Reproduced with permission of 18 Pace International Law Review, Issue No. 1 (Spring 2006) [forthcoming]
Peter J. Mazzacano [*]
CHAPTER 1: INTRODUCTION
(i) Overview of the Problem
Since the time of the publication of the Lex Mercatoria in 1622, efforts have been made to create and codify a uniform international sales law. With this thought in mind, Lord Mansfield expressed the view more than 250 years ago that "mercantile law...is the same all over the world. For from the same premises, the sound conclusions of reason and justice must universally be the same." In more recent times, the efforts to create a uniform international sales law have culminated in the adoption by sixty-six countries of the 1980 United Nations Convention on Contracts for the International Sale of Goods ("CISG" or "Convention"). These countries represent over two-thirds of all world trade, making the CISG one of the most successful international conventions to date. However, the CISG is not without its critics. Some academic commentary has also focused on the failure of the CISG to facilitate the development of a truly uniform body of rules to govern international sale of goods transactions.
The CISG came into being because of a growing need for certainty in international sales contracts. As a result, functional uniformity should be at the core of the CISG, rather than absolute or strict uniformity. This suggests that there should be a growing international convergence of interpretations and applications of the CISG by tribunals and national courts. In this respect the purpose of the CISG is not only to create new, state-sanctioned law, but also to give recognition to the rules born of international commercial practice and to encourage national courts to apply them in a functionally uniform manner through a form of jurisconsultorium. Not surprisingly, courts in numerous jurisdictions are beginning to recognize that the mandate of the CISG requires them to consider international jurisprudence when deciding cases under the Convention.
In the attempt to create a standardized international sales law, the preamble of the CISG introduces the concept of uniformity. It states, inter alia, the desire to remove "legal barriers in international trade" and promote "the development of international trade." It appears that the drafters of the Convention intended to adopt uniformity in the rules governing contracts for the international sale of goods. The objective of uniformity permeates the CISG by way of Article 7(1), which states, "in the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade." However laudable this stated goal of uniformity is, in practice it is difficult to achieve. Considering that the CISG is practiced in about 50 different languages, with signatory nations having diverse social, economic, and cultural backgrounds, the goal of uniformity is ambitious. To make the goal of uniformity even more challenging, there are also great differences in the legal systems of each signatory state. Unless the CISG is fully understood by domestic courts, recourse to local law would seem inevitable.
According to Article 7(1), the goal of uniformity should impart an obligation upon legal practitioners, tribunals, and courts to look to standards of international practice in an interpretation or a determination of provisions of the Convention. In other words, the courts of all signatory nations are obliged to consider the practice and judgments of other countries, a form of "ipso facto stare decisis" or "supranational stare decisis." Failure to do so, whether done consciously or not, leads to the "homeward trend," which reflects the tendency of domestic courts to ignore the autonomous-international requirement of the CISG, and instead make decisions with reference to domestic legal concepts. This natural predisposition is found in all domestic legal systems. As John Murray Jr. notes, a national court finds it difficult to "transcend its domestic perspective and become a different court that is no longer influenced by the law of its own nation state." However, the requirement for uniformity in certain international laws dictates otherwise. Tribunals and courts are obliged to resist the homeward trend, unless they are specifically directed to do so under the CISG. As Antonio Boggiano states, "[u]niform law requires...a new common law" in which "[f]oreign precedents would not be precedents of a foreign law, but of uniform law." Similarly, Lord Scarman notes, "[c]ourts...have to develop their jurisprudence in company with the courts of other countries." With this spirit in mind, the Supreme Court of the United States decided that when considering specific words in international conventions, court decisions from other nations are "entitled to considerable weight." The court repeated this interpretive methodology in a 1999 treaty case. Thus, in addition to the courts' own evaluation of the issues in a particular case, international precedent should also be considered. In the spirit of international uniformity, courts need not follow international precedent if it is incorrect or inapplicable. However, there is a minimal duty to consider similar cases from international practice.
There are problems for courts attempting to comply with the stated mandate of Article 7(1). This may explain why national courts were initially slow to refer to Article 7(1) and to the requirement for international uniformity. As Franco Ferrari notes, "requiring interpreters to consider foreign decisions can create practical difficulties. On the one hand, foreign case law was not readily available, i.e., it cannot easily be retrieved. On the other hand, foreign case law is often written in a language unknown to the interpreter." Fortunately, in the last decade foreign case law, translated into English, has become readily available. Thus, the blame for any lack of international case law to assist in an interpretation of the Convention lies squarely with legal practitioners.
In recent years, national courts appear to have made greater efforts to consider international precedent in CISG cases. This suggests that there is a growing development of a trend towards the jurisconsultorium that Article 7(1) contemplates -- at least at the broader, international level. For example, the courts of Italy and Switzerland were the first to consider international precedent in CISG cases, with rulings decided in 1996 and 1997 respectively. Shortly thereafter, the German Supreme Court issued a ruling citing CISG material from England, France, Switzerland, and the United States. More recently, a number of other national courts, including those in the United States, have referred to CISG authorities in other jurisdictions. As a beacon of all things multicultural, it might be likely that Canada would, if not lead, at least follow these developments. Considering the cosmopolitan nature of Canadian society, it might also be expected that Canadian courts would be naturally predisposed to embracing foreign authorities, especially when such an opportunity is authorized by the Convention. However, after fourteen years as part of Canadian federal law -- and having been in effect in certain provinces for up to seventeen years -- the CISG is still treated as an interloper by Canadian courts. As will be illustrated by the six cases discussed in this research paper, while some courts have made a modicum of effort to interpret the Convention, Canadian courts continue to suffer from the homeward trend. Instead of recognizing the Convention's "international character" and promoting uniformity, Canadian courts have reflexively invoked common law language and concepts that will only contribute to other conflicting interpretations of the Convention's rules. These interpretations are antithetical to purposes and general principles of the CISG. Should such a trend continue on a broader scale among signatory states, the purpose of the CISG would ultimately be defeated.
