own court and yet one that still strives for what uniformity that there can be. The UCC is often hailed as an example of harmonizing commercial law successfully, even though if one looks to its case law we can see that states have often rendered different interpretations of its provisions. However, it is not held up to the same scrutiny of absolute uniformity as the CISG is and relative uniformity would seem sufficient as far as the UCC is concerned.

The final important aspect of Article 7 (1) is the requirement to observe ‘good faith’. Honnold comments that the inclusion of this aspect of the convention was subject to heated debate.[27] Consequently, there is no general duty of good faith found in the convention, only the duty in Article 7 (1) where the good faith principle is included. The problem arose out of a difference between common law and civil law jurisdictions. The principle of good faith is an integral part of civil law, but not so much of common law, where there is no general duty to act in good faith. Therefore a compromise was reached and there was no inclusion of a duty of good faith between parties but there is a duty to interpret the CISG in accordance with good faith principles.

Effectively therefore, Article 7 (2) allows the principle of good faith to be inferred into the rest of the convention. It invites interpreters to observe good faith in Article 7 (1) and in 7 (2) to look to the general principles of the convention to fill any gaps. Therefore, despite a compromise having been reached in allowing the notion of good faith only in the interpretation of the CISG, in actuality the notion of good faith now permeates the entire convention through implication.[28]

In any event, national courts have not been deterred from inferring the duty of good faith into the rest of the convention, imposing therefore a duty of good faith between the contractual parties. In Hungary a court ruled that:

“the observance of good faith is not only a criterion to be used in the interpretation of the CISG, but also as a standard to be observed by the parties in the performance of the contract”.[29]

There were some concerns among the UNICATRL working group that a general principle of good faith would go against the principle of uniformity as it was too vague and could be interpreted in different ways in national courts.[30] As Komarov comments:

“It is well known that the legal notion of "good faith," which is widely used in quite a number of national legal systems, mainly belonging to the civil law tradition, has no single meaning even within one domestic legal system.”[31]

Komarov states that there is a vast amount of domestic case law concerning the CISG and the good faith requirement, but an analysis of this leads him to the conclusion that there is a definite lack of uniformity in interpreting the principle. However, Komarov also highlights an example where the good faith inclusion has led to the promotion of uniformity. In BP Oil Int'l v. Empresa Estatal Petroleos de Ecuador[32] the Court agreed with an academic on the subject that if two parties wanted to exclude the CISG then they should do so by writing a specific opt-out clause. As the court stated:

“an affirmative opt-out requirement promotes uniformity and the observance of good faith in international trade, two principles that guide interpretation of the CISG”.[33]

The principle of good faith can therefore be viewed as one of the general principles of the convention and notwithstanding the inclusion of the good faith requirement in Article 7 (1) there is also the requirement of reasonableness contained in the convention. It can therefore be presumed that a reasonable party would have acted in good faith for example, so by whatever means, it would seem that this ideology was significantly important to the drafters of the CISG. The requirement of reasonableness permeates the Articles and definitely gives the impression that the drafters intended it, and by analogy also notion of good faith, to be a central principle of the CISG.

This leads us into a discussion on the second part of Article 7 which states that heed should be taken of the ‘general principles’ of the convention if there were any inconsistencies or gaps in the convention. As already discussed, if the idea of good faith was in any way inconsistent or unclear, one would only have to look at the other provisions of the CISG to see that there are several articles which call for a reasonableness standard, and as DiMatteo states, “The reasonable person is always seen as acting in good faith”.[34]

Article 7 (2) is concerned with issues that arise which are within the scope of the Convention but which it does not expressly deal with. The article states that in these circumstances the court should look to settle the matter in conformity with the general principles of the convention. These general principles may be expressed or implied. Of course, typically if there is a gap in the Convention, the temptation would be for a court to return to their national rules, out of mere familiarity if nothing else. Again Article 7 (2) is designed to promote uniformity and to guide national courts away from using their own legislation as an interpretive tool.

From analysis of Article 7 (2) we can summarise into three steps the procedure a court or tribunal would need to follow in order to fill in any ‘gap’ the convention contained. Firstly, as discussed in more detail later, the issue considered would need to be a question that was within the range of the convention but not expressly settled by it. Then the court would need to look firstly by analogy at the other provisions of the convention, secondly at the application of general principles that the convention is based on and finally, to the principles of private international law. Again we will see that recourse to domestic law is undesirable and the use of the same is only encouraged as a last resort.

