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Ch.15 Regional Developments and the CISG

From: Damages Under the Convention on Contracts for the International Sale of Goods (3rd Edition)

Bruno Zeller

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

Contract — Choice of law — UN Sales Convention and damages

(p. 287) Chapter 15  Regional Developments and the CISG


15.01  This chapter compares the various regional developments in relation to their utility compared with the CISG. In particular, this chapter will use the comparison to discuss these various attempts. Specifically in relation to EU attempts only PECL will be discussed specifically in relation to

  • •  the treatment of Article 74

  • •  the remedies available when a contract is avoided

  • •  whether Regional Harmonization is superior to the CISG.

I.  Introduction

15.02  There were several regional developments in attempting to draft a contract laws which were either in competition with the CISG or attempted to assist the CISG in the harmonization effort of creating a global contract law. The EU was a big driver in this attempt not only creating the Principles of European Contract Law (PECL) but also the Common Frame of Refence (CFR) and lately the Common European Sales Law (CESL). What can be said is that the CFR and CESL were not successful and are currently simply collecting dust on a shelf and hence a discussion is of no real value.

(p. 288) 15.03  In the EU the best-known proposals are those that constitute the PECL. This project was the work initiated by the Commission on European Contract Law led by Ole Lando, the Aquis group led by Professor Ajani and the Trento group led by Professors Mattei and Bussani. It can be argued that the problem in the EU is the issue that formulating agencies are not flexible in choosing an instrument and in conceiving ways in which hard and soft law may best supplement each other.1 The important lesson is that the EU has not managed to harmonize contract law and hence the CSG is still in command. The same arguments are also valid when comparing regional developments in the ASEAN region which also ended up on a shelf and have simply been forgotten. Hence as an example PECL as well as the attempts in the ASEAN and African regions will also be touched on. It is by no means a complete review but simply an illustration that the CISG is still the best instrument in the harmonization efforts and is here to stay.

The main advantages of the harmonisation of international sales law remain unchanged: legal certainty, the lowering of transaction costs, the suitability of the CISG for international trade, the balancing of the interests of the parties, as well as the policy reasons … In short, the case for adopting the CISG in [any country in an unchanged form] remains strong.2

II.  The Principles of European Contract Law

15.04  As a parallel development to the UNIDROIT Principles, the European Commission and other organizations supported a project under the leadership of Ole Lando to draw up a set of contract laws and principles namely the Principles of European Contract Law (PECL).3 The current rules are the culmination of work that started in 1982. Not unlike the UNIDROIT Principles, the rules have been drawn up by an independent body of experts from each Member State of the European Union. As pointed out in the previous chapter, the UNIDROIT Principles are useful in the interpretation of the CISG. This chapter will investigate whether the PECL assist equally well in the interpretation of the CISG. It must be noted that PECL never really gained much traction past commentators who compared the two notable harmonized laws, namely the UNIDROIT Principles and PECL as useful tools in assisting the CISG. Despite the fact that (p. 289) PECL never gained popularity in commercial and now academic circles it is still of value to have a basic understand of Lando’s work.

15.05  The Principles of European Contract Law parts I and II (PECL I and II) cover the core rules of contract formation, authority of agents, validity, interpretation, contents, performance, non-performance (breach), and remedies. The principles previously published in part I (1995) were included in a revised and reordered form in 1999. Part III covers plurality of parties, assignment of claims, substitution of new debt, transfer of contract, setoff, prescription, illegality, conditions, and capitalization of interest.

15.06  The PECL are of specific interest in the EU because the European Parliament has on occasions called for the creation of a European civil code. The PECL, and to a lesser degree the CISG and the UNIDROIT principles, will likely form the nucleus of a unified sales law in the EU and possibly throughout Europe.

15.07  At the beginning of the project, doubts were expressed because the Amsterdam Treaty does not allow the EU to prepare a unified contract law that in essence would form part of an EU civil code. It appears that these doubts have been overcome, as the European Parliament has now twice requested that a unified civil code should be prepared. In 1999, the decision was made that the Commission and the Council of Ministers should study whether to prepare a soft law or comprehensive and binding union legislation on the law of contract. The matter appears to have been resolved in favour of the creation of a black-letter law, which in hindsight never eventuated.

