Presented in "Celebrating Success: 25 Years United Nations Convention on Contracts for the International Sale of Goods" (Collation of Papers at UNCITRAL -- SIAC Conference 22-23 September 2005, Singapore), published and copyright by the Singapore International Arbitration Centre at 18-27. Reproduced with permission of the SIAC.
Spiros V. Bazinas [*]
Uniform interpretation and application of its texts has been one of the goals of the United Nations Commission on International Trade Law ('UNCITRAL') since its establishment. This is the result of the recognition that uniformity of the practical results (and not just uniformity of the law in the books) will ultimately promote international trade. The preparation of the Case Law on UNCITRAL Texts ('CLOUT') and the UNCITRAL Digest of case law on the United Nations Convention on Contracts for the International Sale of Goods ('CISG Digest' or 'Digest') are part of UNCITRAL's efforts to achieve this goal. The purpose of this paper is to briefly describe CLOUT and the CISG Digest and to evaluate them as tools in the promotion of the uniform interpretation and application of the CISG.
II. UNIFORMITY IN THE INTERPRETATION AND APPLICATION OF THE CISG
In recognition of the fact that uniformity would be an impossible task to achieve if a uniform text were to be interpreted and applied in the light of rules of interpretation of domestic law, Article 7(1) of the CISG provides that '[i]n the interpretation of this Convention, regard is to be had to its international [page 18] character and to the need to promote uniformity in its application ...'. The reference to the international character of the Convention is generally considered as meaning that the Convention should be interpreted autonomously rather than on the basis of national law notions. The reference to the need for its uniform interpretation is considered as encouraging (or even requiring) judges, arbitrators, lawyers and parties to business transactions to take into account foreign case law, without, however, being bound by it. Following the example of Article 7 of the CISG, all Conventions prepared by UNCITRAL refer to the need to take into account their international character and the need to promote uniformity in their interpretation and application.
With the exception of the UNCITRAL Model Law on Electronic Commerce, UNCITRAL model laws do not contain a provision on interpretation. The main reason cited for Article 3 of the Model Law on Electronic Commerce is that it would enhance unification and harmonisation of law, since it could provide national courts with useful guidance, consistent with the practice followed in contemporary international legal instruments. However, it is argued in a persuasive way that, even if a Convention or a model law does not contain a provision along the lines of Article 7(1) of the CISG, its uniform application and interpretation is a methodological requirement, since the aim of establishing a uniform legal regime would be seriously compromised if uniform texts were to be applied differently in the various legal systems. [page 19]
The purpose of CLOUT is to disseminate information on legal texts emanating from the work of the Commission and to promote their uniform interpretation and application. CLOUT reports on case law related to all the Conventions and Model Laws resulting from the work of the Commission as soon as they enter into force or are implemented by States. So far, cases reported are primarily on the CISG and the UNCITRAL Model Law on International Commercial Arbitration ('MAL').
Before deciding to establish CLOUT, the Commission considered, on the basis of a note by the Secretariat, other ways in which it could promote the uniform interpretation and application of its texts, including responding to specific questions of interpretation of an UNCITRAL text referred to the Commission by a court adjudicating on a dispute or by the parties to that dispute; and responding to abstract questions of interpretation. The note suggested that responding to such queries would in effect mean that the Commission would have to perform judicial or quasi judicial functions that fell outside its mandate.
However, it was suggested that the Secretariat could monitor judicial and arbitral decisions relating to the interpretation of UNCITRAL texts and report to the Commission on the status of the interpretation of those texts when necessary, for example, if conflicts in the interpretation of provisions of UNCITRAL texts or gaps in such provisions were identified. On the basis of those reports, the Commission could decide whether it would have to intervene by issuing an authoritative interpretation of certain provisions, revising those provisions or preparing a new text. As suggested in the note, the Commission decided to defer consideration of the matter to a future session after the entry into force of the CISG.