Harjani claims that Article 7 (2), like the inclusion of the good faith principle in Article 7 (1) is a “product of compromise”. [35] There were differences of opinion between drafters from civil and common law countries as to whether there were even enough principles in the convention to glean analogies from. The civil law traditions believed that the ‘true-code’ method of interpretation would be more than sufficient. This is a method which is based on the ideology that no gaps exist because “principles and policies supply answers when the text gives out”.[36] It is a method of interpretation preferred by those familiar with the civil law, as they are used to interpreting things broadly from statute, in fact the law of other civil law jurisdictions Austria, Spain, Egypt and Italy all contain a similar provision.[37] Those familiar with the common law prefer the precedent system and are not used to interpreting legislation as broadly as the CISG requires. This is a significant problem, as we have discussed previously, much of the problems associated with bad decisions under the CISG are as a result of viewing the problem and therefore also the solution through a ‘domestic lens’.

So what exactly is meant by a ‘gap’ in the Convention? It may seem obvious but the term requires definition. Something is not to be considered a ‘gap’ when it is something that was meant to be outside the realm of the convention in any event. The convention covers the obligations and rights of a buyer and seller as well as the formation of a sales contract. It does not cover the validity of the contract.

The scope of the Convention is set out in Article 4:

“This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not concerned with:

(a) the validity of the contract or of any of its provisions or of any usage;

(b) the effect which the contract may have on the property in the goods sold.”

There are also many other areas which are also considered outside the convention and a full familiarity with the various provisions of the CISG is necessary to understand these. Article 7 (2) will also not apply if there is already an express provision contained within the CISG that would cover the issue in hand.

There are several examples of express or implied general principles which we will discuss here. Firstly, there is generally understood to be an implied general principle of favouring the continuation of a contract. This principle is gleaned from several articles of the convention and the courts have also used the guidance in Article 7 (2) to imply the principle. In the Finnish courts a case was heard concerning a buyer who had been purchasing from a particular seller for two years on a piecemeal basis.[38] The seller was found to be liable for damages for terminating the sales relationship abruptly although no formal contract existed between the two. Here we can see that the court favoured the continuation of the contract. The court discussed the requirement of reasonableness and good faith and these general principles were used and the convention interpreted in favour of the buyer. The Netherlands also looked to the general principles of the convention when they were attempting to ‘fill the gap’ in defining merchantability in the case discussed above.[39]

This principle of interpretation also applies where there is not a gap in the convention but rather an ‘open-ended rule’. This is precisely what happed in the case of Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft[40] where the tribunal decided that although there was no express provision in the CISG, that a payment of interest should be made. They based this rationale on the general principles, one of which they saw as being the principle of ‘full compensation’.

The provisions of Article 7 considered together make the CISG unique in international law, as it can be interpreted to cover a wide range of issues which could arise out of International sales law, even if it does not expressly provide for them. As Felemegas states:

“Article 7(2) provides the important mechanism for filling any gaps praeter legem in the CISG and thus complements Article 7(1) by laying the course for the text's deliberation and future development. Thus, the CISG acquires the flexibility necessary to any instrument that attempts to deal with a subject matter as fluid and dynamic as international trade.”[41]

We have seen therefore how the CISG provides what DiMatteo refers to as an ‘interpretive methodology’ for users to understand the rules it creates. The idea is that the principles are developed by means of autonomous interpretations. The CISG provides that in most cases the answer to any problem can be found in its own pages, either by interpretation or analogy. As DiMatteo comments, problems will arise not as a result of autonomous interpretations but rather if there are different autonomous interpretations. There are some notable cases where divergent interpretations have occurred.

For example in the US case of Zapata[42], the decision possibly stands alone against numerous other interpretations on the same issue. This case concerned the recovery of attorney’s fees, an issue which is not expressly dealt with by the CISG. Initially, in accordance with their (correct) interpretation of the CISG, the court in the first instance allowed the recovery of attorney’s fees. However, the decision was overturned, bringing the decision in line with the domestic law of North America. There is no real explanation for why the domestic law was followed and the decision certainly is contradictory to other decisions taken on similar issues by other national courts.

