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International Sale of Goods Outline Uniform law – must be identical or substantially similar texts that are intended to be interpreted in the same way in multiple jurisdictions. This is international law and will not replace domestic law. How do you create uniformity? Treaties/conventions – high degree of uniformity because you ratify it all or nothing (somewhat misleading due to the ability to create reservations in the treaty itself). Model Law – This has less uniformity because of the ability of all parties to change the rules. Guides – these are basically textbooks. Standard forms – this is good for companies that do business in multiple jurisdictions to be consistent, but it doesn’t create uniformity between countries and their laws. Specialized court – this is hard to do because of the language barriers, and the lack of a hierarchy between countries and their courts. Availability of different court decisions – see website sections below Digest – Uncitral has begun preparation of this. The English version is finished but the other 5 languages are not finished. Again there is no hierarchy between the countries or between arbitrators that see these issues every day as opposed to courts that see them rarely. Also the digest only has summaries of cases, no commentary on their correctness and no comment on articles that currently have not been litigated. How do you benefit from uniformity? It lowers the chances for unknown results. However, it is only beneficial if the parties involved know of the uniform rules and be able to predict results. Some claim uniform rules help to lessen forum shopping. Ferrari says this is nonsense (the CISG doesn’t always apply, the parties can contract out of it, the courts don’t necessarily use the same interpretations, the procedures and evidence rules in each court are different, the CISG has some gaps that will be filled by different laws, private international law is different, the language of the forum may be different, time to complete a case, enforcement of judgments of foreign courts). Forum shopping is “hated by bad lawyers because a good lawyer can change the outcome to be in favor of his client”. Uniform interpretation Art. 7(1)1 – The US has a tendency to interpret uniform laws by looking at our domestic approaches. This is exactly what you should not do. There is one US case, Chicago Prime (May 2004) that looks to foreign cases in order to decide a case based on the law of the CISG. Divergences are not always a bad thing. Official measures to create uniformity are things that Uncitral does. The websites by Pace and unilex are unofficial ways to create uniformity. Right now, there is no uniformity, and this is more dangerous than divergence because there is only an appearance of uniformity 1 Must take into account foreign decisions when deciding a case under the CISG. when that uniformity is really lacking. Foreign case law cannot be binding. In fact, a line of cases decided the same way, could be lacking in some form and need to be changed. Websites that are useful in looking up foreign cases in order to promote uniform interpretation: CLOUT – Uncitral – This is a network of international governments. Each government has a person compile cases on the Uncitral texts. All of the cases in this site have abstracts in all 6 languages of the UN. However, there are not as many cases on this website as on the other websites. Only about 380 cases involving the CISG. Unilex (www.unilex.info) – There are about 500 cases on the CISG at this website. The abstracts are only in English. The full texts are sometimes available in the original language. This also deals with Unidroit. Unidroit are principles and are NOT law. Pace University – this is the best of the websites. It has 1,302 arbitration and court decisions. You can search by country, year, article, word, and author, click on links to other website’s summaries, find biographies of law review articles and books, and search in different languages. This has a full text of decisions and articles. 540 of the cases have been translated into English. It has an annotated version of the articles included Secretariat commentary and history of the provision. CISG is not mandatory law. The parties can contract out of it. If you are considering opting out of the CISG, you need to look at your party and what is best for him. Art. 74 – Limit Art. 78 – Interest Art. 39 - Notice Damages to begins to run as soon of lack of Foreseeable Damages as payment is due conformity within (notice not necessary) reasonable time Good Seller Do not want to limit Want to have this Want to have a possible recovery provision definite and shorter period. Bad Seller Want to have this Want to have this Want to have a provision provision shorter period. Good Buyer Do not want to limit Do not want this Still want a possible recovery provision. definite time, but reasonable is longer than some rules. Bad Buyer Want to have this Do not want this Still want a provision provision definite time, but reasonable is longer than some rules. Hague convention of 1964 – The only country with this still in effect is England, but England has a reservation that this will apply when both parties are contracting states. Since England is the only contracting state, 1964 Hague will never apply after 2002. If England is on the exam, as a forum, run through the Hague convention applicability and come to conclusion of which law would apply stating the reservation is what makes the Hague convention not apply. To put this into effect you need to ratify the convention and to introduce it into the domestic laws of the contracting state. There were only 9 countries that ratified this. Internationality here is different than internationality under the CISG. Here internationality is parties who have places of business in different countries and one of the following: 1. Goods cross the border of a country (de facto crossing isn’t enough, need to have intent at the time of the contract for a border crossing) 2. Offer and acceptance occurred in different countries 3. Conclusion of the contract (formation) and performance of the contract are in different countries Under Hague, if the contract was international, then the Hague convention applied. Citizenship is IRRELEVANT. US and France didn’t ratify because of the fear of imperialism. However, the only way Hague could apply to two international parties that did not contract to it, was if the forum was a contracting state. CISG (Went into affect January of 1988) Internationality of the CISG is based solely on two parties having their place of business in different countries. This definition of internationality is both too broad and too narrow. Two problems with this definition of internationality are that party (intermediaries) and place of business (multiple locations of the same corporation) are not defined. Does the CISG apply? 