The matter was next considered by the Commission at its 21st Session, in 1988, on the basis of a further note by the Secretariat. The Commission agreed with the findings in the note that there was a need for collecting and disseminating case law relating to its texts and that a case law collection system could play a [page 20] role in promoting the desired uniformity. At that Session, the Commission considered a more far-reaching proposal to establish a permanent editorial board that, in addition to collecting and reporting on case law, would make, from time to time, a comparative analysis of the case law relating to the CISG and report to the Commission on the state of the application of the Convention. The board would be composed of representatives of States that are parties to the Convention and, depending on how efficiently it would operate, could in the future be entrusted with the additional task of issuing, at the request of a court, arbitral tribunal or the parties to a dispute, authoritative opinions on the interpretation of the Convention.
This proposal raised a number of concerns, including: that the operation of such a board would be problematic in view of the large number of States that would wish to be represented; and that it would be premature and possibly misleading to treat court decisions or arbitral awards as representing an authoritative opinion in a State party to the Convention, or to assign to such judicial or arbitral decisions the same value. The Commission thus decided not to establish such a permanent editorial board, but it was understood that the matter would be reconsidered at a later stage in the light of experience gathered.
As CLOUT deals with a matter which is at the core of the mandate of UNCITRAL, policy guidelines with regard to its operation are set by the Commission during its annual sessions. However, the day-to-day operation of CLOUT is left to a network of experts appointed by their governments ('national correspondents') and to the Secretariat.
National correspondents prepare, in one of the six official United Nations languages (Arabic, Chinese,French, English, Russian and Spanish), and forward to the Secretariat summaries ('abstracts') of the decisions and awards they identify [page 21] as being relevant to the interpretation of an UNCITRAL text, along with the full texts of the decisions and awards.
The Secretariat edits those abstracts with a view to publishing them in a uniform format and style, translates them into the other United Nations languages and publishes them as official United Nations documents under the title A/CN.9/SER.C/ABSTRACTS.
In addition, the Secretariat is entrusted with the dissemination of CLOUT documents, which takes place in a number of ways, including: making CLOUT documents available upon request, free of charge; mailing CLOUT documents regularly and, upon specific request, the full texts of the reported cases, at the cost of copying and mailing of documents; and making CLOUT documents available on the internet.
Moreover, the Secretariat is charged with preparing thesauruses, i.e. analytical lists of issues that might arise in the context of an UNCITRAL text, and, based on the thesauruses, indices listing cases under a particular issue or provision. The first such thesaurus for the CISG was prepared by the Secretariat and finalised by Professor John O Honnold in 1995; on the basis of the thesaurus, the Secretariat has prepared an index.
From the fact that CLOUT has reported so far only on a part of the existing court decisions or arbitral awards relating to the CISG, the conclusion may be drawn that CLOUT is slower in reporting than case law collection systems that are commercially available. This problem needs to be addressed if CLOUT is to reach its full potential in providing in a timely manner up-to-date, complete information regarding case law on UNCITRAL texts. Until a solution is found based on the national correspondents' network on which CLOUT relies, more co-ordination with other CISG databases would be useful. This would enhance the usefulness of CLOUT, which has an important advantage, namely that it is addressed to users throughout the world in all six United Nations languages at no cost. Furthermore, CLOUT is the tool for the Commission to monitor the CISG with a view to ensuring the uniform interpretation and application of the texts emanating from its work. With CLOUT, UNCITRAL texts (not [page 22] just the CISG) will not '... become "orphans" whose development is stunted by lack of care'.
IV. THE CISG DIGEST
In 2001, in view of the fact that up to that time more than 250 CISG cases had been reported indicating divergences in the interpretation of the CISG, the Secretariat suggested that the Commission consider ways to promote the uniform interpretation and application of the texts resulting from its work. The preparation of a digest of cases that would identify trends in interpretation by the Secretariat in consultation with experts from different regions was mentioned as a possible way in that regard. According to the Secretariat, a digest could just note the divergences in case law or, alternatively, provide guidance in the interpretation of an UNCITRAL text.
