The suitability of the CISG for adoption into English Law

The United Nations Convention on Contracts for the Interna- tional Sale of Goods (“CISG”) was signed on 11th April 1980 in Vienna. More than 70 countries have ratified it, what makes it suc- cessful international document [1]. This was considered as an effort to unify international sales rules, to remove economical and legal differences and to “promote the development of international trade” [1, Preamble].

Although the CISG was adopted by economically strong nations, like the USA, China, Germany and France, the United Kingdom still has not ratified the Convention. Moreover, not adopting of the Convention was surprising and unexpected if consider the fact that England was one of the actively involved country in process of drafting and negotiating of the CISG [2, p.168].These facts could cause reasonable questions as to the reasons for that. It could be inquired if it is suitable for England’s common law to assume the international document. The possible answer should be that it is not appropriate to ratify the CISG. This paper tries to examine this opinion.

However, a view formed about such reality should be based on facts and knowledge and from point of view of supporters and opponents. The former may consider that English law cannot ignore reality. Those represent the CISG as a widespread Convention, which already has an impact on legal practice and science in England. The latter could argue that: the CISG does not cover many areas; enforcement of some parts of the Convention could be problematic under current common law established in England; ratification of the CISG does not guarantee uniformity; the CISG has rules which are unfamiliar with the common law.

Nowadays, the CISG is a ratified legal document in countries, where the UK is importing its goods. This fact might mean that English lawyers have to deal with the CISG  and  possibly will often deal with the Convention in the future. English law could not anymore ignore reality. Practitioners should be able to enforce it and be aware of pitfalls. The increased internalization of the world, in which the UK is heavily involved, means that the UK traders will deal with even more international contracts, involving parties, based in the countries that ratified the CISG. Thus, as difficult as it may be for them already having two legal systems, regulating each party, it will obviously get even tougher, as the will rely on international trade even heavier. Thus, the UK might make it easier for them, as the implementation of the CISG will mean that both parties are regulated by the same law, and both parties will be treated equally and will be equally aware of any penalties or remedies available to them.

On the one hand, the CISG has an impact on national law, which could not be disregarded. As a result, it may be object of future legal researches in England [3, p.1]. Although these facts do not mean that present time is suitable for ratification of the Convention, those may be considered as preparation, which will probably make adoption of the CISG necessity.

On the other hand, there are probably strong arguments, which support the view that it is not appropriate time for ratification of the CISG.

Firstly, the CISG does  not  regulate  some areas and those should be  covered  by  national law. Furthermore, according to the CISG parties can exclude the applicability  of  the  Convention [1, Article 6]. This means that it may be futile to adopt something that only covers  a  small  field. For example, the CISG does not deal with the commodities. It is ‘less suitable to commodity sales than the English Sale of Goods Act’ [4, p.151].

Secondly, in 1980 The Law Reform Committee of the Law Society of England and Wales advised non-adoption of the CISG for two reasons: firstly, there were distinctions between the  Convention and English law. Those could disrupt historically developed process of solving disputes in England. Secondly, English could lose its international status [5, p.57].

Adoption of the CISG could cause problems for several reasons. For example, article 16(2)(a) may be of concern [1, Article 16(2)(a)]. Under English law offer cannot be revocable, if it was supported by consideration and ‘the promise not to revoke must be expressed as such’ [5, p.61]. Another example, articles 25 and 49 ‘indicate that a fundamental breach is a precondition for avoidance of contract, whereas according to the English Sale of Goods Act, any non-conformity would be considered as a breach of condition (the so-called perfect tender rule) and thus a ground for termination of the contract’ [4, p.152]. Those and other possible differences could cause unnecessary problems and necessary declarations and reservations.

Another danger is that the CISG ‘contains hidden complexities which can easily lead  to errors’ [6, p.249]. For example, Article 100 [1, Article 100]. Court could wrongly refer to    Article 100(2), whilst it should make reference to Article 100(1). The similar situation happened in case named “FilantoS.p.A. v. Chilewich International Corp”. “Filanto also demonstrates  the importance of measured and cautious interpretation of the Convention by courts. Careless and unnecessarily broad discussion of CISG can result in erroneous and misleading precedent” [6, p.260].

Thirdly, there is a probably arguable opinion that ratification of the CISG could be a  step towards uniformity. Article 7 of the CISG provides that in its application the Convention should be interpreted considering its ‘international character’ and ‘the need to promote uniformity’. The former means that the CISG ‘demands that its terms and concepts be interpreted autonomously’ [8, p.251], whilst uniformity of application signify that ‘it should applied in a  uniform  manner  throughout the Contracting  states’  [9,  p.73].  According  to the Article, the English lawyers  should ‘consider not only domestic case law  applying  the  CISG and domestic commentaries on the CISG but also foreign decisions and writings from foreign authors’ [9, p.73]. ‘The difficulty with these provisions is that they do not say anything about the ways and means of achieving uniformity, nor do they acknowledge the fact that the general principles that one draws from CISG will often depend on one’s legal education and experience’ [10, p.21].

