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ANALYSIS OF ARTICLE 1 OF CISG IN TERMS OF PRIVATE SALES TRANSACTIONS
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ANALYSIS OF ARTICLE 1 OF CISG IN TERMS OF PRIVATE SALES TRANSACTIONS
AUTHORED BY
- RISHIT
ABSTRACT
The United Nations Convention on
Contracts for the International Sale of Goods (CISG) or Vienna Convention is a
multilateral treaty brought about by the United Nations for establishing a
uniform framework to govern international trade. It was signed on 11 April 1980
and made effective on 1 January 1988. As of September 2023, 95 countries
accounting for two-third of the world trade have ratified the treaty.
Article 1 of the CISG is the
subject-matter of discussion here. It describes in what situations a contract
falls within the jurisdiction of the CISG.
Clause 1 of Article 1 provides that
the Act would apply to contracts of sale of business is between parties whose
places of business are in different States in two situations – when the states
are party to the CISG or when the rules of Private International law require
application of the law of a state which is party to the CISG.
Clause 2 provides that the fact that
the parties have their places of business in different states is to be
disregarded if the same is not disclosed from the contents of the contract, the
dealings between them or from the information disclosed by them before or at
the time of completion of the contract.
Clause 3 provides that the
nationality of the parties or the nature of the contract or parties whether it
is of civil or commercial character is not relevant in determining the
applicability of the CISG.
Article 1 of the CISG is the perfect
example of why business lawyers involved in international sales transactions
need to understand the nuances of the CISG.
The project will analyze
and study the applicability, use and impact of Article 1 of the CISG on private
sales transactions.
Keywords: CISG, Private
Sales Transaction, Vienna Convention, International Trade, Commercial
Transactions
LITERATURE REVIEW
1. Md. Zahidul Islam, Applicability of
the Convention on Contracts for International Sale and Goods (CISG)
This article analyses
Article 1 of the CISG to understand in what situations the CISG will be
applicable while taking into account in the judicial position on the topic
around the globe.
It attempts to answer the
following questions:
·
When
the CISG will be applicable and when it will not be applicable?
·
What
is the requirement for application of CISG?
2. Petra Butler, Article 1 CISG – The Gateway to the CISG
This article looks at Article 1 from
the perspective of finding out before entering into a sale of goods contract
whether the final transaction would be governed by the provisions of CISG and
in what situations it can be questioned whether CISG is applicable or not.
3. Marlene Wethmar-Lemmer, Applying the CISG via the rules of private
international law: Articles 1(1)(b) of the CISG
This article analyses the
applicability of CISG as provided for by Article 1 in relation to Article 95
which provides that ‘any state may declare at the time of the deposit of its
instrument of ratification, acceptance, approval or accession that it will not
be bound by subparagraph (1)(b) of article 1 of this Convention.’ It tries to
resolve the paradox caused in interpretation of the jurisdiction of CISG caused
by interpreting both these articles together.
4. James P Quinn, The Interpretation and Application of the
United Nations Convention on Contracts for the International Sale of Goods
This paper discusses the interpretive
techniques which commentators suggest will enable courts to accurately
interpret the CISG to bring uniformity in interpretation of the extent of its
jurisdiction. It identifies the current difficulties in interpreting Article 1
of the CISG and proposes solutions.
5. Jacob Ziegel, The Scope of The Convention: Reaching Out to Article One and Beyond
The article analyses Article 1 of the
CISG to find answer to the ongoing challenges regarding interpretation and
application. It looks into how common law jurisdictions have dealt with the
applicability of the CISG.
6. John F. Coyle, The Role of The
CISG in U.S. Contract Practice: An Empirical Study
The Article
draws upon a hand-collected dataset of more than 5,000 contracts, along with
interviews with several lawyers who had a hand in their drafting, in an attempt
to better understand the role that the CISG plays in U.S. contract practice.
7. Claire M. Germain, The United
Nations Convention on Contracts for the International Sale of Goods: Guide to
Research and Literature
This article covers research
strategies and provides research ideas related to interpretation of the CISG.