During the discussion in the Commission, the suggestion was made that the digests should discuss not only case law but also legal writing and that they should not only indicate the divergences in case law but also provide guidance as to the correct interpretation of a text and identify any gaps in that text. The concern was expressed, however, that such an approach could inadvertently lead to criticism of national court decisions, a result that would be inappropriate for an international, inter-governmental organisation such as UNCITRAL. In order to address that concern, the Commission decided that the digests, which should be prepared with the help of national correspondents, should avoid criticism of national court decisions.
The draft CISG Digest was prepared by a group of experts. It was circulated to national correspondents for comments and then finalised by the Secretariat. It has received both praise and criticism. By providing a systematic discussion of CISG case law, it facilitates consideration of such case law by judges, arbitrators, lawyers and parties to business transactions. Without being bound, such parties are encouraged to take into account case law. At the same time the Digest has certain limitations. [page 23]
The Digest cites both court decisions and arbitral awards that are reported and that are not reported in the context of CLOUT but there are decisions and awards that have not been cited in the Digest yet. One can only hope that gaps or omissions will be addressed in future updates of the Digest. Another limitation of the Digest is that it does not discuss issues that have not been the subject of any case law yet. This is an area which scholarly writing can and, surely, will cover. However, the Digest could briefly list those issues. Yet another limitation is that, while the Digest has been prepared on the basis of the full text of a court decision or arbitral award, the reasoning of court decisions and arbitral awards is not mentioned in the Digest. For that reason, readers are encouraged to read the full decision or award rather than relying solely on the abstracts reported in CLOUT. However, in some cases, the grounds for one or the other trend in the interpretation of a provision are mentioned. Perhaps, this is another area in which the Digest may be improved.
Perhaps, a more important limitation of the Digest is that scholarly writing, and thus criticism of court decisions and arbitral awards, is not mentioned. This approach, however, is justified both for practical and political reasons. Mentioning the views of one or the other author would have raised difficult questions, such as whether there are any contrary views and whether UNCITRAL endorsed the criticism.Such questions could compromise the usefulness of the Digest unnecessarily since questionable decisions would tend to attract criticism from experts in any case and the Digest would not indicate the prevailing view in case law on one or the other issue. In addition, an international, inter-governmental Commission, such as UNCITRAL, has to abide by the principle of separation of powers that does not permit the executive or the legislative branch of a government to criticise court decisions and the principle of State sovereignty, which presents some limits as to what an international, inter-governmental organisation can do. [page 24]
V. SOME EXAMPLES OF DIVERGENCES IN CASE LAW INDICATED BY THE CISG DIGEST
There are several issues with respect to which the Digest reveals that diverging views are emerging in CISG case law. Some examples are mentioned below.
Courts hold opposing views on the question whether software constitutes 'goods' and, if so, to what extent. According to some court decisions, only standard software falls under the notion of 'goods', while a court has held that even the sale of custom-made software is governed by the CISG. It seems that software, other than custom-made software and standard software that is extensively modified to fit the needs of the buyer, should be governed by the CISG.
Similarly, courts seem to hold different views on whether the CISG governs the burden of proof. The Digest cites some court decisions that hold that the burden of proof is governed by the CISG but not expressly settled in it and derive from the CISG the general principle that the party that is to benefit from certain facts has to prove them. This view is supported by the fact that the CISG contains at least one provision (Article 79) which deals with the burden of proof and that the issue is so closely linked to substantive law that the CISG must have addressed it.
Another such example is whether estoppel is dealt with in the CISG. Court decisions cited in the Digest go in different directions. It seems that the correct view is that estoppel is governed but not explicitly settled in the CISG as it is a manifestation of the general principle of good faith underlying the CISG.
Yet another example is whether the choice of law of a Contracting State amounts to an implicit exclusion of the CISG. The Digest cites court decisions according to which the choice of the law of a Contracting State amounts to an implicit exclusion of the Convention since otherwise the choice of a national law would be rendered ineffective. At the same time, the Digest notes a prevailing view in case law that a reference to the law of a Contracting State in itself does not amount [page 25] to an implicit exclusion of the Convention since the Convention is part of the law of a Contracting State and the choice of the law of a Contracting State is intended to identify the law applicable to fill gaps in the Convention.