One possible reason is interpretation. For instance, ‘the traditional approach of statutory interpretation applied by English courts is different from the approach used in civil law jurisdictions’ [4,  p.154].  Lawyers  and  practitioners  should learn ‘the compromise nature of the CISG… Undoubtedly, court systems will gradually “mold” majority interpretations of CISG’s provisions. The persons who will be impacted by these (sometimes unfavorable) compromise interpretations are practitioners and their clients’ [10, p.24]. Thus, raising the obvious question of whether the CISG should be adopted for the reasons of uniformity, if the existence of the uniformity is doubtful.

Finally, possibly main reason is that the CISG ‘has rules foreign to… the common law’ [11, p.230]. John Murray has opinion that ‘we are struck by a new world where there is no consideration, no statute of frauds, and no parol evidence rule, among other differences’ [12, p.2]. Monica Kilian’s words support this argument, ‘Common law goes out its way to exclude CISG… the unwillingness of common law judges to apply CISG… It is perhaps significant that the United Kingdom, the cradle of common law, is not a contracting state’ [11, p.233].

At the present time the government of the United Kingdom does not believe that the CISG  is a primary concern that is why they delay adoption. Furthermore, some economically dominant and powerful organizations are against implementation of the CISG. Moreover, businesses do not support ratification, as they are content with the current common law in the country [13, p.483].

However,  English  law  could  not  disregard the CISG, as it is a ratified legal document in a large number of countries. Non-ratification of the Convention could be unfortunate to English legal system, whilst trading partners would practice solving issues rose under the CISG. Moreover, supporters of ratification believe that after implementation of the CISG  British  companies can rely on the Convention and do not bother their heads with choice of law.

These could be argued by next  arguments. First, the CISG could not regulate some areas, which are left to be covered by domestic law. It might be pointless to implement such Convention. Second, the present law is well structured and is satisfactory in the regulation of the market, whilst the implementation of the CISG could bring havoc to the system, associated not only  with  the new law and changes to the system  being introduced and the adaptation period required, but with the CISG possibly being inferior to the current system. Another argument may be that the current legal system was developing for centuries and takes into account most of the customs and problems of the English trade, thus, any changes to the system may have unpredictable consequences. For example, implementation of the CISG could increase number of disputes [13, p.483]. Moreover,  ratification of the CISG could not support uniformity. Finally, the CISG has regulations, which are foreign to common law.

In conclusion, arguments mainly support the view, which states that at the present time it is not suitable for English law to adopt the CISG.

References 

1. The United Nations Convention on Contracts for the International Sale of Goods (adopted 11 April 1980) available at http://uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG_status.html
2. Bruno Zeller, ‘A Historical Perspective, The Development of Uniform Laws’ (2002) 14 Pace Int’l Rev. 163
3. Filip De Ly, ‘Sources of International Sales Law: An Eclectic Model’ (2005-2006) Issue 1 25 J.L. &
4. Nathalie Hofmann, ‘Interpretation Rules and Good Faith as Obstacles to the UK’s Ratification of the CISG and to the Har- monization of Contract Law in Europe’ (2010) 22 Pace Int’l L. 145
5. Angelo Forte, ‘The United Nations Convention on Contracts for the International Sale of Goods: Reason and Unreason in the United Kingdom’ (1996-1997) 26 U. Balt. L. 51
6. Ronald Brand and Harry Flechtner, ‘Arbitration and Contract Formation in International Trade: First Interpretations of The U.N. Sales Convention’ (1992-1993) 12 Journal of Law and Commerce 239
7. http://www.cisg.law.pace.edu/cases/920414u1.html
8. Bruno Zeller, ‘The Black Hole: Where are the Four Corners of the CISG?’ (2002) 7 Int’l.Trade & L. Ann. 251
9. Camilla B. Andersen and others, A Practitioner’s Guide To The CISG (JURIS 2010)
10. Paul Amato, ‘UN Convention on Contracts for the International Sale of Goods – The Open Price Term and Uniform Applica- tion: An Early Interpretation by the Hungarian Courts’ (1993-1994) 13 J.L. & Com. 1
11. Monica Kilian, ‘CISG and the Problem with Common Law Jurisdictions’ (2000-2001) 10 J. Transnat’l L. &Pol’y 217
12. John Murray, Jr., ‘An Essay on the Formation of Contracts and Related Matters under the United Nations Convention on Contracts for the International Sale of Goods’ (1988) 8 J.L. & Com. 11
13. Sally Moss, ‘Why the United Kingdom Has Not Ratified the CISG’ (2005-2006) 25 J.L. & Com. 483