1. Is the forum a contracting state at the time the proceedings start2? If yes, go to 2. If no, go to private international law (conflicts of laws) of the forum. 2. Does the convention have its own applicability rules? If so, apply them because they are more specific then the private international law. In addition, if private international law is used, then there is a two step process: 1) use private international law to determine which country’s law will apply, and 2) find the substantive law of that country and apply it. With a convention, the applicability of the convention automatically gives the substantive rules to apply. 3. Is the contract international under the substantive convention (CISG places of business)? If no, go to private international law. If yes, go to 4. 2 A state that took the art. 92 reservation is a contracting state if it is the forum. When you look to art. 95 reservation states, they are contracting states. If a contracting state with art. 95 reservation is the forum and art. 1(1)(a) is not met, then look to privation international law and that will be the reason the CISG is applied. 1(1)(b) CANNOT be the reason for the CISG to apply if the forum is a contracting state with an art. 95 reservation. 4. Was there a reliance on domestic transaction? If yes, internationality under CISG is disregarded; go to private international law. If no, go to 5. 5. Is there an intermediary? If yes, go to 6. If no, go to 7. 6. Was the intermediary disclosed? If yes, the intermediary is probably not a party under private international law; go to 7. If no, the intermediary may be a party go to 7. 7. Where is the party’s place of business (durability, stability, autonomous power – place of business; art. 10 – closest connection to contract)? No matter your answer go to 8. 8. Are the parties both from contracting states before and at the time of formation3? If yes to both, the convention will apply under 1(1)(a). If no to “before the formation” but yes to “after the formation”, use CISG parts I, III, and IV but private international law for rules of formation. If no to both, go to private international law. 9. What do the private international rules of the forum say? If country ratified the Rome convention only (Austria, Belgium, Germany, Netherlands, Spain, England and Portugal), go to 10. If the country ratified the Hague 55 and the Rome convention (France and Italy)4 or only the Hague 55 convention (Switzerland), go to 10. If the country has not ratified either, assume the choice of parties would be applied, or if no choice was made, the law of the seller. 10. Did the parties choose a law? If yes, under Rome convention art. 3 OR under Hague convention art. 2, the choice of law will be respected. If no, under Rome convention, go to 11. If no under Hague 55 convention, go to 13. 11. What is the law most closely connected to the contract (art. 4(1))? Art. 4(2) says the law must closely connected is presumed to be the law of the place of business of the party who has to effect the characteristic performance5. Go to 12 regardless of your answer. 12. Is the presumption rebutted? If no, use the law of the country identified in 11. If yes, use the law of the country that is most closely connected to the contract. 13. Did the seller accept the buyer’s order in the buyer’s country? If no, Hague 55 art. 3(1) applies and the general rule is law of the seller will be used. If yes, Hague 55 art. 3(2) applies. Art. 3(2) is the exception and will allow the law of the buyer to apply. Art. 1(1) – Internationality is when parties have places of business in different states. Art. 1(1)(a) – The convention will apply when both parties are from contracting states. Art. 1(1)(b) – the convention will apply when the rules of private international law lead to the application of the law of a contracting state. 3 Countries that made art. 92 reservations are contracting states to parts I, III, and IV. But, they are non- contracting states as to part II. Countries that made art. 95 reservations are contracting states fully. 4 The Rome convention is more general than the Hague 55 convention. The drafters of the Rome convention included art. 21, which says the Rome convention will not apply when there are other conventions in force, if the other convention is more specific. 5 Paying money is usually not the characteristic performance. Art. 1(2) – If it is unknown from the contract, dealings between the parties, or information disclosed that the parties are from different countries, then internationality is to be disregarded. Art. 1(3) – citizenship is irrelevant. Art. 5 – death or personal injury caused by a good is not covered by the CISG. Art. 8 – parties must act reasonably in dealing, understanding of communication, etc. Art. 10 – Place of business will be the place with the closest relationship to the contract and the performance. If no place of business, then habitual residence. Art. 90 – conflicts of conventions provision gives way to regional unification efforts. Art. 92 – A party can opt out of part II (formation of the contract) or part III (nonperformance) of the convention. (Sweden, Finland, Norway, Denmark used this reservation to avoid Part II of CISG). For this reservation, the countries are treated as non-contracting states as to part II of the CISG. Art. 94 – this allows countries with similar laws in a region to use their law instead of the CISG to decide cases. (Sweden, Norway, Finland Denmark) Art. 95 – reservation that allows countries to not apply art. 1(1)(b). (United States, and China)6 6 For this reservation, BE CAREFUL. The only time the CISG won’t apply due to this reservation is when the buyer and forum is the same country and that country has made the reservation.
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