CISG HOME
Welcome to the Australian site of the autonomous worldwide network on the United Nations Convention on Contracts for the International Sales of Goods (1980). This Convention is commonly called the Vienna Convention or the CISG. The CISG has been accepted by most of Australia's major trading partners with the notable exception of the United Kingdom and Japan. However in the EC the CISG has become the de-facto sales law of the Community. In the USA increasing case law is indicating that the CISG is well established and will increase in importance.
This site intends to help the
academic, legal profession and the student to gain an understanding on the function and
implications of the CISG. It will provide material written by Australian authors and list
other references available on the CISG in
Australia.
Scholarly writings and worldwide cases in English can be accessed through Pace Law School, Institute of International Commercial Law, at Pace University, which is edited by Professor Albert Kritzer. To link directly to Pace University, click HERE. Also go to International Commercial Law Links on this site to find useful links to other sites dealing with the CISG worldwide.
Application of the CISG and reasons why it matters to you and your clients.
INTRODUCTION
The following is only a brief introduction into the application of the CISG. It provides the legal professional with a brief synopsis of the merits of the CISG but further reading is essential. This site and the Pace University site (direct link provided on this page) will provide enough material to gain a full understanding of the CISG.
All States and Territories in Australia have introduced the CISG into domestic law via the Sale of Goods (Vienna Convention) Acts. In essence the CISG in case of conflict prevails over any other laws in force in Australia and is therefore self inclusive. However article 6 allows parties to exclude the application of the CISG through express clauses.
In view that only one reported case has so far been determined in Australia and according to anecdotal evidence the CISG has not yet found acceptance among traders and their advisors. Such a view would have been quite understandable as the CISG was so new and so different from domestic laws that it appeared sound practice to exclude the Convention in favor of a domestic law.
Two considerations should be taken before this practice of exclusion is considered or continued. Let us assume that an Australian Trader wishes to sell goods to Turkey. Neither of the two parties wants to be governed by any of the two domestic systems. The Turkish buyer proposes to use the law of a neutral country namely Switzerland. The effect of that choice of law is that the Turkish buyer in practice is using his own law as Turkey in their modernization of commercial laws introduced the Swiss commercial Code (OR) into their own system. The Australian buyer now has to deal with a foreign law whereas the buyer uses his own, well understood domestic law merely with a different front cover. This is not an isolated case as many countries in their push to modernize their domestic laws have taken over well established civil laws such as Italian, German or Swiss commercial laws. Another point to remember when opting for a foreign domestic law is that the domestic system needs to be understood as each system has its own idiosyncrasies. Lets revert back to Swiss law and consider that under article 1(2) of the Civil Code a judge in view of an issue not resolved by the law, has to "make" a law in other words he has to act as legislator. It is quite feasible therefore that despite the exclusion of the CISG a judge could decide that Swiss law should be brought in line with the CISG to achieve a desired outcome.
A second point which needs to be considered is the effects of globalization. Exporters and Importers in Australia are no longer in a position to have their own way with the choice of law and forum selection. The lack of a widely accepted alternative to the laws of England are gone or changing. The alternative namely the CISG has found wide acceptance and will increasingly become the accepted "lex mercantoria".
Article 1, application of the CISG
Article 1 has two limbs in explaining the application of the CISG. Obviously the parties must have their place of business in different states otherwise no international sale transaction would take place. In the first limb pursuant to article 1(1)(a) the CISG applies to "contracts when the States are contracting States". In other words the seller and the buyer have their place of business in a contracting state. This limb is straight forward and does not require any explanation.
The second limb pursuant to article 1(1)(b) on the other hand makes the CISG applicable if the "rules of private international law lead to the application of the law of a Contracting State." If we remember that the CISG is self inclusive, the choice of law becomes rather crucial. If we revert back to the example between the Australian and Turkish business partners it becomes obvious that as Switzerland is a Contracting State the CISG has become the governing law in this particular incident. Provided of course that the CISG was not explicitly excluded.
Important differences
There are certainly areas in the CISG which are different to domestic law. The two areas which need mentioning are the timing of notification of lack of conformity and fundamental breach.
It is most important that legal professionals advise their clients of the impact of articles 38 and 39. Courts have interpreted the term "reasonable time" very narrowly. In effect examination of all of the goods or if not appropriate at least of a sample must be done immediately. Examination and notification should ideally be undertaken within a week or two.
In respect of fundamental breach the CISG has as its stated purpose the intention to keep the contract as long as possible afloat. Fundamental breach is difficult to show and more likely a granting of a "Nachfrist" pursuant to articles 47 and 49.