Chapter 2
The Vienna Convention on the International Sale of Goods 1980
Chapter Contents
Introduction |
60 |
The Vienna Convention |
63 |
Conclusion: Recent international initiatives |
89 |
Further reading |
93 |
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60 | THE VIENNA CONVENTION ON THE INTERNATIONAL SALE OF GOODS 1980
Introduction
Ideally, any international sale contract should include a choice of law clause – a clause stipulating the law applicable to the contract, such as English law.1 Parties often, through oversight or ignorance, omit to include a choice of law clause. It is also possible that the parties have found it difficult to agree on such a clause. In the event of a dispute, the forum applies its private international rules2 to determine the law applicable to the contract. The law relating to sale contracts varies from state to state, and any uncertainty with regard to applicable law also means uncertainty in respect of the rights and obligations of the parties to the contract and the available remedies in the event of a dispute. One way to tackle this uncertainty is to harmonise the law relating to international sales in the form of an international convention for worldwide adoption, thus enabling the application of a uniform set of rules to such transactions. This task of harmonising the law relating to international sales of goods at an international level started in 1930 under the auspices of the International Institute for the Unification of Private Law (UNIDROIT).3 Interrupted by the Second World War, work resumed in the early 1950s, and, in 1964, two conventions were adopted: Uniform Law on International Sales (ULIS) and Uniform Law on the Formation of International Sales (ULFIS). Ratified only by a handful of states, including the UK,4 they were criticised on both political and legal grounds.5 Unpopularity of the ULIS and ULFIS meant a return to the drawing board.6 The United Nations Commission on International Trade Law (UNCITRAL)7 was seen as the ideal organisation to undertake the task of drafting such an international convention, since its membership, consisting of developing (Third World) and developed nations and socialist countries, would counter any political objections that might be levelled by the socialist or Third World quarters. The Working Group set to work in 1969 with ULIS and ULFIS as springboards and submitted two draft conventions in 1976 and 1977 to the Commission. On review, the Commission combined the two draft conventions into one – the Convention on the International Sale of Goods – and submitted it to the Diplomatic Conference held at Vienna.8 The Convention on International Sales of Goods 1980 (‘CISG’ or popularly known as the ‘Vienna Convention’) came into force in 1988 with the required 10 ratifications.9 Since then, there has been a steady stream of ratifications.10 Popularity of the Convention on International Sales of Goods 1980 (hereinafter ‘Vienna Convention’) has brought it to prominence in the field of international commercial law.
1 If English law applies to a sale, the Sale of Goods Act 1979 will apply to the contract. Reference to provisions as and where relevant in the context of cost, insurance, freight (CIF) and free on board (FOB) contracts was made in Chapter 1. For an excellent comprehensive account of the Sale of Goods Act, see Furmston, Sale and Supply of Goods, 2000, Cavendish Publishing.
2 See Chapters 16 and 17 for further on the Brussels Regulation I, the Rome Convention 1980 and Rome I.
3It was set up as an auxiliary organ of the League of Nations in 1926. Subsequent to the demise of the League of Nations, UNIDROIT was re-established on the basis of the UNIDROIT statute.
4 |
These conventions, implemented by the UK with the Uniform Laws on International Sales Act 1967, entered into force in 1972. |
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The text is available in Carr and Kidner, International Trade Law Statutes and Conventions, 5th ed, 2008, Routledge-Cavendish Publishing. |
5 |
For an interesting comparison of some of the provisions of ULFIS and the UNCITRAL Convention on the International Sale of |
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Goods 1980, see Barbic´, in Voskuil and Wade (eds), Hague-Zagreb Essays on the Law of International Trade, Vol 4, 1983, TMC Asser Institute. |
6 |
See Magnus, ‘European experience with the Hague sales law’ [1979] Comparative Law Yearbook 105. |
7 |
See Farnsworth, ‘UNCITRAL Why? What? How? When?’ (1972) 20 American Journal of Comparative Law 314. |
8For more on the historical background, see Farnsworth ‘The Vienna Convention: history and scope’ (1984) 12 International Lawyer 17.
9The text of this Convention is reproduced in Carr and GoldbyKidner, International Trade Law Statutes and Conventions, 65th edn, 201108, Routledge-Cavendish. The full text is also available at www.uncitral.org. They also maintain a database of reported cases relating to this convention. Another useful database of cases and other bibliographic materials is maintained by http://cisgw3.law.pace.edu.
10 Visit www.uncitral.org for an up-to-date list of ratifications, along with details of reservations.
INTRODUCTION |
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As for the UK, it has not yet ratified the Convention. The reception of the Convention is less than enthusiastic for a variety of reasons. Among them:
(1)unfamiliarity with some of the concepts and rights introduced by the Vienna Convention, such as fundamental breach,11 right to cure after the time fixed for performance and the selfhelp remedy of reducing the price where non-conforming goods are delivered;
(2)popularity of the well-established Sales of Goods Act 1979 in the international commercial sector as evidenced by the use of choice of English courts as a forum for dispute resolution, and the choice of English law clauses in contracts even where the contracting parties do not have any connection with the UK and the movement of goods does not involve the UK;
(3)doubts about producing uniformity, since it is likely to be interpreted variously;
(4)minimum effectiveness, since most commercial traders are likely to opt out of the Convention12; and
(5)incomprehensiveness, since theVienna Convention does not address issues such as the validity of the contract and passing of property.13
Reluctance to ratify on the part of the UK has come under criticism. For instance, Barry Nicholas, a prominent academic and member of the UNCITRAL Group, although sympathetic to the hesitation of British lawyers to embrace the Vienna Convention, correctly observes:
There are indeed grounds for an English lawyer to feel disquiet about the convention and the way in which it is developing. But this is no longer a ground, if it ever was one, for refusing to ratify the convention. On the contrary, it is a ground for ratifying quickly, so that the experience of English lawyers and the English Commercial Court may infl uence the way in which the convention is applied.14
In October 1997, the Department of Trade and Industry (DTI) published a consultation document with a view to inviting views, since it felt the time was right to reconsider the issue of ratification of the Vienna Convention in the interests of the UK traders due to its popular acceptance worldwide. As the DTI observed:
Since 1989, the number of countries ratifying the Convention has more than doubled to 48 . . .