15.08  With a few exceptions, the members of the Commission on European Contract Law have been academics, but many of these academics are also practising lawyers. The members have not been representatives of specific political or governmental interests, and they have all pursued the same objective, to draft the most appropriate contract rules for Europe.

15.09  In some respects, the PECL may be compared with the American Restatement of the Law of Contract, which was published in its second edition in 1981. Like the restatements, the draft articles are supplied with comments and notes. The restatements consist of non-binding rules, or soft law. They purport to restate the common law of the United States. The PECL are also soft law, but their main purpose is to serve as a first draft of part of a European civil code. No common law exists in the European Union; the principles have therefore been established by a more radical process. No single legal system has been their basis. The European Commission has paid attention to all the systems of the member states, but not all of them have influenced every issue dealt with. The rules of legal systems outside of the EU have also been considered, such as the American Restatement on the Law of Contracts and existing conventions such as the CISG. Some of the principles reflect ideas that have not yet materialized in the law of any state. In short, (p. 290) the Commission has tried to establish those principles that it believed to be best under the existing economic and social conditions in Europe.

15.10  An attempt has been made to draft short rules that will be easily understood by the prospective users of the principles, including practising lawyers and business people. The Commission has analyzed the extent to which part I of the PECL is applicable to the more important commercial contracts for the provision of goods and services of various kinds and the transfer of rights (for example, license agreements). Although the principles cannot provide the appropriate solution to all the issues that these specific contracts raise, the Commission has found them applicable to the great majority.

15.11  The Commission has made an effort to deal with contractual issues that face business today and may advance trade, especially international trade. However, the principles are not intended to apply exclusively to international transactions.4

II.1  Article 74 CISG and the PECL

15.12  Many comments that were made above in relation to the UNIDROIT Principles are equally applicable here. The PECL were also updated in 1999, and they cover more ground than the UNIDROIT Principles. The PECL have been called on by the European institutions as the centrepiece of the current drive to develop a uniform EU contract law.5 In comparison with the CISG, the PECL display a more detailed approach to the treatment of damages, but the fact remains that the PECL contain matters that are expressly settled in the CISG, matters that are not expressly settled, and matters that are not governed by the CISG. As previously noted, the PECL can be used only as a guide to assist judges and arbitrators to define and interpret the CISG on matters that are not expressly settled within the CISG and are not open to being governed by municipal laws.

15.13  It is of interest to briefly list and discuss matters relating to damages that are governed by the CISG and the PECL. A comparative analysis is a useful indicator of crucial aspects of the CISG; otherwise, the PECL would not have copied what may be termed ‘persuasive principles’. Three principles are contained in both instruments: the right to damages, full compensation, and the foreseeability of losses. The CISG has ‘crammed’ many principles into Article 74, whereas Articles 9.501 to 9.504, 9.509, and 9.510 (a total of six articles) of the PECL are devoted to damages. Article 9.502 of the PECL reiterates the underpinning principle of full compensation contained in Article 74 of the CISG. Article 9.502 states:

(p. 291)

The general measure of damages is such sum as will put the aggrieved party as nearly as possible into the position in which it would have been if the contract had been duly performed. Such damages cover the loss which the aggrieved party has suffered and the gain of which it has been deprived.

As can be seen, the general principle is the same in both instruments: the aggrieved party must be put into the position he would have been in had the contract been properly performed.

15.14  Foreseeability of loss is also recognized by the PECL, in Article 9.503, which states:

The non-performing party is liable only for loss which it foresaw or could reasonably have foreseen at the time of conclusion of the contract as a likely result of its non-performance, unless the non-performance was intentional or grossly negligent.