This is indicative of what Felemegas is concerned that judges from common law countries will be far less used to examining general principles in interpretation, whilst this is something that will be familiar to a judge from a civil law country. Felemegas is also concerned with the latter part of Article 7 (2) which states that if looking at the general principles of the convention does not provide an answer to the possible ‘gap’ in the CISG then national law should be drawn upon. Firstly he quotes Filip de Ly who is of the opinion that if the remedy to a gap in the convention is contradictory to any of the principles in the correction then simply no gap in the convention exists:

"… if the availability of the remedy conflicts with any of the principles which underlie the provisions of the Convention, it is unlikely that a gap exists. Conversely, if the absence of a remedy conflicts with any of the Convention's general principles, it is likely that a gap exists.”[43]

This is indicative of Felemegas’s opinion that even when the principles of the convention are exhausted, it would be damaging to refer to national jurisprudence as that would only undermine the aim of the CISG to promote uniformity. Felemegas uses examples from national laws to illustrate that different legal systems have different rules and that there would be divergent opinions if two cases from two different legal systems were to consider the same ‘gap’ in the convention. He argues that recourse to national law would only create inconsistencies in interpretation, which are of course undesirable.

In the American case of Delchi Carrier, SpA v. Rotorex Corporation[44] the court found themselves using Article 7 of the CISG in a ‘gap-filling’ exercise. Whilst the court acknowledged their duties under Article 7, it seemed that they systematically ignored its contents in any event:

“The Delchi decision has received extensive and strong, but valid criticism regarding the court's failure to grasp the Convention's spirit of internationalism. This is evident in the methodology it followed in resolving most of the issues at hand, from the applicability of CISG and its discussion of the concepts of "fundamental breach" and "foreseeability", to its damages and pre-judgment interest award.” [45]

There were no references made to international judgments or methods of analysis, and the case is an example of how wrongly a court can use its power when the provisions of Article 7 are ignored. This is a trend which while not limited to the American Courts, is typical of them. Monika Killen comments that courts in the US seem almost frightened of the CISG, often choosing to discourage its use. Also, where it is used and applicable, it would seem that they find it easier to use domestic law to clarify it than international:

“Although it is debatable whether CISG encourages recourse to domestic law in interpreting CISG provisions, U.S. courts have no qualms applying UCC to help fill the gaps in interpretation, without first consulting relevant international case law.”[46]

However, whilst recourse to domestic law was clearly considered a last resort by the drafters of the CISG, the option is of course still included in Article 7 (2) which indicates quite clearly that the drafters accepted that on occasions such a step might be necessary. For example a Swiss arbitration tribunal found that the question they were faced with had no solution that they could glean from the CISG by analogy or by recourse to its general principles. Therefore, in accordance with Article 7 (2) they resorted to Swiss Law. The tribunal concluded therefore that:

“As the general principles of the Convention do not settle the matter and the parties have referred to the laws of Switzerland, it seems justified to refer to Article 73 of the Swiss Code of obligations whereby, in the absence of a determination of the rate of interest by agreement or law or usages, that rate shall be 5% per annum.”[47]

Clearly, the one thing that would seem to solve all these issues regarding uniformity and gap filling would be the creation of a central court or tribunal which would oversee and provide definitive judgment on the CISG case law of national courts. A similar court is in place in Europe – the European Court of Justice which will hear questions from member states regarding the interpretation of European law and ensures that European law is applied uniformly across all member states. The final decision of the European Court of Justice is binding. A central court was not simply something that did not enter the minds of the drafters of the CISG, but they actually chose not to create one.

Felemegas is also concerned with the lack of a central court:

“Unfortunately, there is no single judicial body charged with applying the Convention. Instead, domestic fora - whether they are national courts, or arbitration panels - will interpret its provisions. The decisions concerning the CISG are not subject to central review; there is no central world court for that purpose.” [48]

Felemegas discusses several reasons why the creation of an independent tribunal is not so straightforward as it would first appear. Firstly, in contrast to the situation with European law, the CISG has a large amount of signatories, which span the globe. There would be issues as to where to place a court and it would have an unmanageable, diverse range of cultural and social regimes to span. It is unrealistic in his view that a central court could be created which would provide a satisfactory compromise for everyone. However, the largest reason for not creating an international tribunal would most likely be the sheer cost of the operation.