Similarly, there are diverging views in case law as to whether the application of the Convention should be excluded where the parties argue solely on the basis of domestic law. It seems that the correct view is that parties' pleading in themselves should not lead to the exclusion of the Convention, unless the parties are aware of the applicability of the Convention and their intent to exclude can be inferred with certainty.
Divergent views have been expressed by courts even with respect to the autonomous and uniform interpretation required under Article 7 of the CISG! While most courts accept that the CISG should be interpreted 'autonomously', some courts have held that, where the Convention tracks the language of domestic law, domestic case law may also need to be taken into account. It is correctly pointed out that 'this line of cases clashes with the CISG's goal of promoting uniformity'.
Set-off is another issue on which different views are held by courts. One view is that it is governed by the CISG but not expressly settled in it and that according to the principles underlying the Convention reciprocal claims could be offset. A different view is that set-off is not governed in the Convention at all and thus should be left to the law applicable by virtue of the private international law rules of the forum. It seems that the latter view is convincingly supported by many court decisions and commentators.
With CLOUT and the CISG Digest, UNCITRAL has made a significant contribution to the uniform interpretation and application of its texts. There is good indication that, because of CLOUT and the Digest as well as the other case law reporting systems, national courts will increasingly take into account foreign court decisions. [page 26]
It is true that this effort by UNCITRAL has its limitations. CLOUT does not include all existing case law, although this may change with time. And, to the extent that the Digest does not refer to scholarly writing and thus to criticism of national court decisions, it cannot provide guidance as to what is the correct interpretation of one or the other provision of the CISG. This, however, is the unavoidable consequence of the nature of UNCITRAL as an international, inter-governmental body. In any case, in the absence of an international commercial tribunal, such guidance should be left to scholarly writing. [page 27]
* Spiros V Bazinas is a Senior Legal Officer in the International Trade Law Division of the United Nations Office of Legal Affairs, the Secretariat of the United Nations Commission on International Trade Law ('UNCITRAL'). He is currently the Secretary of Working Group VI (Security Interests), which is preparing a Legislative Guide on Secured Transactions. Mr Bazinas joined the United Nations Office of Legal Affairs in 1989 and the Secretariat of UNCITRAL in 1992. Prior to joining the United Nations Office of Legal Affairs in 1989, Mr Bazinas, a national of Greece, worked as a senior associate with the international law firm Vgenopoulos and Partners, Piraeus (1985-1988), on corporate and shipping finance matters. Mr Bazinas holds law degrees from the University of Athens (LLB (Hons)) and the University of Miami at Coral Gables (LLM (Hons)). He has also conducted post-graduate research at the Hamburg-based Max-Planck-Institute of Foreign and Private International Law (1982-1984). He has been a member of the Athens Bar since 1981 and of the International Bar Association (Committees E, J and M) since 1997.
1. For a brief description of UNCITRAL and its work, see<http://www.uncitral.org/uncitral/en/index.html>.
2. See para 8(d) of GA Resolution No 2205 (XXI) of 17 December 1966, reproduced in the UNCITRAL Yearbook, Volume I: 1968-1970, 65. The Yearbook and all UNCITRAL documents cited in this article are available at <http://www.uncitral.org>.
3. See Case Law on UNCITRAL Texts ('CLOUT') at <http://www.uncitral.org/english/clout>; and UNCITRAL Digest of case law on the United Nations Convention on the International Sales of Goods at <http://www.uncitral.org/english/clout/Digest_cisg_e.htm>.
4. For a detailed account of CLOUT and the CISG Digest, see Jernej Sekolec, 'Digest of case law on the UN Sales Convention: The combined wisdom of judges and arbitrators promoting uniform interpretation of the Convention', in The Draft UNCITRAL Digest and Beyond: Cases, Analysis and Unresolved Issues in the UN Sales Convention, Franco Ferrari, Harry Flechtner, Ronald A Brand (Ed), Sellier, European Law Publishers (2004).