One point needs to be made: the wording of the CISG applies a wider standard than do the PECL. ‘[A] possible consequence’ of the breach includes more facts than just ‘a likely result’ of its non-performance. It has been argued that the PECL cannot be used as a persuasive authority to interpret Article 74 of the CISG despite the fact that it is expressly settled.6 This argument is not correct; the PECL and the UNIDROIT Principles are used to assist in the interpretation of the CISG only if the matter is unclear. In this case, the issue is not one of being unclear but one of describing damages that fall under the CISG. The CISG simply has a wider standard, and hence the PECL are not an appropriate tool to assist in the interpretation of the CISG in this matter.

15.15  The utility of the PECL undoubtedly is in circumstances where matters that are governed by the CISG but are not expressly settled require clarification.

II.2  Matters Not Expressly Settled in the CISG

15.16  One cause of conflicting views and judgments is the question of whether non-pecuniary losses such as loss of goodwill and reputation are covered by the CISG. This book has argued that goodwill and loss of reputation are contained within the CISG, and hence the PECL are a useful instrument to assist courts and tribunals to come to a considered conclusion. Article 9:501 of the PECL clarifies the point in subsection (2): ‘The loss for which damages are recoverable includes: (a) nonpecuniary loss; and (b) future loss which is reasonably likely to occur’.

15.17  As already stated, the principles of full compensation and foreseeability should indicate to courts and tribunals that non-pecuniary losses must be included into the regime of Article 74 of the CISG. The PECL are certainly of help in this instance.

(p. 292) 15.18  Furthermore, the question of which currency is to be used in the payment of damages is not clearly settled in the CISG, but again foreseeability and full compensation lead courts and tribunals to the view that the currency of the place where the loss has occurred should primarily be applied. This is because the aggrieved party intended to derive his benefits in general at the locality determined as the place of performance. Article 9.510 of the PECL clarifies this point by providing: ‘Damages are to be measured by the currency which most appropriately reflects the aggrieved party’s loss’.

II.3  Measurement of Damages When the Contract Is Avoided

15.19  As far as the rules governing substitute transactions are concerned, both instruments provide substantially the same remedies, though they use slightly different language.7 The advantage of the PECL is that in Article 1.302, the principle of reasonableness, on which many provisions of the CISG are based, including Article 75, is defined as follows:

[R]easonableness is to be judged by what persons acting in good faith and in the same situation as the parties would consider to be reasonable. All relevant factors should be taken into consideration when deciding what is reasonable.8

This definition is useful if the questions of ‘reasonable time’ and ‘reasonable manner,’ as set out in Article 75 CISG, need to be resolved.

15.20  If no substitute transaction has been made pursuant to Article 76 of the CISG, Article 9.507 of the PECL is comparable and is at first glance able to assist in defining unclear terms within Article 76 of the CISG. However, the PECL govern either matters that are not included in the CISG or matters where there is no difference; the two instruments are compatible. The conclusion, therefore, is that the PECL are of little assistance in the interpretation of Article 76.

II.4  Conclusion

15.21  The PECL, like the UNIDROIT Principles, are valuable in assisting courts and tribunals to interpret either words or principles that are not clear within the CISG. Courts and tribunals ought to take notice of the fact that the PECL are regarded by the European institutions as the centrepiece of the current drive to develop a uniform EU contract law. From a practical point of view, it can be argued that in cases of uncertainty of interpretation, both instruments ought to be consulted.

(p. 293) 15.22  It is important that the mandate in Article 7 of the CISG, the interpretation ladder, is followed. If the CISG is clear, then the PECL and the UNIDROIT Principles are not to be consulted. The same applies if a matter is expressly excluded by the CISG or a gap exists that cannot be filled by recourse to general principles. There are arguments, mainly in arbitration, that either principle can be applied if no particular domestic law governs the contract.

15.23  The conclusion is that both sets of principles have a role in interpretation of the CISG when assistance is required in unclear matters that are still governed by the CISG. Using the principles to assist in interpretation of the CISG is preferable to any other form of assistance; both sets of principles are related to the CISG, as they used the convention as their foundation and had the advantage of understanding shortcomings or deliberate exclusion of matters from the sphere of application of the CISG.