The European Union has its own funding and financial system and therefore the cost implications of a supreme court are not so pivotal and can be worked around, however, in the case of the CISG there would be significant funding issues. The signatories are from a wide range of countries which are not connected in any other way and the cost implications might very well actually put them off becoming signatories which in itself would be detrimental to the CISG. Felemegas then turns to question whether a more informal international tribunal would be a feasible concept and although this is the more likely option, there are still significant reasons why this may never happen.

We can now conclude that it is one of the predominant aims of the CISG to create a uniform sales law which bridges all the national laws that the signatories to it bring to the table. As Felemegas concisely puts it:

“The ultimate aim of the CISG, and arguably the reason for its existence, is to achieve the broadest degree of uniformity in the law for international sales transactions.”[49]

Both sections of article 7 are intimately concerned and involved with this ideal. Article 7 (1) with ensuring that any interpretation of the convention is focused on promoting uniformity by adhering to the CISG’s international nature and general principle of good faith. Article 7 (2) ensures that recourse to national law is avoided at all costs, even in situations where the CISG does not provide an express solution to a problem.

However, despite these provisions that the CISG makes to ensure that it is not ‘contaminated’ by interpretations tainted by a domestic lens, in practice we have seen, there are many decisions which flout these principles, either seemingly purposively, or simply because there may be two correct and divergent solutions to an issue. We have also of course seen that there are indeed situations where recourse to domestic legislation is necessary.

There is of course concern regarding the so called ‘homeward trend’ where national courts are minded to interpret the CISG in accordance with their national laws. The issue of precedent has been discussed and we have discovered that national courts time and time again fail to refer to the jurisprudence of other national courts in their decision making. This is a fatal error in continuing the aim of uniformity. If national courts tend to interpret the CISG so that it is more like their national laws, and of course the national laws of each country differ, there will be simply no point in the CISG at all. If national courts used the notion of precedent and at least referred to similar judgements there would instantly greater clarity and uniformity in the CISG’s interpretation.

As Felemegas states:

“The CISG seeks to achieve such uniformity. Whether or not it is successful will largely depend on two things: first, whether domestic tribunals interpret its provisions in a uniform manner and, secondly, whether those same tribunals adopt a uniform approach to the filling of gaps.” [50]

One of the solutions to this problem we have seen, would be if there were a ‘supranational’ court or tribunal which would oversee and provide final interpretation decisions on matters concerned with the CISG. We have seen that such a court, while clearly is an ideal solution, would also be a controversial one due to the number of obstacles in the way of creating such an institution. The creation of an international tribunal would be costly and with the sheer number of signatory states to the CISG it would also simply be a logistical nightmare.

There are critics of course who would argue that absolute uniformity is not the goal of the CISG, and nor is it desirable. There is no doubt that the CISG was developed as a piece of international law to be interpreted broadly and to have relevance to as large a number of countries and legal systems as possible. However, as Article 7 is evidence of, the uniformity of the convention was one of the significant concerns of the drafters of the CISG and was likely one of the impetuses behind creating it in the first place. One fails to understand therefore how some could say that uniformity is not even desirable.

In conclusion therefore, through analysis of the jurisprudence of national courts we have seen that despite it being the aim of the CISG to promote uniformity, the national courts have not been paying as close attention to Article 7 (1) as they should have been. The case law shows that there are divergent decisions on the same issues and that courts are heavily inclined to recourse to their own national laws rather than use the principles contained in the provision.

The same happens when the courts are considering the use of Article 7 (2). The avenues provided for gap-filling in the convention are interpreted differently by different national courts, and they still show the tendency to revert to their own legislation too easily. The result of this is that the international essence of the convention is watered down and the convention fails to be all it aimed to be.

Whilst there is some evidence that national courts are improving in their interpretation of the CISG, this has been a long time coming and it would seem to be a long way off that even a semblance of uniformity will be achieved. Therefore it must be concluded that while the aims of the CISG were to harmonize international trade laws, it has failed in its aim. This failure can be attributed to a lack of procedures put in place by the CISG itself to regulate the decisions that are made under it. There is no system of precedent and domestic law is allowed, even if only in extreme circumstances, to be used in interpretation. The lack of a central court to oversee any decisions and interpretations is distinctly missing, and despite the difficulties in putting such a court or tribunal in place, the absence of one is a large failing.