This core of this research paper will analyze the case law (jurisprudence) involving six Canadian cases on the CISG, as well as consider relevant scholarly literature (doctrine). It must be noted, however, that there have been more than six Canadian cases that have mentioned the CISG in some way. As of August 1, 2005, at least nine Canadian cases have cited the CISG. However, three of these cases do not consider the CISG in any significant manner. For this reason they will not be considered. The focus of the remaining six cases will be primarily on the extent to which Canadian courts have respected the CISG's requirement that it be interpreted with regard to its international character and the need to promote uniformity in the application of the Convention across signatory states. This requires that special attention be paid to interpretive rules embodied in Article 7. Canadian jurisprudence will be examined to discern the extent to which it has deviated from the standard established in Article 7 (and in other relevant provisions of the Convention). As the unification of international sales law demands a common interpretation by divergent legal systems, comparisons with similar court decisions from other signatory states will be made to determine the extent to which Canadian courts lead or lag in the development of a truly uniform international sales law, as envisioned by the CISG.
In examining Canadian jurisprudence and the CISG, this research paper will attempt to answer the following questions: to what extent have Canadian courts looked beyond domestic law when interpreting the provisions of the Convention? Have they become unsuspecting victims of a homeward trend and failed to implement the CISG requirement for autonomous, internationally-focused interpretations of the CISG? In other words, is Canadian CISG jurisprudence permeated with domestic gloss? If so, how do Canadian court decisions compare with those of other national jurisdictions? In broader terms, since the CISG has come into force, has there developed a functionally uniform international sales code, as evidenced by a duty to consider international precedents? If so, converging case law, as noted in the judgments of national courts, will be apparent. The extent to which Canadian court decisions have helped or hindered in the quest for international uniformity will also be considered.
CHAPTER 2: THE BACKGROUND TO THE CISG
(i) The Ancient Lex Mercatoria [26a]
The quest for predictability and uniformity in the rules of international trade is not a modern phenomenon. Indeed, it could be argued that the roots of the CISG can be traced back more than 500 years to the beginning of the eleventh century when medieval Europe experienced a commercial resurgence that required a need for a special law to govern its commercial activities. Gerard Malynes, writing in 1622, traces the existence of uniform merchant customs back even further, to ancient Greek and biblical times, "[s]o that it plainely appeareth, that the Law Merchant, may well be as ancient as any humane Law, and more ancient than any written Law." Its precursor may have also been in the Roman ius gentium, which was the body of law that governed trade between foreigners and Roman citizens.
With the Middle Ages came the rise of independent city-states, flourishing seaports, town markets, and boroughs which led to the flow of goods across new national borders. The merchants not only brought good across borders; they also transported their unique practices into foreign markets. The impetus to create or crystallize a law for merchants came from a desire to overcome the fragmentary and obsolete rules of feudal and Roman law, which were unsuited to the needs of international commerce. Thus, trading centres began to reduce local practices into regulatory codes, and the laws of particular towns, eventually grew into dominant codes of custom with an international flavor. Stimulated by the maritime trade of burgeoning seaport towns throughout Europe, the lex mercatoria soon acquired its cosmopolitan character and reflected a retreat from local law to a universal system of law that transcended sovereigns and national boundaries. The end result was a new legal order, free from burdensome local laws and local legislators. In other words, the lex mercatoria became an autonomous body of law.
A unique feature of the lex mercatoria was that it incorporated the customs of commerce, trade fairs, markets, and maritime customs relating to trade, into a single law. It also had additional features, some of which are not unlike of the principles adopted by the CISG: cross-border disputes could be administered by the market tribunals of various trade centres; justice was quick and informal; and, the law stressed equity and fairness, hence, decisions were made on the basis of ex aequo et bono.
The lex mercatoria governed international commerce for an extremely long period, until the early seventeenth century. At this point the autonomous mercantile courts began to decline in relative importance, and the lex mercatoria began to merge with common law. The reason for this wane is attributed to the rising influence of nationalism and the quest for state sovereignty. The pace accelerated under the influence of Sir Edward Coke, who initiated a comprehensive common law for England and the British Empire. During this period, the common law courts were given the power to override the decisions of the mercantile courts. Thus, in the case of a dispute, merchants would initiate an action with the common law courts, and bypass the mercantile courts altogether. Eventually, the mercantile courts became superfluous, and fell into disuse. Those that remained were eventually abolished by national laws.
The customs and usages of the merchants, while still relevant, were deemed not binding in the common law courts. Instead, they were treated as ordinary questions of fact, which had to be proved in each case to the satisfaction of twelve civilian jurors. With the blending of the lex mercatoria with the peculiarities of national law, the former began to lose much of its uniform and cosmopolitan character. It likely would have faded into oblivion had it not been recognized in the mid-eighteenth century by Lord Mansfield, the Chief Justice of the King's Bench. In the famous case of Pillans v. Mierop, Mansfield held that the rules of the lex mercatoria were questions of law to be decided by the courts, and not issues of custom or fact to be proved by the disputing parties. With this ruling, the lex mercatoria became an integral part of the common law.
(ii) The Nationalization of Sales Laws
The formal nationalization of the mercantile law, including international sales law, occurred in the nineteenth century. During this period, states began to codify commercial common law rules into national legislation. They decided to take full control over international trade, and developed new laws to regulate all aspects of economic relations between commercial parties. Furthermore, disputes between domestic and foreign parties were to be resolved in state courts by referring to private international law. The emergence of these national laws, and the exclusive state court jurisdiction over commercial disputes, marked the demise of the ancient lex mercatoria. By the end of this era, it had dissolved into an array of domestic legal regimes. With nationalization and codification, a universal, developing, cosmopolitan, commercial law ceased to exist.