III.  Regional Developments

15.24  It has never been argued that the CISG is the perfect product in the harmonization process. As Professor Kronke noted:

most of us would agree by and large that there are ‘open,’ deliberate gaps and—defying, much to the wonderment on the part of some professional commentators, logic—‘hidden’ gaps, in Professor Loewe’s metaphoric language absent Yetis and virtual Loch Ness monsters, lack of clarity or disclosed or undisclosed compromises, as they are regularly generated in complex intergovernmental negotiations.9

These observations are indeed true but equally correct are Eiselen’s observations:

The CISG has one major advantage over most other instruments of international harmonisation: the functioning of the principle of party autonomy. It is one of the underlying principles of the CISG, as of most national laws, that in matters of contract the parties are autonomous in realising the relationships between them and that there is relatively little mandatory law that cannot be changed, modified or excluded by the parties themselves. This allows parties to bypass or exclude the CISG where its provisions are inapposite to their situation and to structure their own solutions, that is if the parties are even aware that the CISG may be applicable.10

Simply put the question again can be posed namely why change a flexible instrument when it is not needed? Just because the CISG is incomplete is not a negative argument because the gaps can be filled by either drafting the contract (p. 294) to overcome the gaps or simply relying on the underlying law in the relevant seat or jurisdiction.

15.25  One fact is obvious that if any changes are made to the CISG two instruments would in effect be in operation. The question is—and it has not been tested—how many current CISG states would abandon the ‘old’ version for the new one? The closest one can answer this question is by simply looking at maritime law where several versions are currently operational namely the Hague Rules, the Amended Hague Rules, the Hamburg Rules and now the Rotterdam Rules. It is very unlikely that eventually only one rule would be in use as every new rule appears to have declining accession rates.

15.26  In addition, it is worthwhile to remember that the UNCITRAL Electronic Commerce Convention of 2005 was intended to amend the CISG ‘but quickly morphed into a free-standing instrument because of the fear of reopening the CISG’.11 As already noted in a previous chapter and aptly put by Herbert Kronke is the fact that:

What we see looking at the two instruments – the CISG as the mother of all modern conventions on the law of specific contracts and the UPICC as the (inevitably) soft-law source of modern general contract law – are neither competitors nor apples and pears. What we see is actually, and even more, potentially, a fruitful coexistence … [T]he UNIDROIT Contract Principles are, obviously, complementary in that they address a wide range of topics of general contract law which neither the CISG nor any other existing or future convention devoted to a specific type of transaction would ever venture to touch upon.12

Hence it is obvious that the astute drafter of a contract has the ability—due to the principle of party autonomy—to fill the gaps in the CISG either through the UNIDROIT Principles or at least as a default position leave it to the otherwise applicable domestic law.

15.27  In sum, two points are of interest. First; topics which are not governed in the CISG or any other convention are not included for a very good reason. To reach consensus is difficult and requires patience and a lot of time which is better spent on other more pressing issues such as cross border insolvency. Secondly, the most important point is that the two instruments such as the CISG and the UNIDROIT Principles are complementary. It would indeed be a waste of time and scarce resources for UNCITRAL to reinvent contract law and attempt to draft a new convention as indicated by the Swiss proposal.13 The efforts in the EU in drafting a common European Contract law should be a lesson to be learned.

(p. 295) III.1  Regional Harmonization Attempts

15.28  In relation to regional developments there is no debate that a harmonized contract law within a region is of benefit to inter- and intra-state trade to and in the region. This goal can be achieved if a region simply adopts the CISG, as is currently the case in East Asia but unfortunately not in the ASEAN region with the exception of Vietnam.