8.
Franco Ferrari & Stefan Kröll, The CISG's Sphere of Application: Articles 1-3 and 10
This
book provides an in-depth analysis of Article 1 of the CISG, including their
interpretation and application in practice.
9.
Franco Ferrari & Harry Flechtner, The
CISG and Its Impact on National Legal Systems
This
book provides an analysis of the CISG and its relationship to domestic laws and
international trade.
CHAPTER I: INTRODUCTION
In recent decades, there has been a
consistent growth in international instruments aimed at establishing uniform
rules for international contracts. This unified approach to governing the law
applicable to international sales transactions offers three distinct
advantages. Firstly, it helps mitigate the escalation of transaction costs for
parties involved. Complex private international law regulations and, for
instance, restrictions on liability can create significant challenges for
parties in understanding their legal standing. Secondly, the divergence in
domestic contract laws can distort competition among businesses operating in
different states, creating an uneven playing field. Lastly, many domestic
contract laws are ill-suited for the complexities of international
transactions.[1] Given
these developments, one might assume that choice of law rules has only a
minimal role in resolving disputes related to international sales of goods.
However, this assumption is incorrect.[2]
Even in the context of the 1980 United Nations Convention on the International
Sale of Goods (CISG), which is the foremost instrument in this area, the
analysis of choice of law remains highly relevant.[3]
It is through the process of choice of law that a court or tribunal can
determine the applicability of the CISG or identify the governing law for
matters falling outside the scope of the Convention.
The United Nations Convention on
Contracts for the International Sale of Goods (CISG) is a significant outcome
of the diplomatic endeavours led by the United Nations Commission on
International Trade Law (UNCITRAL) to establish consistent international trade
regulations. In contemporary times, CISG has gained substantial popularity,
with a rapid increase in the number of countries ratifying it. Nevertheless,
there remains an ongoing debate about the specific circumstances under which
CISG should be applied. Numerous legal cases have been filed to determine its
applicability, and in many instances, judges have provided clarifications
regarding its scope. Despite these efforts, there is still considerable uncertainty
surrounding the precise conditions for the application of CISG, leaving us in a
state of ambiguity.
Given the large number of
contracting states, representative of all legal traditions, as well as its
important subject matter, the CISG is one of the most influential international
conventions to date.
This article has tried
to focus that, when the CISG will be applicable and when it will not be
applicable. This article also attempts to highlights that, what is the
requirement for application of CISG?
CHAPTER II: APPLICATION IN LITIGATION
a. Introduction
One of the most fundamental
considerations for parties entering into an international sales contract is
whether the contract will be governed by the CISG (United Nations Convention on
the International Sale of Goods). This determination hinges on two key questions:
i.
Choice of Law: The first question is whether the CISG applies based on the choice of
law. This can occur either through Article 1(1)(a) or (b) of the CISG itself or
by following the choice of law rules of a non-contracting state.
ii.
Scope of the Convention: The second question is whether the transaction or the
dispute falls within the scope of the CISG, as outlined in Articles 2 to 5 of
the Convention. Alternatively, it may involve issues that are not covered by
the CISG.[4] This
discussion will primarily focus on the first question, which pertains to the
choice of law and how it determines the applicability of the CISG.
b. Global Applicability
Article 1(1) of the CISG establishes
a crucial requirement for its application: the parties involved must have their
places of business in different states.[5]
While this provision doesn't function as a conventional choice of law rule, it
addresses a key issue that typically falls under the jurisdiction of the
forum's private international law rules.[6]
Specifically, it determines whether a dispute qualifies as international,
thereby triggering a choice of law consideration. This provision acts as a
filter for the CISG's application, potentially excluding the Convention in
cases that still necessitate a choice of law determination according to the
forum's private international law rules. The CISG doesn't provide a precise
definition of what constitutes a "place of business." Generally, a
place of business is understood to involve a genuine and effective connection
of a business with a location where it engages in regular commercial
activities.[7] In
situations where the identity of the parties in the sales contract is
uncertain, such as when one party is represented by an agent, the determination
of whether a place of business requirement is met must be made based on
standard choice of law rules before establishing the international character of
the contract under Article 1(1).[8] To satisfy
the internationality requirement, it must be evident either from the contract
itself, the parties' interactions, or information disclosed by the parties
before concluding the contract.[9]
Importantly, the parties don't necessarily need to have actual knowledge that
their places of business are located in different states for this requirement
to be met.[10] It's
essential to note that the application of the CISG doesn't hinge on whether
goods physically cross-national borders or where the place of performance is
located.