The roots of Canadian sales law -- or that of its provinces and territories -- can be traced to this era. In 1888, MacKenzie Chalmers was commissioned by Lord Herschell to draft a sales law statute. Herschell advised him to endeavor "to reproduce as exactly as possible" existing English common law, rather than try to harmonize it with the codes of states on the European continent. The end result was the Sale of Goods Act, 1893. Because of their close ties to England, the common law provinces and territories of Canada were quick to adopt the English Act. In fact, it was essentially copied verbatim. It was also viewed as a relatively sophisticated piece of legislation, and well suited to the needs of trade at that time.
But by the 1900s, there were already signs that the international trade community felt unduly restricted by the array of national legal systems governing their cross-border transactions. As W. Mitchell remarks, "whenever the private law is splintered into many jurisdictional fragments, the need for uniformity shows up most strongly in the field of commercial law." The complexity of the rules of private international law, and the obsolete character of domestic laws, failed to satisfy the business community's need for simplicity and predictability in cross-border trade. In particular, conflict of law rules often produced results that appeared arbitrary and impractical. It also became recognized that national laws were primarily enacted to govern domestic transactions, and often failed to address the unique requirements of international transactions. This hindered global trade. As Lord Justice Kennedy wrote in 1909:
"The certainty of enormous gain to civilised mankind from the unification of law needs no exposition. Conceive the security and the peace of mind of the shipowner, the banker, or the merchant who knows that in regard to his transactions in a foreign country the law of contract, of moveable property, and of civil wrongs is practically identical with that of his own country..."
States soon became aware of the negative impact to international commerce of a world divided into so many legal systems. Non-governmental institutions, such as the International Chamber of Commerce ("ICC"), and its International Court of Arbitration, were established to address some of the flaws inherent in the national regulation of global commerce. In 1926, the International Institute for the Unification of Private Law ("UNIDROIT"), an independent intergovernmental organization, was also founded as an auxiliary organ of the League of Nations. Its objective was to find methods for modernizing and harmonizing private international law between states or groups of states. Following the demise of the League, UNIDROIT was re-established in 1940, and continues to work towards preparation of modern, harmonized uniform rules of private law.
(iii) The Modern Lex Mercatoria
The establishment of the ICC and UNIDROIT reflected the renewed interest in -- and rediscovery of -- the historical, cosmopolitan character of commercial law, and the desire on the part of the business community to free itself from the restrictions of national law. States began to address this dissatisfaction by introducing international conventions and model laws in the effort to harmonize private international law across borders. Considering the various economic, social, political, and legal systems of numerous participating states, the process was -- and continues to be -- difficult and time-consuming. However, considerable progress has been made, especially in the fields of arbitration, factoring, leasing, letters of credit, sale of goods, and contracts. In the 1960s, academics also began to question the effectiveness of national law in international transactions, and they also noted the revitalization of the lex mercatoria. As Ana Rodriguez notes, "[j]ust as the medieval merchants overcame feudal law, present time traders were adopting alternative solutions to avoid the application of national law to their transactions." With the use of standardized contract clauses, self-governing contracts, trade term usages, and recourse to international commercial arbitration, merchants began to introduce their own regulatory regime, which operated autonomously, as an addendum of national law. This development has since become known as the new lex mercatoria.
(iv) The History of the CISG
It is within the context of this dissatisfaction with national legal regimes, and the renaissance of the lex mercatoria, that the CISG came into being. However, the CISG was not the first modern attempt to codify a uniform international sales law. In the 1930s, a group of European scholars met to work towards the unification of international sales law under the auspices of UNIDROIT. Work on this initiative was suspended with the outbreak of World War II, until 1951. With the support of 21 nations, UNIDROIT eventually produced two draft conventions, the final versions of which were adopted by a diplomatic conference at The Hague in 1964. These were the Uniform Law on the International Sale of Goods ("ULIS") and the Uniform Law on the Formation of Contracts for the International Sale of Goods ("ULF"). ULIS and ULF became the first modern attempts to eliminate the problems stemming from variations in national laws, particularly those rules relating to the sale of goods and conflicts of laws rules. Despite this admirable objective, neither of these two conventions received widespread acceptance. The common complaint with ULIS and ULF is that they reflected the parochial legal and social traditions of the Western European countries that were primarily responsible for their creation. Without the input from nations worldwide, and participation from states with divergent social and legal systems, a universal contract and sale of goods convention would never receive extensive support from the international commercial community.
Credit for the drive to create a truly international version of ULIS and ULF may be given to the state of Hungary at the United Nations. While work on ULIS and ULF was being completed by UNIDROIT, the Hungarian Delegation proposed to the Nineteenth Session of the UN General Assembly the following: "consideration of steps to be taken for progressive development in the field of private international law with a particular view toward promoting international trade." The Hungarians were concerned that the conflicts inherent in private international law, arising from divergent national legal systems -- and the resulting uncertainties and complications -- were creating barriers to the development of global trade. They spoke convincingly, and at length, in support of their argument. At one point, they quoted a passage from a 1962 colloquium on the law of international trade, held in London, which summarized their position:
"...the main defect which this examination of the sources of the law of international trade has revealed is the lack of purposeful co-operation between the formulating international agencies...[T]he law of international trade, by its nature, is universal and for that reason, a progressive liaison and co-operation between the formulating agencies should be the next step in the development of an autonomous law of international trade."
The UN decided to take up the matter, and the Secretary-General approved the production of a preliminary study based on the Hungarian recommendation. Considering the concurrent work of UNIDROIT and other bodies, the preliminary study acknowledged that there were inefficiencies with the duplication of unification efforts by competing organizations. The Hungarians similarly complained that "this diversified activity, for all its usefulness, is lacking in direction, uniform organization and synthesis." The remedy for this apparent state of affairs would lie in the establishment of a central organ based at the UN, which would co-ordinate and supervise activities for the harmonization of private international law.