This evidence suggests the UK is becoming increasingly isolated within the international trading community in not having ratifi ed the convention. We judge the time is right therefore to consider again whether our international traders are at a disadvantage because the UK is not a party to the convention and therefore does not have access to a law which was drafted specifically for international sales in the modern world. Ratifi cation would also enable our courts to
11This is not to be confused with the notion of fundamental breach as developed in English law. See Photo Productions v Securicor [1980] AC 827 and Chapters 7 and Deviation. The problem with the Vienna Convention in the UK has largely been due to compromises between civil law and common law approaches to produce a convention that would be adopted. See Merryman, ‘In the convergence (and divergence) of the civil law and the common law’ (1981) 17 Stanford Journal of International Law 357; Rossett, ‘The international sales convention: a dissenting view’ (1984) 18 International Lawyer 445.
12See ‘Party autonomy and the Vienna Convention’, below.
13Some of these objections can be found in Law Reform Committee of the Council, 1980 Convention on Contracts for the International Sale of Goods, 1981, Law Society of England and Wales.
14Nicholas, ‘The United Kingdom and the Vienna Sales Convention: another case of splendid isolation?’, available at http://www. cisg.law.pace.edu/cisg/biblio/nicholas3.html.
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contribute towards the interpretation and development of the convention, which is taking place at the moment without our participation.15
Of the 450 consultation documents sent out, the DTI received only 36 responses.Twenty-eight of the responses supported ratification on the grounds that use of a neutral and uniform law would be beneficial in an increasingly globalised marketplace. Seven responses were against ratification on the grounds listed previously.16 Three responses did not take any clear view on the matter.17 The poor response rate is indeed surprising, if not alarming, given the involvement of a government department in canvassing opinions on the suitability of ratifying the convention. This could be an indication of ignorance or apathy on the part of interested parties toward the Vienna Convention.
According to a communication from the DTI dated February 1999, the Government is expected to bring theVienna Convention into‘national law when there is time available in the legislative programme’. At the time of writing the third edition, the author was informed by the DTI that the Government intended to ratify the Convention as soon as a convenient slot in Parliament’s legislative timetable was available.This is yet to happen. Regardless of this apparent apathy, it is important to include a discussion of this convention, since it is likely to affect a great many international sales contracts. Most member states of the EU are parties to the Convention. so are the world’s biggest traders, such as the US and China. It is also likely that the British courts will be called on to interpret the convention either because the parties have chosen the Vienna Convention to apply to their sales contract or the application of private international law rules lead to the law of state that is a party to the Vienna Convention.18
The UK is by no means alone in voicing its dissatisfaction with the Vienna Convention. Criticisms have come from a variety of quarters, including practitioners and academics. Arthur Rossett expresses the dissatisfaction constructively and lucidly in the following manner:
We should not fault the drafters of the [Vienna Convention] for their inability to arrive at a Continental style code that concisely and clearly states universal principles of sales law. The 68 nations that participate in UNCITRAL are incapable of any such agreement. I fault the pretense that there are grand principles at work and transcendent values being vindicated. In fact, the convention is largely a cut-and-paste job, and the primary operative drafting principle was to produce a document that all could agree to and none would reject. I do wish that the drafters had seen their task more realistically as one of building from transaction and practice to principle . . .
I wish they had shown greater realization that the process upon which they had embarked is an organic, continuing one . . . What we need are conventions more sensitive to the need to incorporate the capacity for change, growth and discovery into the process of harmonization.19
Although the focus of this chapter is the Vienna Convention, reference to the ULIS and the ULFIS conventions will be made as and where relevant.20 There is also reference to case law relating to various provisions of the Vienna Convention.The reference is, however, limited by the availability
15 DTI, United National Convention on Contracts for the International Sale of Goods (the Vienna Convention): A Consultation Document, 1997, DTI (available at www.dti.gov.uk), paras 22 and 23. The DTI also produced a consultation document in 1989, United Nations Convention on Contracts for the International Sale of Goods, DTI. See also Azzouni, ‘The adoption of the 1980 Convention on the International Sale of Goods by the United Kingdom’, available at www.cisg.law.pace.edu/cisg/biblio/azzouni.html.
16Based on the information obtained from the DTI.
17I would like to thank Mr Fraser Murrey, Business Law Unit, Department of Trade and Industry, for providing information on the responses to the consultation document.
18See Kingspan Environmental Ltd v Borealis A/S [2012] EWHC 1147 (Comm) where the court in applying Danish law considered the scope of Art 39 of the Vienna Convention.
19Rossett, ‘CISG laid bare: a lucid guide to a muddy code’ (1988) 12(3) Cornell International LJ 575, at p 589.
20 For further on these conventions, see Sutton, ‘The Hague Conventions of 1964 and the unification of the law of international sale of goods’ (1971) 7 University of Queensland LJ 145.