c. Contracting States
Article 1(1)(a) of the CISG
stipulates that the Convention applies to contracts for the sale of goods
between parties whose places of business are in different states, but with a
caveat: it applies "when the States are Contracting States." This
provision can be seen as a one-sided choice of law rule that mandates the
application of the CISG as part of the forum's legal framework.[11]
Alternatively, in terms of its effect, the CISG can be viewed as either an
overarching mandatory law of the forum or a self-executing treaty. In essence,
paragraph (a) of Article 1 overrides the usual choice of law rules that would
typically apply to international contracts by enforcing the CISG for all cases
that fall within its scope. Consequently, when a dispute is covered by the
Convention, there's no need to determine the law that would otherwise be
applicable. However, an important exception to this unilateral forum rule is
the principle of party autonomy. If parties from different contracting states
have chosen the law of a non-contracting state or have explicitly excluded the
CISG, this choice generally prevails in accordance with the forum's rules on
party autonomy. In such cases, the parties' express choice of law takes
precedence over the default application of the CISG.
d. Effect of the rules of private international
law
Article 1(1)(b) of the CISG presents
an interesting aspect of its application. It states that the Convention applies
"when the rules of private international law lead to the application of
the law of a Contracting State." There has been some debate about whether
this provision, when the forum itself is a contracting state, directly applies
the CISG or designates the CISG as part of the foreign law to be applied. One
viewpoint, as articulated by Schlechtriem & Schwenzer, argues that if the
forum state is a CISG Contracting State, the Convention is not treated as
foreign law but as law created by an international convention and enacted by
the forum State as its own law.[12] In this
interpretation, paragraph (b) does not require the forum state to give effect
to its private international law rules at all. The alternative interpretation,
which is believed to be the correct one, views paragraph (b) as a simple
reference to the choice of law rules of the forum. According to this
interpretation, the forum must apply the CISG when its choice of law rules
points to the law of a contracting state, and it does so in the same manner as
the foreign court would apply it. This interpretation aligns with the wording
of paragraph (b), which calls for the "application" of the law of the
contracting state, indicating that the forum's choice of law rules should be
followed. The distinction between these two interpretations becomes significant
in cases where party autonomy in choosing the applicable domestic law can be
constrained, particularly in countries where conflict of law rules are
considered mandatory. For example, in Brazil, Article 9 of the Introductory Law
to Provisions under Brazilian Law dictates that a judge must apply the law of
the place where the parties entered into the contract (lex loci contractus)
when they are present, or the law of the jurisdiction where the offer was made
when they are not in each other's presence (contract inter absentes), such as
in email communications. The interpretation of Article 1(1)(b) as advanced in
this discussion could potentially lead to a more limited application of the
CISG by Brazilian courts compared to courts in other member states. In cases
governed by Brazilian conflict of laws rules, which prioritize extrinsic
criteria over party autonomy, the law of a non-contracting state might apply
instead of the CISG. It's important to note that the distinction between these
interpretations also comes into play when the CISG is not yet in force in the
foreign contracting state. In such cases, following the forum's choice of law
rules would mean that the CISG should not be considered part of the foreign
governing law. This is especially relevant in situations where the contracting
state has entered a reservation to paragraph (b) under Article 95, indicating
that it will not be bound by this paragraph. Several countries, including the
United States and China, have made such reservations. It's worth noting that an
Article 95 reservation does not necessarily prevent the courts of a reservation
country from applying Article 1(1)(b). The reservation merely gives them the
option not to apply it. Courts in reservation states have respected party
autonomy when parties have expressly agreed to the CISG or the law of a CISG
contracting state, even when one party's place of business is in a non-member
state.[13] The
question arises about whether the CISG should be considered part of the law of