Thus, the Secretary-General's proposed the creation of the United Nations Commission on International Trade Law ("UNCITRAL") to lead the global effort on the unification front. This recommendation was adopted by the General Assembly in 1966. The mandate of UNCITRAL is to provide for the "progressive harmonization and unification of the law of international trade." In keeping with the international character of the UN, the organ is to "have due regard to adequate representation of the principal economic and legal systems of the world, and of developed and developing countries." A number of representatives further expressed the hope "...that out of the co-operative endeavours of the Commission and other bodies active in the field, a new lex mercatoria would in time evolve reflecting the interest of the entire international community."
At the first meeting of UNCITRAL in 1966, it was decided that priority was to be given to the development of a unified international sales law. Members of the UN were circulated copies of ULIS and ULF to solicit opinions on their acceptability as the basis for a new unified international law. However, neither of these two conventions were found to be adequate. The basic problem stemmed from the lack of participation from representatives of countries with different legal regimes in their creation. In simple terms, ULIS and ULF were too Western European in orientation. Even one of the world's largest traders, the United States, had little to do with the creation of ULIS and ULF, and never adopted the conventions. Thus, UNCITRAL proposed the preparation of a new international sales convention that would more accurately reflect a cross-section of the organ's world-wide composition. By taking a pluralistic approach, UNCITRAL was confident that a universal international sales convention would win "wider acceptance by countries of different social, legal, and economic backgrounds."
In 1978, the UNCITRAL draft of what was to become the CISG was completed. It clearly attempted to improve upon its less successful antecedents, not just by incorporating a collection of various rules from common, civil, and socialist law traditions, but by aiming for a true synthesis of the best features available from all modern sales law regimes. In the process, an array of cross-border legal traditions were reconciled, and a convention was produced that is truly global in scope.
In 1980, a UN Conference was held in Vienna to consider UNCITRAL's draft convention. True to its international roots, the delegates at the conference came from 62 states: 22 were from European or other developed Western states, 11 came from socialist countries, and the remaining 29 were from third world nations. After only five weeks of deliberations, the CISG was unanimously approved and, as Errol Mendes notes, "the historical cycle of international sales law which began in the 11th & 12th centuries" was completed. In this respect, perhaps most significant aspect of the Vienna Conference was that it represented a truly global effort by balancing representation from all regions of the world. It also took into account diverse social, economic, and legal systems. In keeping with its international character, the CISG was also adopted in six different languages. The end result is a sales convention that attempts to de-politicize international trade law, and escape the ethnocentric perspectives and biases of a single legal system. With the implementation of the CISG, as T.C. Drucker remarks, "[i]t is hoped that at least in the area of international sales Voltaire's complaint, when crossing Europe in the 18th century, will soon no longer hold true, namely, that he had to change laws as often as he changed horses."
CHAPTER 3: CANADIAN CASE LAW AND THE CISG: THE QUEST FOR UNIFORMITY
(i) The CISG in Canada
Internationally, the CISG came into force on January 1, 1988, following the ratification by eleven nations, including the United States. The American ratification of the CISG appeared to have the effect of prompting other nations to also ratify the Convention. However, the situation in Canada was complicated by its Constitution, which fails to give the federal government clear authority to implement treaties in areas primarily under the jurisdiction of the provinces. This situation exists even though the federal government alone is the nation's recognized international personality. These constitutional complexities may account for the reason why Canada did not formally participate in the negotiations that eventually developed the CISG in 1980. Fortunately, even though Canada did not take part in the Vienna Conference, it was able to lobby for the inclusion of a federal state clause in the CISG. Thus, Article 93 of the CISG allows federal states to have the Convention apply to only certain provinces or territories. This is essential, as provincial governments are not bound by international agreements that fall within their exclusive areas of competence, such as sales law. The provinces, however, have usually made efforts to ensure that their laws conform with Canada's international treaty obligations. Fortunately, the CISG was not an exception, and the provinces began to adopt the CISG of their own volition as early as 1988. At the federal level, it came into force on May 1, 1992. It is now incorporated into the sales laws of every province and territory of the nation.
(ii) Canada's First CISG Case: Nova Tool v. London Industries
Reporting in 1999 on the first Canadian court case involving the CISG, Jacob Ziegel notes that "the decision is not a good precedent for the treatment of the Convention in future Canadian litigation." With a few minor exceptions, this seemingly innocuous statement has come to portend the dismal course of Canadian CISG jurisprudence -- at least to date. Although one of the most successful international conventions in history, the CISG did not have an illustrious beginning domestically. Indeed, the case of Nova Tool & Mold Inc. v. London Industries Inc. seemed to establish the trend: the CISG was to be treated by legal practitioners in a cursory manner, and it was often misinterpreted through the lens of domestic law. Some have ignored it altogether; few have attempted to analyze its interpretive methodology.
In a pattern that seems to be a recurring theme in Canadian CISG jurisprudence, counsel for the plaintiff in Nova Tool argued that the CISG governed the sales transaction, yet courts at two levels failed to address its direct applicability to the case. This is a remarkable omission considering that a central tenant of the CISG is, according to Article 7(1), regard is to be had to its international character, and to the need to promote uniformity in its application at the international level. This is a very broad power, and dictates that the CISG be interpreted by courts in an autonomous manner, and not through the lens of domestic law. Moreover, Article 7(2) of the CISG provides that if the Convention does not expressly deal with an issue of law under consideration, such a question is to be settled in conformity with the general principles upon which the CISG is based. These principles are set out in the Preamble of the Convention, and include, inter alia, "the establishment of a new International Economic Order," and the "adoption of uniform rules" to govern contracts for the international sale of goods. Considering "the different social, economic and legal systems" of the world, a uniform law "would contribute to the removal of legal barriers in international trade and promote the development of international trade." As a last resort, if these principles are absent, the courts' interpretation is to be made in conformity with the law applicable under the rules of private international law. While it is difficult to determine the exact weight to be placed on words in a treaty preamble to which Canada has acceded, the Vienna Convention on the Interpretation of Treaties ("Vienna Convention") provides some guidance. It explicitly notes that the preamble of a treaty is to be considered as being part of its context for interpretative purposes. At a minimum, the Preamble informs the other provisions of the CISG, and has a close, ideological connection with Article 7.