5. See para 1 of the Digest comments on Article 7, which refers also to the travaux préparatoires. See also Ferrari, 'Interpretation of the Convention and gap-filling', Article 7, footnote 4 above, 138.
6. In addition to referring to their international character, some UNCITRAL texts refer to the need to observe good faith in international trade (see CISG, Article 7, United Nations Convention on International Bills of Exchange and International Promissory Note, Article 4, United Nations Convention on Independent Guarantees and Stand-by Letters of Credit, Article 5 and United Nations Convention on the Assignment of Receivables in International Trade, Article 7). The reason for this cautious approach with regard to the use of the term 'good faith' is that it may cause uncertainty since it is understood differently in the various parts of the world (see Honnold, Uniform Law for International Sales, 125; Schlechtriem, Uniform Sales Law, The UN Convention on Contracts for the International Sale of Goods, 39).
7. See para 2 of the Digest comments on Article 7. See also Ferrari, Interpretation of the Convention and gap-filling, Article 7, footnote 4 above, 140.
8. See paras 3 and 4 of the Digest comments on Article 7. See also Ferrari, 'Uniform interpretation', footnote 4 above, 144; and Joseph Lookofsky, 'Digesting CISG case law: how much regard should we have?' (2004) 8 VJ 184.
9. CISG, Article 7, Convention on the Limitation Period in the International Sale of Goods, Article 7, United Nations Convention on the Carriage of Goods by Sea, 1978 (Hamburg Rules), Article 3, United Nations Convention on the Liability of Operators of Transport Terminals in International Trade, Article 14, United Nations Convention on International Bills of Exchange and International Promissory Notes, Article 4, United Nations Convention on Independent Guarantees and Stand-by Letters of Credit, Article 5 and United Nations Convention on the Assignment of Receivables in International Trade, Article 7.
10. See A/CN.9/390, para 67, UNCITRAL Yearbook, XXV: 1994, 329.
11. Fritz Enderlein, International Uniform Law in Practice (1988), 329.
12. See para 99 of the Report of UNCITRAL on the work of its 21st Session, Official Records of the General Assembly, 43rd Session, Supplement No 17 (A/43/17), UNCITRAL Yearbook, XIX: 1988, Pt 1.
13. See A/CN.9/267, UNCITRAL Yearbook, XVI: 1985, 387.
14. Ibid, paras 8-14.
15. Ibid, para 15.
16. UNCITRAL, Report on the work of its 18th Session (1985), A/40/17, paras 376-377, UNCITRAL Yearbook, XVI: 1985, 45.
17. See A/CN.9/312, UNCITRAL Yearbook, XIX: 1988, 136.
18. UNCITRAL, Report on the work of its 21st Session (1988), A/43/17, paras 98-109, UNCITRAL Yearbook, XIX: 1988, Pt 1.
19. For a detailed account of the proposal, see Bonell, 'A proposal for the establishment of a 'permanent editorial board' for the Vienna Sales Convention', in International Uniform Law in Practice (1988), 241.
20. UNCITRAL, Report on the work of its 21st Session, A/43/17, paras 107-109, UNCITRAL Yearbook, XIX: 1988, Pt 1, 16.
21. After having established CLOUT in 1988, the Commission considered CLOUT-related matters at its annual Sessions starting in 1992. UNCITRAL, Report on 25th Session (1992), A/47/17, paras 162-163 (UNCITRAL Yearbook, XXIII: 1992, 20); UNCITRAL, Report on 26th Session (1993), A/48/17, paras 274-285 (UNCITRAL Yearbook, XXIV: 1993, 29); UNCITRAL, Report on 27th Session (1994), A/49/17, paras 202-207 (UNCITRAL Yearbook, XXV: 1994, 24); UNCITRAL, Report on 28th Session (1995), A/50/17, paras 405-411 (UNCITRAL Yearbook, XXVI (1995) - not published yet).