an Article 95 reservation state if the forum's private international law rules
lead to the application of the law of an Article 95 reservation state. The CISG
Advisory Council argues that the Convention still applies in such cases, as the
Article 95 declaration does not affect the declaring state's status as a
"Contracting State." However, some authors contend that when the
forum's private international law rules lead to the application of the law of
an Article 95 CISG reservation state, the court should apply the domestic law
of that reservation state without invoking the CISG. They argue that the law
referred to by the forum's choice of law rules should be applied in the same
way as a judge in that state would apply their domestic law, which, in the case
of a reservation state, means not applying the CISG. In the author's view, the
reasoning put forth by the CISG Advisory Council is persuasive. Article 1(1)(b)
explicitly states that the Convention applies when the forum's private
international law rules point to the law of a Contracting State. It specifies
"this Convention," meaning the CISG itself, should be applied in such
cases, irrespective of whether the contracting state has made an Article 95
declaration. This interpretation aligns with the intent of the CISG to create
uniformity in international sales law.
e. Non-Contracting States
Since the CISG is an international
treaty that only applies among contracting state parties, a non-contracting
state's court is not obligated to consider an Article 95 reservation. Whether a
non-contracting state will apply the CISG when its choice of law rules
indicates the law of a contracting state depends on how the CISG is treated
within the applicable law of that non-contracting state. If the applicable law
recognizes the CISG as part of its legal framework, the non-contracting state's
forum typically follows its own choice of law rules and gives effect to the
CISG.[14] This
approach is consistent with the rejection of renvoi in contract law because it
doesn't involve the foreign forum's choice of law rules; rather, it depends on
substantive law considerations.[15] For
example, a case in point is the Brazilian Superior Court of Justice's decision
in the Atecs v. Rodrimar case, which concerned an enforcement proceeding for an
arbitral award. The court held that the inclusion of a convention incorporated
into Swiss law, like the CISG, does not violate the boundaries of the
arbitration clause or Brazilian public policy for recognition purposes. According
to Brazilian law, a treaty or convention ratified by a contracting state is
treated similarly to national law in that country. To ensure that the CISG
applies to their dispute, parties may consider selecting a forum that is a
contracting state, as this increases the likelihood of the CISG being the
applicable law.[16]
A related question concerns the
impact of parties directly choosing the CISG as the governing law when the
conditions of Article 1(1)(a) are not met, and the otherwise applicable law is
not that of a contracting state. In most legal systems, courts are obligated to
identify and apply the law of a specific state.[17]
Since the CISG is essentially a set of legal rules, unless it is part of the
applicable law, a direct choice of the CISG might not typically be an effective
choice of law in these situations. However, this doesn't imply that the choice
of the CISG can be entirely disregarded. Instead, the CISG should be
incorporated into the parties' contract to the extent allowed by the applicable
law. This process of "incorporation" takes place within the framework
of the applicable law's contract law. For instance, in a dispute governed by
English law, an English court would respect a direct choice of the CISG to the
extent that its rules do not conflict with fundamental mandatory provisions of
English law—those provisions that parties are unable to contract out of. The
pro-CISG choice approach not only upholds party autonomy but also aligns with
the views of the delegates at the diplomatic conference, who believed that
party autonomy should suffice for parties to opt into the CISG. For parties who
want to ensure that their transactions are governed by the CISG, the most
secure option is to select the law of a contracting state, possibly accompanied
by a direct choice of the CISG. This clarifies that the parties intend to
include the CISG in their contract and are not seeking to exclude it,
especially when the forum is not a contracting state.
g. Clause in contract to opt out of CISG
Article 6 of the CISG is a provision
that offers parties the ability to exclude or, within certain limits, deviate
from the application of the Convention. This provision operates at two levels:[18]
i.