The words of Article 7 may admonish, but they cannot ensure that uniformity will reign as an interpretive principle. As John Honnold notes, uniform words in themselves will not guarantee uniform results. There are bound to be interpretational challenges with the CISG. This was recognized during the drafting of the Convention. Gyula Eörsi, who headed the diplomatic conference on the CISG, commented on the problems Article 7 would encounter:
"[i]t could be argued that the provisions of Article 7(1) are but pious wishes: the paragraph is necessarily vague and therefore open to surprising results...the elements of regard to the international character of the Convention and uniformity in its application were well chosen. The first, as we have seen, was devised to check the homeward trend, and the second is an admonition to follow precedents on the international plane."
To meet the challenges in the attempt to create a uniform international law, Article 7 was devised to allow judges, arbitrators, and counsel to refer to the court decisions of other signatory states. Thus, in addition to the courts' own evaluation of the issues in a particular case, international precedent should also be considered for its non-binding, persuasive value. In the spirit of international uniformity, courts need not follow international precedent if it is incorrect or inapplicable. However, there is a duty to consider similar cases from international practice. This is the notion of jurisconsultorium that permeates the Convention. However, as the Nova Tool case illustrates, this is where interpretive errors with the CISG most often seem to arise. Canadian courts have frequently become their own victims of the homeward trend, and invariably fail to transcend their domestic orientation. In doing so, they also fail to seek the autonomous-international interpretation that the CISG requires. In words that appear to foretell the course of Canadian CISG jurisprudence, R.J.C. Munday noted long before the CISG became effective that, "even when outward uniformity is achieved...uniform application of the agreed rules is by no means guaranteed, as in practice different countries almost inevitably come to put different interpretations upon the same enacted words."
The particulars of the Nova Tool case are straight forward. A Canadian seller from Windsor Ontario, Nova Tool & Mold ("Nova"), and a U.S. buyer based in Ohio, London Industries ("London"), concluded a contract for the production and delivery of molds which London was to use to in the manufacture of automobile parts. Time was of essence in the contract, as London was required to meet the production schedule of its customer, Honda Motors. When Nova fell behind schedule, and London discovered numerous quality problems with the product during interim testing, the latter sub-contracted with another producer to finish one of the ordered molds. Accordingly, when Nova sued for payment, London counterclaimed for damages for the extra costs caused by the change of producer to finish the mold. London further claimed damages for breach of warranty, since some of the molds did not conform to the specifications of the contract.
At trial, Zalev J. ruled in favour of London, including its counterclaim. However, considering the international dimensions of this case, it is remarkable that she does not specifically address the issue of applicable law. Thus, no conflict of laws analysis is conducted. This would be understandable had this case arisen from an inter-provincial sale of goods, as there are few conflict of law issues arising from inter-provincial trade. In an international case, where the parties are from different states, this omission is disappointing, if not inexcusable. The trial court does acknowledge that this is a transaction for the sale of goods between a U.S. buyer and a Canadian seller. Having been adopted by the United States and in all jurisdictions in Canada, the CISG automatically applies to all foreign sales transactions when the parties are from two signatory states -- unless the parties exclude it. Considering that London and Nova did not bar the CISG as applicable law, it would apply by default. Instead, the court relies either on the terms of the agreement between the parties or on Canadian case law and common law principles. This seems all the more perplexing considering that U.S. sales law could also, arguably, apply to the case. In fairness to Zalev J., it is likely that counsel failed to make this argument.
The sole reference to the CISG in the trial court's opinion is during the discussion on London's claim for breach of warranty. This is found at paragraph 61, and states:
"London relies on this contractual warranty and also relies on the implied warranties under the International Sale of Goods Act R.S.O. 1990 c. I.10. London relies particularly on Article 1(1)(a) and (1)(b), 35(1), 36(1), (2), 45(1)(a), (1)(b) and 74 all of which follow as Schedule 'B'."
With this single exception, there is no more mention of the CISG and no analysis of any of these specific Convention articles. Why Zalev J. mentioned these articles at all is left for the reader to discern. With a few exceptions, the CISG, as incorporated into the provincial statute, addresses all the standard features of contemporary sales law, such as contract formation, conformity of goods, passage of risk, remedies for breach of contract, damages, etc. Zalev J. could have utilized it as readily as the Ontario Sale of Goods Act. The end result would likely have been the same. But, as Ziegel notes, it's possible that counsel for London raised the issue of the applicability of the CISG in its pleadings, specifically as it related to Nova's breach of warranty obligations; thereafter, it did not mention the Convention in its oral pleadings at trial, so Zalev J. no longer felt compelled to raise any CISG issues. However, considering the importance of the CISG as uniform law internationally, as well as the fact that this was Canada's first case on the Convention, the omission is striking. An important precedent could have been established had the jurists' in this case taken heed. Unfortunately, matters did not fare any better when Nova appealed the case. The Ontario Court of Appeal upheld the trial court's judgment but did not discuss or mention the CISG in its decision.
With counsel for London having raised the issue of the CISG, Zalev J. should have insisted that the parties review and consider the relevant aspects of the Convention. Had this been done, the parties could have made reference to Article 7, which establishes the main interpretive rules of the Convention. In particular, it provides that, "[i]n the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade." This requires national courts to avoid recourse to domestic legal concepts, unless they have no other option. To this end, Article 7(1) emphasizes the importance of having due regard for the Convention's international character, as well as for the need to promote uniformity across all signatory states. Reliance on domestic law would likely lead to different, contradictory, and confusing rules, and would ultimately defeat the purpose of the CISG. As a result, the functional uniformity at the heart of the CISG requires that legal practitioners, tribunals, and courts look to standards of international practice in an interpretation or a determination of provisions of the Convention. In other words, the courts of the signatory states are obliged to consider the practice and judgments of other countries, in the form of non-binding precedent.