15.29  Attempts were made to develop a unique Asian contract law which did not come to fruition. The main argument was that there is not enough difference or uniqueness in a region to warrant the creation of a regional contract law. Bell argued that:

There is no good reason to consider a regional harmonisation of the laws of sale of Asia but many good reasons why the CISG should be adopted more widely in Asia. My main hope is that through the adoption of the CISG and of other international commercial law treaties, an international practice of commercial law will be developed in Asia by Asian lawyers and that lawyers here will soon acquire the international and comparative law expertise that will allow us to compete better with American and European practitioners of international commercial law.14

The second point which needs to be considered when envisaging the creation of a regional harmonized contract law is the question of coexistence between the CISG and the otherwise applicable regional law. If the regional law is drafted as a model law, its existence depends on parties’ incorporation it as part of their contractual obligations. This option—looking back at all contract model laws—appears not to provide much confidence because none of the contract model laws except the UNIDROIT Principles has achieved much success.

15.30  The question must be asked; what is the advantage in facilitating a development of a new principle such as the principles of Asian contract law15 when every member of the region already has ratified the CISG? The problem is obvious namely how the new system of contract law will sit next to the CISG which is already part of the domestic system. In effect, such a law will only produce a soft law as noted above and, again, looking at the efforts of the EU, will never gain traction. After all, why create a problem where none existed before?16

(p. 296) 15.31  The alternative to adopting the CISG because of regional concerns is to develop a home-grown system such as in the OHADA group of nations. However, even such a development could not completely free itself form the influences of the CISG.

15.32  The OHADA contract law took the form of a treaty between the participating nations and as a result a supranational court was introduced. The problem is that within each state the domestic system of laws still is valid but international and interstate issues are subject to the harmonized law. The bedding in process has taken some time to come to fruition but there are now signs that it is working. Domestic courts are referring treaty issues to the supranational court.17

15.33  However, in OHADA the coexistence with the CISG is an issue. It has been argued that in a country where Art. 95 CISG applies; regional sales law can govern the contract.18 Generally speaking, the effect is that the regional contract law will displace the CISG. In all other cases, the CISG will displace the regional contract law. However, OHADA has resolved this issue positively through the enactment of the Uniform Acts. Juana Coetzee and Mustaqeem de Gama argue:

To date only Guinea is party to both the CISG and a member of OHADA. What would therefore be the governing law in a situation where the seller is situated in Guinea and the buyer is established outside the OHADA region? Accordingly, to Basedow, both instruments might be applicable, however under Art. 10 of the basic OHADA Treaty, the Uniform Act overrides previous or subsequent enactments of internal law. Art. 10 of the OHADA Treaty explicitly states that a uniform law adopted pursuant to the OHADA Treaty is directly and mandatorily applicable in the member states.

The adoption of a uniform law is a relinquishment of sovereignty by the member states contemplated by the OHADA Treaty. But it is not clear whether this provision also purports to deal with conflicts between uniform acts and other international conventions or laws to which an OHADA contracting state is a subject. It is arguably open to the OHADA Common Court of Justice and Arbitration to find that the Uniform Acts, under Art. 10 of the basic OHADA Treaty, take priority over other international conventions.

If the Uniform Acts do not take precedence over international conventions, the conflict would be resolved with reference to the traditional manner in which conflicts between conventions are resolved.19

The real question is: will a region such as ASEAN find enough common ground not only to form a contract treaty but also establish a supranational court as in OHADA? Just simply ratifying the CISG seems to be a far easier solution to (p. 297) harmonize a regional sales law. The view of the CISG Advisory Council on this issue is very pertinent. It notes that:

A key attribute of uniformity and harmonization is also simplicity. Increasing legal plurality detracts from that virtue and introduces fragmentation, which is the very thing that uniformity and harmonization seek to avoid.20

In relation to regional developments the view of the Council is the same:

[t]he likelihood that regional initiatives would not produce better solutions and, moreover, that those solutions would not have been subject to the same searching inquiry, from delegates drawn from many different countries, as occurred in the case of the CISG. So far as it varies work already done in the area of sales law covered by the CISG, however, it does not promote the cause of harmonization. States may become entrenched behind regional instruments at the expense of participating in the work of increasing harmonization of global contract law that has yet to be done to carry forward the achievements of the CISG.21