Bibliography

Bonell, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 65-94

DiMatteo, Larry A, International Sales Law: A critical analysis of CISG jurisprudence, Cambridge: Cambridge University Press, 2005

Felemegas, John, The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation, found online at Pace website. Review of the Convention on Contracts for the International Sale of Goods (CISG), Kluwer Law International (2000-2001) 115-265

Fletchner, Harry M, “The Several Texts of the CISG in a Decentralized System: Observations on Translations, Reservations and other Challenges to the Uniformity Principle in Article 7(1)”, Journal of Law and Commerce (1998) pages 187-217

Gianuzzi, Karen, B, “The Convention on Contracts for the International Sale of Goods: temporarily out of 'service'?”, Law and Policy in International Business. Volume: 28. Issue: 4. Publication Year: 1997. Page Number: 991-1035

Hackney, Philip, “Is the United Nations Convention on International Sale of Goods Achieving Uniformity?” 61 LA L Rev 472 (2000)

Harjani, Sunil R, The Convention on Contracts for the International Sale of Goods in United States Courts, Houston Journal of International Law. Volume: 23. Issue: 1. Publication Year: 2000. Page Number: 49

Huber, Peter & Alastair Mullis, The CISG: A New Textbook for Students and Practictioners, Sellier, European Law Publishers, 2007

Killen, Monika, CISG and problems with common law jurisdictions, Journal Transitional Law and Policy, Vol 10: 2

Komarov, Alexander, S, Internationality, Uniformity and Observance of Good Faith as Criteria in Interpretation of CISG: Some Remarks on Article 7(1), 25 Journal of Law and Commerce (2005-06) 75-85

Lookofsky, Josef, Walking the Article & (2) Tightrope between CISG and Domestic Law, found online at http://www.uncitral.org/pdf/english/CISG25/Lookofsky.pdf

Murray, John E Junior, The Neglect of CISG: A workable solution, 17 Journal of Law and Commerce (1998, pages 365-379

Pace International Law Review, “Review of the Convention on Contracts for the International Sales of Goods (CISG)”, European Law Publishing, 2007

Povrzenic, Nives, Interpretation and Gap Filling under the United Nations Convention on Contracts for the International Sale of Goods, found online at http://www.cisg.law.pace.edu/cisg/biblio/gap-fill.html#fn32

Schlechtriem, Peter, Uniform Sales Law – “The UN-Convention on Contracts for the International Sale of Goods”, Published by Manz, Vienna: 1986. Reproduced at http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem.html#b*

United Nations Convention on Contracts for the International Sale of Goods (1980), found online at http://www.cisg.law.pace.edu/ cisg/text/treaty.html

www.westlaw.co.uk (as accessed on 12/09/08)

1


Footnotes

[1] DiMatteo, Larry A, International Sales Law: A critical analysis of CISG jurisprudence, Cambridge: Cambridge University Press, 2005, p. 9

[2] DiMatteo, op cit (fn 1) p. 1

[3] United Nations Convention on Contracts for the International Sale of Goods (1980), found online at http://www.cisg.law.pace.edu/cisg/text/treaty.html

[4] DiMatteo, op cit (fn 1), p. 9

[5] For details of what is considered the ‘place of business’ by the CISG

[6] Gianuzzi, Karen, B, The Convention on Contracts for the International Sale of Goods: temporarily out of 'service'?, Law and Policy in International Business. Volume: 28. Issue: 4. Publication Year: 1997. Page Number: 991-1035

[7] Harjani, Sunil R, The Convention on Contracts for the International Sale of Goods in United States Courts, Houston Journal of International Law. Volume: 23. Issue: 1. Publication Year: 2000. Page Number: 49

[8] See DiMatteo op cit (fn 1) p. 3

[9] Dimatteo op cit (fn 1) p. 5

[10] Murray, John E Junior, The Neglect of CISG: A workable solution, 17 Journal of Law and Commerce (1998) 365-379

[11] Italdecor SAS v Yiu Industries, CA Milano, Mar 20, 1998 (Italy) available at http://cisgw3.law.pace.edu/cisg/wais/db/cases2/980320i3.html#ct

[12] DiMatteo, op cit (fn 1) p. 3

[13] Honnold, John O, Documentary History of the Uniform Law for International Sales, Deventer : Kluwer Law and Taxation Publishers, 1989