In non-CISG cases, Canadian courts have begun to recognize international practices. In particular, reference to the general principles of a treaty, as well as their interpretive rules, have been sanctioned by Canadian courts in recent years. This cosmopolitan tendency is an interesting development considering that Canadian common law principles of statutory interpretation have been relatively more restrictive than their international counterparts, particularly the rules regarding extrinsic evidence, such as the use of legislative history. Generally, this is not admissible. However, the Supreme Court has taken a broad, international approach in a number of cases. For example, international agreements on human rights have been referred to as aids to the interpretation of provisions in the Charter of Rights. In Pushpanathan v. Canada (Minister of Citizenship and Immigration), for example, the Court states that it must adopt an interpretation that is consistent with Canada's obligations under an international convention. It notes that these rules are articulated in the Vienna Convention, and allows for the use of several interpretive devices, such as the drafting history of, and preparatory work on the provision in question, as well as previous judicial commentary on the purpose and object of the treaty. The Court further considers the submissions of the individual state delegations to the convention from the travaux preparatoires. This approach appears to be consistent with methods adopted by the Court in other rulings. For example, in R. v. Parisien, it cited Article 31 of the Vienna Convention, and stated that in interpreting Canada's extradition commitments to Brazil, a treaty must be read in context with reference to its object and purpose, as well as in the light of general principles of international law. Unfortunately, the courts in Nova Tool failed to follow this line of reasoning.
Just as the Supreme Court has utilized an internationalist perspective and methodology in certain cases, some legislatures have also sanctioned this technique in laws that contain an international component. Provincial treaty-implementing legislation has recognized the need to refer to international sources to aid in the understanding of concepts that may be alien to domestic legal practitioners. For example, section 13 of Ontario's International Commercial Arbitration Act provides:
"13. For the purpose of interpreting the Model Law, recourse may be had, in addition to aids to interpretation ordinarily available under the law of Ontario, to,
(a) the Report of the United Nations Commission on International Trade Law on the work of its eighteenth session (June 3-21, 1985); and
(b) the Analytical Commentary contained in the Report of the Secretary General to the eighteenth session of the United Nations Commission on International Trade Law, as published in The Canada Gazette, Part I, Vol. 120, No. 40, October 4, 1986, Supplement."
This reference is apt considering that, like the CISG, the UNCITRAL Model Law is an international convention that is incorporated into the Ontario Act. It similarly introduces a number of words and concepts that may be foreign to the Canadian legal practitioner. This is the result of compromise at the international level, which invariably leads to an amalgam of ideas from civil and common law jurisdictions, as well as from non- and free-market economies, and developed and developing countries. Thus, in an interpretation of the Act, the courts are instructed to look beyond the narrower, domestic rules of statutory construction. As Henry J. notes in granting leave to appeal in Rio Algom Limited v. Sammi Steel Co.:
"There can be no doubt that the proposed appeal involves matters of considerable importance to the development of consistency in the application of the Model Law throughout the nations that have adopted it. As I understand it, the purpose and spirit of the [International Commercial Arbitration Act] in adopting the Model Law, was to make Ontario commercial arbitration law consistent with the law of other international trading countries so as to enhance and encourage international commerce in Ontario and the resolution of disputes by rules of international commercial arbitration: for this it is important that appellate courts address the issues emerging in this case."
(iii) International Precedents and the CISG
As the Nova Tool case illustrates, the CISG requires legal practitioners to refer to and, if appropriate, utilize emerging case law from other signatory states. With the burgeoning of case law on the Convention globally, the practice of considering foreign cases is slowly emerging -- at least in jurisdictions outside Canada. A review of this development provides some perspective on Canada's place within this larger jurisprudence. In particular, the issues of contractual and implied warranties in Nova Tool have been considered in a number of other international CISG cases. For comparative purposes, it is interesting to take into account how some of these jurisdictions have dealt with these issues, as well as look at the extent to which they have referred to foreign case law.
There is no doubt that an autonomous-international interpretation of the CISG could have informed the court in Nova Tool. For example, the breach of warranty issue raised in relation to CISG Article 35 is often implicated in many commercial sales disputes -- both domestically and internationally -- due to the nature of the seller's key obligation: that it provide goods of the quantity, quality, and description required in the contract. This usually requires a trial court to conduct an evidentiary inquiry to determine whether there was non-conformity, and if so, the nature and extent of the non-conformity. In such cases, as, for example, Nova Tool, considerable reference is made to the description of the goods in the contract. In a purely domestic transaction, national law is cited, and the decision is made on this basis. However, national laws differ world-wide on this point. For example, the corresponding provisions to Article 35 are those contained in the Ontario Sale of Goods Act sections 14, 15, 16, and 55. There are similarities between the CISG provisions and the provincial provisions, but there are also some significant differences. If the CISG is to provide uniformity for parties involved in international transactions, courts are obliged to harmonize divergent national sales laws by considering international practice and the relevant judgments of courts in other signatory states. Thus, the extent to which foreign courts have been influenced by the homeward trend, or have sought uniformity of interpretation at the international level in similar CISG cases, requires consideration.
It has been less than a decade since the first cases on the CISG began to refer to foreign case law in search of the non-binding precedents that the Convention requires courts to contemplate in the quest for international uniformity. The first country to consider foreign precedent in a CISG case was Italy, in 1996. As in Nova Tool, the Italian case of Sport d'Hiver di Genevieve Culet v. Ets. Louys et Fils also involved the issue of product non-conformity. In its ruling, the Italian court referred to similar CISG cases in Switzerland and Germany before reaching its verdict.