There are emerging regional groups such as the ASEAN and SADC22 where the CISG has not yet been extensively adopted. This is very fertile ground for UNCITRAL to develop relationships in order to promote a regional harmonized contract law either in the form of ratification of the CISG or at least the use of the CISG as the model for a home-grown system of law reform. This proposal would fit into what is now called the third phase of legal harmonization, namely ‘the dawn of inter-regionalism’.23 It is, however, unfortunate that in the end the bureaucratic structure of a country will determine whether the introduction of the CISG is a priority. In 1999, with the assistance of UNCITRAL, Eiselen made a strong case for the adoption of the CISG in South Africa.24 As of 2016 South Africa has not yet adopted the CISG nor has it found much traction in SADC.

III.2  Why Gaps in the CISG Must Still Be Left to Domestic Law

15.34  The starting point on this issue must be the fact that ‘legal harmonisation can only be attained by standardising legal terms’.25 The success of the CISG is a result of having been able to standardise not only legal terms but also principles. However, (p. 298) due to the political aspect in the drafting process standardization was not possible on all aspects. Arguably, therefore, gaps are the exception to the rule as otherwise the ‘birth’ of the CISG would have been in doubt.

15.35  Simply put, issues such as validity of contract and transfer of property were and are still considered to be ‘sacred cows’ in many legal systems and hence consensus of a uniform rule on these issues is difficult but not impossible to achieve. To preserve national sovereignty, compromises were not reached in a number of areas which are covered in national law regimes.26 In essence the question is: what has changed and would a new system that is a comprehensive sales law—or contract law for that matter—overcome the problems as experienced in the drafting process of the CISG?

15.36  The answer is that simply nothing has changed, or at least is unlikely to change. One need only look at the reasons why there are gaps in the CISG and arguably the same reasons are still present. However, a solution lies within each jurisdiction when any law reforms are undertaken, that is uniformity is achievable when each of the major legal systems modernizes its domestic law by taking note of the UNIDROIT Principles and the CISG, as was the case recently when Germany reformed aspects of the German law of obligations.

15.37  Some authors, on the other hand, have advocated that the road to a comprehensive sales law is by developing a Restatement of Sales law or what is termed a ‘CISG plus’ document by stating:27

[Developing a Restatement] is the next logical step in developing a more comprehensive international sales law. This is especially true given the unlikelihood of a formal revision of the CISG or the adoption of a broader international contract or commercial code in the near future.28

The problem with this argument is that it does not present anything new. It is—as one might say—simply changing the deckchairs on the Titanic. The efforts in the EU indicate which way such a proposal will go namely to be put on a shelf and gathering dust. The UNIDROIT Principles is the only model law which has gained some traction and is still the best option to fill gaps and coexist with the CISG. It is argued that the inclusion of the model clause incorporating the Principles into the CISG could be the solution. It requires minimal effort, it is not costly, and represents at least the same chance to succeed than any other model laws or restatements. Simply put, the model clause should merge the CISG and the UNIDROIT Principles, as already discussed in another chapter, with the purpose of filling the gaps in the CISG.

(p. 299) 15.38  However, on a realistic note it is argued that domestic reforms either through the judiciary or in the form of statutory changes will or can be the prime mover in this area. The best example—as already noted above—is the exemption clauses in shipping contracts—the Himalaya clause—which has achieved uniformity of interpretation and application. The courts and arbitral tribunals of England, the USA, Australia, Germany, South Africa, Singapore, and Hong Kong— to mention but a few—follow the same application and interpretation of the Himalaya clauses. Considering that the listed countries are common law, civil law, and mixed jurisdictions, what might look at the beginning as impossible turns out to be achievable. Considering that the privity of contract rule was amended to accommodate the inclusion of a third party into the benefits of a contract would have been unthinkable in the past. The interpretation of shipping contracts has also changed and is dominated by what makes commercial sense and what the parties customarily expected—that is subjective knowledge—was assumed. Especially in cases of the common law it is a step away from the restrictive parol evidence rule and a move closer to what Article 8 of the CISG mandates.