22. Only States that are parties to a Convention or have enacted legislation based on a Model Law emanating from the work of UNCITRAL may appoint a National Correspondent (A/CN.9/SER.C/GUIDE/1, para 5).
23. At <http://www.uncitral.org>.
24. A/CN.9/SER.C/INDEX/1, A/CN.9/SER.C/INDEX/2 and A/CN.9/SER.C/INDEX/3/Rev.3.
25. See Michael Will, International Sales Law under CISG: The First 464 or so Decisions, Geneva (1998).
26. See, for example, UNILEX at <http://www.unilex.info> and the CISG library of the Institute of International Commercial Law at the Pace Law School at <http://www.cisg.law.pace.edu>.
27. Sundburg, 'Uniform Interpretation of Uniform Law' 10 Scan Studies 2129; Honnold, footnote 6 above, 123.
28. See A/CN.9/498, UNCITRAL Yearbook, XXXII: 2001, 463.
29. See Report of UNCITRAL on the work of its 34th Session, Official Records, 56th Session, Supplement No 17(A/56/17), paras 391-395, UNCITRAL Yearbook, XXXII: 2001, 58.
30. Franco Ferrari, Harry Flechtner, Ulrich Magnus, Peter Winship and Claude Witz.
31. See, for example, The Draft UNCITRAL Digest and Beyond, footnote 4 above, VIII-IX.
32. For example, no case law exists on the question as to which is the relevant place of business where a contract is concluded in one place and executed in another place (see Ferrari, 'The CISG's scope of application', Articles 13 and 10, footnote 4 above, 29-30, who suggests that reference should be made to the agreement of the parties and, in the absence of such an agreement, to the place where the sales contract was concluded).
33. See Jernej Sekolec, footnote 4 above, 16.
34. This has already been done in some cases. See, for example, para 4 of the comment on Article 6 of the CISG, which refers to the inability of the parties to derogate from the public international law provisions of the CISG although this issue has not been the subject of case law yet. See also para 12 of the comment on Article 6.
35. See, for example, para 8 of the comment on Article 6 of the CISG.
36. There are, however, some references to views of commentators in general. See, for example, para 21 of the CISG comments on Article 7.
37. See Jernej Sekolec, footnote 4 above, 14.
38. Lookosky finds this approach understandable as quoting scholarly writing and thus criticism of national courts could have raised, apart from the problem of 'political correctness' within the United Nations, legitimate questions that should be answered, but regrets the lack of reference to the reasoning of court decisions, see footnote 8 above, 192.
39. See para 10 of the Digest comments on Article 1.
40. See Ferrari, 'The CISG sphere of application', Articles 1-3 and 10, footnote 4 above, 77-78.
41. See para 4 of the Digest comments on Article 4. See also para 13 of the Digest comments on Article 7.
42. See Ferrari, footnote 4 above, 'Scope of application', Articles 4-5, 110-113, and 'Interpretation of the Convention and gap-filling', 164-165.
43. See para 14 of the Digest comments on Article 4. See also para 10 of the Digest comments on Article 7.
44. See Ferrari, footnote 4 above, 'Scope of application', Articles 4-5 and 108-109, and Interpretation of the Convention and gap-filling, pp 162-163.
45. See para 8 of the Digest comments on Article 6. See also Ferrari, 'CISG rules on exclusion and derogation', Article 6, footnote 4 above, 123-125.
46. See para 10 of the Digest comments on Article 6.
47. See Ferrari, 'Exclusion and derogation', Article 6, footnote 4 above, 130-131.
48. See para 2 of the Digest comments on Article 7.
49. See Ferrari, Interpretation of the Convention and gap-filling: Article 7, footnote 4 above, 141-143.
50. See para 19 of the Digest comments on Article 7.
51. See Ferrari, 'Interpretation of the Convention and gap-filling', Article 7, footnote 4 above, 167-168.
52. See Ferrari, 'Interpretation of the Convention and gap-filling', Article 7, footnote 4 above, 146.