In 1999, the Austrian Supreme Court considered a dispute involving the sale of non-conforming wall panels from a German seller to a buyer in Vienna. In the attempt to resolve the dispute, the parties agreed that the panels would be shipped back by the buyer. However, upon return of the product, the seller found them to be severely damaged and unfit for resale. The seller invoiced the buyer for the value of the panels, claiming that they were not shipped back correctly. It also took the position that the buyer had assumed the transportation risk. The court held that the shipping of non-conforming panels constituted a delivery of non-conforming goods and a breach of contract under CISG Article 35, as opposed to a non-delivery of goods. This distinction is significant as it provides that the seller retains the risk of loss per CISG Article 82(2)(a) and (b). By contrast, Austrian sales law would have made a distinction between the delivery of non-conforming goods and non-delivery of conforming goods. This distinction hinges on the degree of the deviation from the contract and on whether the incorrect delivery was subject to approval. In resisting the temptation of applying domestic law, the court considers this distinction with reference to academic CISG commentary. By relying on these authorities, the court suggests a commitment to interpret the CISG in a manner that promotes international uniformity.
A similar case was decided in Belgium in 2001. While this case arose after Nova Tool, it is still interesting to consider the difference in the judicial approach applied elsewhere. In its attempt to avoid paying the contract price for goods, the buyer claimed a "non-conforming delivery" and "latent defects," but invoked the Belgian commercial code to support its position. In the decision, the court referred to existing case law and other authorities, but resisted the homeward trend and held that the CISG to be the applicable law. More importantly, the court insisted that "[t]he CISG knows only one uniform concept of conformity," and within the Convention, "no distinction is made between a guarantee against latent defects and the seller's obligation to deliver. The seller must deliver conforming goods and that is all."
One of the more remarkable applications of the interpretive methodology embodied within the CISG is another Italian court ruling, Tribunale di Vigevano, decided in 2000. In a consideration of product non-conformity and notification rules under CISG Articles 35 and 39, the judge cited cases from Austrian, Dutch, French, German, Italian, and Swiss courts, as well as ICC arbitral awards. The court also noted two CISG websites and the UNILEX database on the CISG. While recognizing the non-binding nature of these cases, the court remarked that the purpose in making these references was "to assure and promote uniform enforcement of the United Nations Convention [the CISG]." Not surprisingly, this decision has been praised by CISG scholars as ground-breaking in the quest to have courts advance the goal of uniformity and discourage the natural inclination to domestic legal concepts and authorities. As Franco Ferrari remarks:
"The conclusions which may be drawn from reading the Tribunale di Vigevano decision are obvious. Recourse to foreign court decisions in interpreting and applying the CISG, something that legal scholars have been asking for from the time the Convention came into force, is apparently possible. It is equally obvious, however, that not all courts (as mentioned earlier) will apply the CISG as did the Tribunale di Vigevano. We can only hope that the Tribunale di Vigevano will soon be called upon to decide another case dealing with the CISG."
Ferrari is correct in suggesting that CISG uniformity is best achieved when courts make reference to foreign judgments. Fortunately, these references appear to be occurring more frequently than in the past, particularly in Italy where many judges are relatively young, and have had legal training on the CISG. Two years after the Vigevano case, another Italian court, in Rimini, cited 37 CISG precedents in a single ruling. As in Nova Tool and the foreign cases noted above, this case also involved various articles of the CISG concerning non-conforming goods. Since the Rimini case, two other Italian decisions have referred to foreign CISG jurisprudence, but these cases did not involve issues of product non-conformity.
Foreign courts have also considered the issue of damages for breach of contract under the CISG. As already noted, the issue of damages under Article 74 was raised by London in Nova Tool, but it received only a single mention in the trial court's judgment, being lumped together with the breach of contractual and implied warranties. As the first Canadian court to interpret the CISG, Zalev J. in Nova Tool should have conducted a thorough analysis of all the relevant facts and applied them to all of the appropriate provisions of the Convention. Such an application could have contributed significantly to the development of case law on the CISG, not only within Canada, but internationally as well. Unfortunately, by referring to strictly domestic legal concepts, the court in Nova Tool missed another opportunity during its discussion on damages for breach of contract. For example, the court considered the common law concepts of accord and satisfaction, and setoff. It similarly discussed the mitigation of damages and calculated these with reference to domestic law. It failed to invoke any reference to the CISG, particularly, Articles 74-77, which establishes a unique set of rules for damages.
The Canadian court in Nova Tool is not alone in its failure to consider the relevant aspects of the CISG. As a relatively new law in 66 countries around the world, it might be expected that legal practitioners in the signatory states will need time to become familiar with the CISG and its unique interpretive methodology. In fact, the worldwide collection of case law on the Convention is replete with instances were courts have displayed remarkable ignorance of the CISG. Even common law courts in other signatory states have made interpretive errors with the CISG. For example, a controversial American case in 2002 also considered damages under Article 74, and overturned a district court ruling. It did so even though the court deemed the CISG to be the governing law. Further, it ultimately held that because certain references or terms were not explicitly mentioned in Article 74, such as legal fees being recoverable as damages, the matter was not expressly settled by the CISG. The gap was, thus, filled by domestic law, even though there was a wide body of extant case law from other CISG signatory nations holding that legal fees are recoverable under Article 74. While a flawed analysis of the CISG led to an imperfect decision, the court still seemed to have a more advanced understanding and appreciation for the Convention that did its Canadian counterpart in Nova Tool. So too did the U.S. Solicitor General. In an interesting statement in the certiorari petition to the U.S. Supreme Court, the Solicitor General pointed out the importance of seeking international uniformity in the CISG:
"Article 7(1)'s reference to 'the need to promote uniformity in [the Convention's] application' is not appreciably different from the rule that judicial decisions from other countries interpreting a treaty term are 'entitled to considerable weight'."