IV.  Concluding Argument

15.39  The question is what can UNCITRAL do in this area? It is argued that the efforts should be on a promotional basis such as the hosting of conferences such as the UNCITRAL days where information is shared and hopefully academics will endeavour to research into the possibility of crating uniformity in areas not covered by the CISG but within the mandate of uniformity within the CISG. The judiciary and legal firms will be challenged in their old views and ‘it might be worthwhile to consider, in addition to the endorsement by UNCITRAL, further measures in order to encourage judges and arbitrators to use the UNIDROIT Principles whenever appropriated’29 to close the gaps left in the CISG. The ‘whenever appropriate’ is indeed the correct approach as there are views that the UNIDROIT Principles should not be used of their own force to fill gaps left in the CISG.30 Gotanda argued correctly that:

[The Principles] help us understand the general principles of the CISG that guide courts and tribunals in resolving matters not expressly dealt with in the convention. In addition, they provide support for solutions to open issues reached through an analysis of the Convention itself.31

(p. 300) In sum, Gotanda correctly notes that the Principles ‘can play a role in finding solutions to questions unresolved by the text of the Convention’.32

15.40  There is also a further point which must be considered. It is one thing to ratify the CISG by a country within a region, but the real success lies in its application. Looking at countries who ratified the CISG such as China, the United States and Australia—just to mention a few—it took nearly twenty years or more for the judiciary, business and the legal profession to understand the function of the CISG and appreciate its scope and advantage in reducing not only contract costs but avoid the need to understand a foreign law. With the speed of introducing FTA’s the luxury of slowly introducing the CISG into a legal system has disappeared. Competition in a shifting global economy indicates that changes need to be bedded down quickly.

15.41  It is obvious—as indicated above already—that regional harmonization cannot waste time to develop—as an example—a unique ASEAN contract law. The problem is that it might suit ASEAN but it will not advance their aspiration to develop their economy within the global network. Adopting the CISG is a better option and it must be remembered that the wheel has already been invented. This has been done by the CISG and the UNIDROIT Principles. Interestingly, Schlechtriem noted the obvious strength of the CISG when regional harmonization is the focal point of discussion. He stated:

The CISG has left its imprint on a number of international projects for the unification or harmonisation of rules in the field of commercial and general contract law. Basic concepts of the CISG have influenced the development of international or regional projects of unification and harmonisation on two levels. Firstly, the prerequisites for application in its Articles 1–7 have repeatedly been used as a model. Secondly, its substantive law provisions on the contractual relations of the parties to an exchange contract in general and its provisions concerning sales contracts in particular had a noticeable influence on such projects.33

In the end, after all is said and done the real issue, however, is the application of the CISG. Its uptake by the business community and more to the point the legal profession is essential. Arguably UNCITRAL could encourage governments and legal professional bodies to invite academics familiar with the CISG to conduct professional development seminars. It certainly would facilitate and speed up the uptake of the CISG in particular through other instruments devised by UNCITRAL.


1  José Angelo Estella Faria, ‘Future Directions of Legal Harmonisation and Law Reform: Stormy Seas or Prosperous Voyage?’ (2009) 14(21) Uniform Law Review 5, 7, 11.

2  S Eiselen, ‘Adopting the Vienna Sales Convention: Reflections Eight Years down the Line’ (2007) 19 SA Mercantile Law Journal 14, 25.

3  This part relies heavily on, and has drawn in parts directly from, the website of the Commission on European Contract Law http://frontpage.cbs.dk/law/commission_on_european_contract_law/.

5  F Blasé and P Höttler, ‘Remarks on the Damages Provisions in the CISG (Article 74), Principles of European Contract Law and UNIDROIT Principles’ in J Felemegas (ed), An International Approach to the Interpretation of the United Nations Convention on Contracts for the International Sale of Goods (1980) as Uniform Sales Law(Cambridge University Press 2007) 468.

6  ibid 469.