[14] See Beijing Metals & Minerals Import/Export Corp. v. American Business Center, Inc and OLG Hamm, UNILEX No. 19 U 97/91 (Sept. 22, 1992). Discussed in Fletchner, Harry M, The Several Texts of the CISG in a Decentralized System: Observations on Translations, Reservations and other Challenges to the Uniformity Principle in Article 7(1), Journal of Law and Commerce (1998) 187-217

[15] Fletchner, Harry M, “The Several Texts of the CISG in a Decentralized System: Observations on Translations, Reservations and other Challenges to the Uniformity Principle in Article 7(1)”, Journal of Law and Commerce (1998) p. 197

[16] 993 F.2d 1178 (5th Cir. 1993), online at http://cisgw3.law.pace.edu/cases/930615u1.html

[17] Murray p. 368

[18] Found online at http://cisgw3.law.pace.edu/cases/990517u1.html

[19] Netherlands Arbitration Institute, No. 2319, Oct. 15, 2002, (Neth), available at http://cisgw3.law.pace.edu/cases/021015n1.html

[20] Hackney, Philip, Is the United Nations Convention on International Sale of Goods Achieving Uniformity? 61 LA L Rev 472 (2000)

[21] Hackney op cit (fn 20)

[22] DiMatteo op cit (fn 1) p. 11

[23] Judgment of September 25, 1992, Legfes {CO}-{04}-{9C}bb Biróság (Hungary), translated in 13 J.L. & Com. 31 (1993);

[24] Fletchner op cit (fn 15) p. 203

[25] Fletchner op cit (fn 15) p.203

[26] Fletchner op cit (fn 15) p. 204

[27] Honnold Harjani op cit (fn13) p.369

[28] See Pace International Law Review, Review of the Convention on Contracts for the International Sales of Goods (CISG), European Law Publishing, 2007

[29] Hungarian Chamber of Commerce and Industry Court of Arbitration, Unilex Databade No VB/94 124, Nov 17, 1995 (Hungary) at http://www.unilex.info/case/cfm?pid=1&do=case&id=389&step=Abstract

[30] See Schlechtriem, Peter, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods, Published by Manz, Vienna: 1986. Reproduced at http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem.html#b*

[31] Komarov, Alexander, S, Internationality, Uniformity and Observance of Good Faith as Criteria in Interpretation of CISG: Some Remarks on Article 7(1), 25 Journal of Law and Commerce (2005-06) p. 80

[32] BP Oil Int'l v. Empresa Estatal Petroleos de Ecuador, 332 F.3d 333 (5th Cir. 2003) (United States), available at <http://cisgw3.law.pace.edu/cases/030611u1.html>.

[33] Ibid p. 337

[34] DiMatteo op cit (fn 1) p.28

[35] Harjani op cit (fn 7)

[36] Harjani op cit (fn 7)

[37] See Bonell, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 65-94.

[38] HO Helsinki S 00/82, Oct. 26, 2000, (Fin), available at http://cisgw3.law.pace.edu/cisg/wais/db/cases2/001026f5.html

[39] See fn 19 (Netherlands arbitration institute)

[40] SCH-4366, Jun 15, 1994 (Austria), available at http://cisg.law.pace.edu/cisg/wais/db/cases2/940615a4.html

[41] Felemegas, John, The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation, available at Pace Review of the Convention on Contracts for the International Sale of Goods (CISG), Kluwer Law International (2000-2001) 115-265

[42] Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., 313 F.3d 385 (7th Cir. 2002),

reversing 2002 WL 398521 (N.D. Ill. 2002), CLOUT Case No. 434 [United States Court of Appeals for

the Seventh Circuit, 19 Nov. 2002].

[43] Filip de Ly, quoted in Felemegas p. 130

[44] Delchi Carrier, SpA v. Rotorex Corp., No 88-CV-1078, 1994 WL 495787 (N.D.N.Y. Sept. 9, 1994); affirm'd. in part by 71 F.3d 1024 (2d Cir. 1995).

[45] Felemegas Harjani op cit (fn 41)p. 140

[46] Killen, Monika, CISG and problems with common law jurisdictions, Journal Transitional Law and Policy, Vol 10: 2 p.11

[47] ICC International Court of Arbitration, No. 7565 (1994), Bull. ICC, Vol. 6/No. 2, November 1995, p. 64-67.

[48] Felemegas op cit (fn 41) p. 136

[49] Felemegas op cit (fn 41) p. 74

[50] Felemegas op cit (fn 41) p.133


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