Choice of Law Level: First, it allows parties to exclude the CISG's application
by choosing the law of a non-contracting state, following the forum's principle
of party autonomy.
ii. Substantive Level: Second, it permits parties to remove
the CISG from governing their contract within the framework of the applicable
law.
Regarding the aspect of Article 6
that deals with choice of law, its primary purpose appears to be to prioritize
the forum's rules on party autonomy. It doesn't grant parties the authority to
select the applicable law themselves. The unilateral choice of law rule in
Article 1(1)(a) is not activated when parties opt for the law of a
non-contracting state as per the forum's choice of law rules. Some have argued
that the exclusion of the CISG should still be determined by Articles 14-24 of
the Convention.[19] However,
it's debatable whether the CISG is even applicable to choose of law agreements,
which are typically considered separate from the underlying sales contract.[20] There is
uncertainty as to whether Article 6 was designed to bifurcate the law governing
the choice of law agreement in this manner, potentially conflicting with the
forum's choice of law rules. The prevailing opinion suggests that the indirect
exclusion of the CISG through the choice of law of a non-contracting state is
not regulated by the CISG's contract rules. On the substantive level, Article 6
becomes particularly significant. Issues can arise when parties have not
clearly expressed their intention to exclude the CISG.[21]
For example, it remains an open question whether explicitly choosing the law of
a contracting state can be interpreted as an implied exclusion of the CISG.[22]
Additionally, courts and arbitral tribunals have grappled with the situation
where parties litigate a dispute solely based on domestic law even though the
CISG is applicable to the dispute. It is unclear whether it should be the CISG
or the relevant national law that determines this question.[23]
The most prudent approach for parties is to explicitly agree on whether they
intend to include or exclude the CISG to avoid ambiguity and disputes.
a. Introduction
For parties who find their domestic
legal system too restrictive and want to ensure that their choice of
non-national legal rules is upheld, arbitration can be a valuable alternative
to litigation in domestic courts.[24] In some
jurisdictions, arbitration is the standard method for resolving commercial
disputes, and it's increasingly chosen even in countries like the United
Kingdom and Germany, where civil litigation in commercial matters has been
common. Even sectors that traditionally preferred litigation, such as finance,
have turned to arbitration to resolve disputes.[25]
One significant advantage of international arbitration is that it operates
independently of domestic legal systems.[26]
The choice of law rules applicable to the merits in arbitral disputes may
differ from those applied by courts.[27]
Most importantly, parties who opt for arbitration generally have more autonomy
and flexibility than those who go to court. International arbitration is built
on the foundation of contract. Unlike courts, arbitral tribunals do not
automatically apply the substantive law of the seat of arbitration. Instead,
the seat of arbitration determines the lex arbitri, which, in turn, governs the
procedural aspects of international arbitration, including the rules for
determining the applicable law to the substance of the dispute.[28] This
greater degree of party autonomy can be seen, for example, in Section 46 of the
UK's Arbitration Act 1996, which allows parties to agree to submit their
dispute to considerations other than the law of a specific country. Similarly,
Article 21(1) of the ICC Rules states that "the parties shall be free to
agree upon the rules of law to be applied by the arbitral tribunal to the
merits of the dispute."[29] Parties
who choose arbitration as their preferred method of dispute resolution can,
therefore, directly select the CISG or soft-law principles like the UNIDROIT
Principles as the law governing their contract.[30]
In cases where parties haven't specified an applicable legal framework for
their contract, arbitrators, unlike judges, have more freedom to determine the
applicable substantive law. Once again, the ICC Rules provide a good example of
this discretion. They state in Article 21(1) that "In the absence of any
such agreement, the arbitral tribunal shall apply the rules of law which it
determines to be appropriate." This means that arbitrators have the
flexibility to select the most appropriate legal rules to govern the dispute
when parties haven't made a specific choice.
b. Conditions for Application
The CISG offers a neutral set of
rules specifically crafted for international business transactions. Article 1
of the CISG, as mentioned earlier, defines when the CISG applies to parties in
a sales contract. Concerning the application of the CISG by an arbitral
tribunal, three distinct scenarios need to be addressed:
i.