7  B Borisova, ‘Remarks on the Manner in Which the Principles of European Contract Law May be Used to Interpret or Supplement Article 75 of the CISG’ in J Felemegas (ed), An International Approach to the Interpretation of the United Nations Convention on Contracts for the International Sale of Goods (1980) as Uniform Sales Law (Cambridge University Press 2007) 478.

8  ibid 479.

9  Herbert Kronke, ‘The UN Sales Convention, the UNIDROIT Contract Principles and the Way Beyond’ (2005–2006) 25 Journal of Law and Commerce 451, 453.

10  Sieg Eiselen, ‘Adopting the Vienna Sales Convention: Reflections Eight Years down the Line’ (2007) 19 SA Mercantile Law Journal 14, 17.

11  Henry Gabriel, ‘UNIDROIT Principles as a Source for Global Sales Law’ (2013) 58 Villanova Law Review 665.

12  Herbert Kronke, ‘The UN Sales Convention, the UNIDROIT Contract Principles and the Way Beyond’ (1995) 25 Journal of Law & Commerce 451, 458–59.

13  United Nations Commission on International Trade Law, ‘Possible Future Work in the Area of International Contract Law’, UN Doc A/CN.9/758 (8 May 2012).

14  Gary Bell, ‘Harmonisation of Contract Law in Asia—Harmonising Regionally or Adopting Global Harmonisations—The Example of the CISG’ (2005) Singapore Journal of Legal Studies 362, 372.

15  See Shiyuan Han, ‘Principles of Asian Contract Law: An Endeavour of Regional Harmonisation of Contract Law in East Asia’ (2013) 58 Villanova Law Review 589.

16  For further reading see B Zeller ‘Recent Developments of the CISG: Are Regional Developments the Answer to Harmonisation?’ (2014) 18(1) Vindobona Journal of International Commercial Law and Arbitration 111; B Zeller, ‘Regional Harmonisation of Contract Law—Is It Feasible?’ (2016) 3 Journal of Law, Society and Development 85.

17  See B Zeller ‘Mining Projects in OHADA: The Legal and Judicial Climate’ in Gabriel Moens and Philip Evans (eds), Arbitration and Dispute Resolution in the Resources Sector: An Australian Perspective (Springer 2015) ch 12.

18  J Coetzee and M de Gama, ‘Harmonisation of Sales Law: An International and Regional Perspective’ (2006) 10 Vindobona Journal of International Commercial law and Arbitration 15, 20.

19  ibid 23–24.

20  CISG Advisory Council Declaration No 1 http://www.cisg.law.pace.edu/cisg/CISG-AC-dec1.html.

21  ibid.

22  The Member States of the Southern African Development Community are Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, United Republic of Tanzania, Zambia, and Zimbabwe; SADC headquarters are located in Gaborone, Botswana. Only Lesotho and Zambia have ratified the CISG.

23  Estella Faria (n 1) 7.

24  S Eiselen, ‘Adoption of the Vienna Convention for the International Sale of Goods (the CISG) in South Africa’ (1999) 116 South African Law Journal 323 http://www.cisg.law.pace.edu/cisg/biblio/eiselen.html.

25  Viola Heutger, ‘Global Jurist Topics’ (2003) 3(1) The Berkeley Electronic Press 2.

26  Larry DiMatteo, ‘CISG as Basis of a Comprehensive International Sales Law’ (2013) 58 Villanova Law Review 691.

27  ibid 711.

28  ibid.

29  Jan Ramberg, ‘CISG and UPICC as the Basis for an International Convection on International Commercial Contracts’ (2013) 58 Villanova Law Review 690.

30  John Gotanda, ‘Using the UNIDROIT Principles to Fill Gaps in the CISG’ in D Saidov and R Cannington (eds), Contract Damages, Domestic and International Perspectives (Hart Publishing 2008) 107, 108.

31  ibid 109.

32  ibid 122.

33  P Schlechtriem, ‘Basic Structures and General Concepts of the CISG as Models for a Harmonisation of the Law of Obligations’ (2005) 10 Juridica International 27, 28.