Party Choice: In the first scenario, commercial parties willingly choose the CISG as
the governing law for their sales of goods contract. In this case, an arbitral
tribunal typically upholds their choice. Unlike the Rome I Regulation or many
national laws, an arbitral tribunal can directly apply the CISG as the chosen
law of the parties, especially when acting as amiable compositeurs or when the
lex arbitri allows or even mandates the application of legal rules rather than
a specific domestic law.[31]
ii.
Default Application: In the second scenario, when the parties haven't agreed on
an applicable governing law for their relationship in an international sale of
goods transaction, the CISG can still be validly applied by an arbitral
tribunal. However, there is controversy surrounding the circumstances in which
an arbitral tribunal can and should apply the CISG in the absence of a specific
agreement.[32]
iii.
Impact of Domestic Law Choice: Finally, the question arises regarding how the parties'
selection of an applicable domestic law affects the application of the CISG by
an arbitral tribunal.
c. Applicable law not provided in the
Agreement
Certain arbitration rules grant
arbitrators substantial discretion when parties have not specified a domestic
law applicable to their contract. For instance, Article 28(2) of the UNCITRAL
Model Law slightly restricts the arbitral tribunal's discretion by specifying
that "the arbitral tribunal shall apply the law determined by the conflict
of laws rules which it considers applicable."
Article 1(1)(a) CISG
Article 1(1)(a) of the CISG states
that the CISG applies when parties to a sales contract have their businesses in
different member states, and this provision can be interpreted in several ways
when it comes to arbitration.[33] One view
is that Article 1(1)(a) of the CISG doesn't apply in the context of
arbitration. This interpretation is based on the understanding that Article
1(1)(a) is an international treaty binding only states and their organs,
particularly courts, but not international arbitral tribunals.[34] However,
another perspective, which the author supports, suggests that the CISG can
indeed be applied by an arbitral tribunal, despite it being an international
treaty. In fact, it can be argued that the application of Article 1(1)(a) is
broader in international arbitration than in litigation.[35]
In litigation, Article 1(1)(a) can only be applied if the forum state is a CISG
member state. Arbitral tribunals, as mentioned earlier, are generally not bound
by the law of the forum state.[36] From this
viewpoint, Article 1 of the CISG, including Article 1(1)(a), can be seen as a
unilateral conflict of laws rule. This approach aligns with the idea that using
international conflict of law rules to determine the applicable law in
arbitration can help avoid the complexities of national legal systems and
promote neutrality, efficiency, predictability, and effective international
enforcement.[37] The CISG,
like international arbitration, provides uniform, neutral international
principles for international sales of goods transactions, which is often
desired by the business world. Moreover, if one considers the CISG as a
self-executing international treaty, then an international arbitral tribunal,
as part of the international legal order, is bound by the CISG. Law is the foundation
of international arbitration, and the legitimacy and effectiveness of the
arbitral process rely on it. In essence, the CISG, as part of the international
legal order, should not be ignored by an international arbitral tribunal when
parties to a sales contract have their businesses in different CISG member
states. It's worth noting that parties can choose to opt out of the CISG if
they don't want it to apply to their sales of goods transaction.[38] This
analysis takes into account the Vienna Convention on the Law of Treaties
(1969), which stipulates that international treaties bind only the contracting
states that are parties to those treaties.[39]
Businesses in CISG member states are inherently part of the legal order of
their respective member states and, consequently, part of the international
legal order as well.[40] This
aligns with international human rights treaties and neutral international
principles for international sales of goods transactions[41],
which is consistent with the intention of parties using international
arbitration as their preferred method of dispute resolution.[42]
Article 1(1)(b)
It is widely accepted that Article
1(1)(b) can be applied by an international arbitral tribunal without
controversy.[43] Article
1(1)(b) directs the application of the CISG when the private international law
rules of the forum lead to the application of the law of a CISG member state
that incorporates the CISG. Article 1(1)(b) is not a choice of law rule;
rather, it grants the CISG domestic law status and prevents any potential
renvoi. The directive provided in Article 1(1)(b) to an arbitral tribunal is
the same as that for any court: if the private international law rules applied
by the arbitral tribunal lead to the law of a CISG member state, the CISG will
be applicable.[44] It's
important to note that, in the context of Brazilian law, it is recognized that
arbitral tribunals are not bound by the mandatory nature of Brazilian conflict
of law rules.
Rules of Law
In addition to the analysis of
Articles 1(1)(a) and 1(1)(b) as discussed earlier, many arbitration rules
provide the arbitral tribunal with the authority to select the applicable law
by permitting the direct choice of 'rules of law' that the tribunal deems
'appropriate.' Consequently, even if one does not adhere to the analysis
presented earlier for the reasons outlined therein, a tribunal entrusted with
such authority should directly apply the CISG.[45]
Parties choose to be subjected to a
domestic law
Given the broad mandate provided by
some arbitration laws and rules, a question arises regarding whether an
arbitral tribunal is free to apply the CISG even in cases where the parties
have explicitly chosen a domestic law. The applicability of the CISG depends on
the choice made by the parties:
i.
If
the parties have chosen the domestic law of a CISG member state, the CISG is
applicable as part of that country's domestic law, as per Article 1(1)(b),
unless the parties have expressly excluded it.[46]
ii.
If
the parties have selected the domestic law of a non-member state of the CISG,
this choice generally implies that the parties have excluded the applicability
of the CISG.[47]
However, an arbitral tribunal can
still apply the CISG even when the parties have chosen the domestic law of a non-member
state if the tribunal has the authority to act ex aequo et bono. To apply the
CISG in such a scenario, the tribunal would need to find that there is a gap in
the chosen domestic law that cannot be filled from within that domestic legal
system.
CHAPTER IV:
SUMMARY AND CONCLUSION
Summary
While the CISG has not yet achieved
the status of customary international law, it has been ratified by a
significant number of states and stands as one of the most successful
international commercial conventions. In cases where the parties have not explicitly
chosen an applicable domestic law, arbitral tribunals should apply the CISG,
unless there is a clear indication that the parties intended not to apply it or
the lex arbitri mandates the selection of a national law. The CISG offers a set
of neutral rules designed with international business transactions in mind, and
the presumption should be that, in the absence of contrary indications, the
CISG is sufficient to govern the contractual relationship between the parties.
Conclusion
Article 1 of the CISG serves as the
entry point to the convention. Parties involved in international trade should
pay particular attention to its requirements. If the parties have their
businesses located in different member states, the CISG will automatically
apply unless they have expressly excluded its application. Unfortunately,
parties and their legal representatives are often unaware of the CISG's
automatic applicability in such cases. Anecdotal evidence suggests that in some
regions, domestic contract law is frequently applied even when the CISG should
be the applicable law. Choosing arbitration as the dispute resolution mechanism
provides a broader scope for the application of the CISG to various types of
contracts.
[1] 2 K.P. Berger, The Creeping Codification of the New
Lex Mercatoria 19-20, 21-26 (Kluwer Law International B.V. 2010).
of
Goods 10-12 (Bloomsbury Publishing 2011).
[6] 3 F. Ferrari, PIL and CISG:
Friends or Foes? pt. IV. (University of Pittsburgh Press 2010).
[7] S. Kröll, L. Mistelis & P.P. Viscasillas, UN
Convention on Contracts for the International Sale of Goods 23, 43 (Bloomsbury
Publishing 2011).
[9] United Nations Convention on
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Article Information
ANALYSIS OF ARTICLE 1 OF CISG IN TERMS OF PRIVATE SALES TRANSACTIONS
Authors: RISHIT
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/09/27
- Issue 7
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International Journal for Legal Research and Analysis
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