It might be suggested that broad interpretations of CISG provisions, such as that suggested by the use of Article 7(1), could lead to extreme results or the establishment of erroneous precedent. As if acting reflexively, the court in Nova Tool adopted the default approach: it provided neither a broad nor narrow interpretation of the Convention. Rather, it effectively ignored the CISG. In doing so, it failed to discuss, apply, or analyze the CISG in any meaningful way. Instead of taking the opportunity to chart new legal territory, it fell back on familiar domestic legal concepts. The result is an opinion that provides little insight into the much-anticipated first Canadian court decision on the Convention. In this respect, the court in Nova Tool seemed to set the tone for future cases.
CHAPTER 4: LA SAN GUISEPPE v. FORTI MOULDING: A SMALL STEP FORWARD
(i) Background to the Case
Shortly after the release of the court decision in Nova Tool, another judgment involving the CISG was released in Ontario. While this case can be considered an improvement over the handling of the CISG in Nova Tool, it also fails to properly apply the Convention. In particular, while the CISG is deemed to be the governing law in La San Giuseppe v. Forti Moulding Ltd., its application and treatment by the court is far from satisfactory. Relevant points of the CISG were overlooked, including the requirement that the court recognize the international character of the Convention, as enunciated in Article 7(1), in the goal of promoting interpretive uniformity.
In La San Giuseppe, an Italian manufacturer of picture frame mouldings (La San Guiseppe) sold its product from 1989 to 1996 to a Canadian buyer (Forti Moulding), located in Toronto. La San Guiseppe also sold a piece of equipment to Forti Moulding, a double mitre saw. In the numerous transactions over the course of seven years, there was no written agreement between the parties. Around 1995, Forti Moulding encountered financial difficulties and became delinquent in meeting a series of payment deadlines that had been granted by La San Guiseppe. The latter party thus initiated an action against Forti Moulding to recover a balance owing of 48,707,460 lira plus interest. Forti Moulding counterclaimed for about twice this amount for damages, alleging lack of conformity of some goods, over-shipments, and added that the mitre saw was defective.
(ii) Application of the CISG
In commencing this action in Ontario, La San Guiseppe argued that the CISG was the governing law in the case, having been in effect in Ontario since its incorporation into law through the International Sale of Goods Act in 1992. The defendant argued that, although the CISG became effective in Italy in 1988, it did not apply in this case because the initial, master contract between the parties was made in 1989 and, therefore, before the Convention became law in Ontario. Based on this argument, the defendant appeared to have been referencing Article 100(1), which provides that the rules on the formation of the contract (Parts I and II of the CISG) are applicable only when "the proposal for concluding the contract" is made on or after the Convention enters into force for the relevant contracting state or states. Furthermore, pursuant to Article 100(2), the rules governing the rights and obligations under contracts (Parts I and III of the CISG) are applicable "only to contracts concluded after the date when the Convention enters into force" for the relevant contracting state or states. In other words, the Convention does not have retroactive effect. The court also correctly noted that the contract was for the sale of commercial goods, and not a contract for the supply of personal or domestic goods. Thus, Article 2(a), which provides that the CISG does not apply to goods bought for personal, family, or household use, did not exclude the contracts between the disputing parties.
Swinton J. found that no contract was made between the parties in 1989, that is, prior to the CISG becoming law in Ontario. Rather, in their initial dealings, they simply agreed to establish a business relationship. This happened to last for several years, but back in 1989 there was no master agreement that contained the essential terms to create a sales contract, such as price, quantities, term, or payment conditions. Thereafter, each order made and accepted between the buyer and seller created a new contract. The result was the formation of a series of individual contracts and transactions for the supply of goods over the course of many years. Considering that the items in dispute arose during or after 1993, Swinton J. correctly concluded that the CISG was the applicable law. However, in arriving at this conclusion, she made a few stumbles along the way. One example illustrates a certain lack of comfort and familiarity with an international convention. In her opening paragraph on the issue of governing law, Swinton J. noted that La San Guiseppe had failed to provide documentary proof that Italy signed the CISG in 1986. Nevertheless, she was willing to forgo this requirement because Italy's signature was a matter of "public record." There is no explanation why accession by a foreign country to an international convention might be a matter of public record, or what requirements the court has for a party to prove that a particular international convention or local law applies in a foreign jurisdiction. The remark, thus, fails to clarify whether international conventions merit the same judicial notice as federal and provincial legislation within Canada. Furthermore, if this were the case, Swinton J. should have noted whether this were due to a common law rule or because a federal or provincial statutory provision required such notice.
Furthermore, in her opinion Swinton J. referred only to Article 1 of the Convention when ruling that the CISG did apply. No mention or analysis of Article 100 was undertaken, which seems odd considering the defendant appeared to rely on it in the attempt to dismiss the application of the CISG as governing law. Rather, she stated that "pursuant to Article 1, the Convention applies both because the contracting parties have places of business in contracting states, and because the rules of private international law lead to the application of the law of a contracting state -- namely, Ontario." The latter part of this sentence is a reference to Article 1(b) which provides that the Convention also applies to contracts of sale of goods between parties "when the rules of private international law lead to the application of the law of a Contracting State." To further confuse matters, while Swinton J. is correct in noting that the CISG applies to parties with businesses in different contracting states, her claim that the rules of private international also lead to Ontario as the applicable law of a contracting state is also perplexing for two reasons. Firstly, without a written contract it would remain up to the court to determine which of Ontario or Italy would have the closest connection with the contracts. As the seller, La San Guiseppe performed most of its contractual obligations in Italy. A strong argument could be made that Italy was, thus, the more appropriate forum. On this note, there is no further discussion. A possible reason for this void is that counsels for both parties were not interested in raising or pursuing the issue. That being the case, why Swinton J. brought it up is all the more puzzling. Secondly, if the CISG applied because the disputing parties were located in different contracting states, why Swinton J. felt the need to refer to -- or possibly invoke the rules of -- private international law is also bewildering. Private international law may lead to an application of the CISG when a party resides in a non-contracting state. This might be the case, for example, where a forum's conflict of law rules point to the law of a CISG contracting state, or where both parties have their places of business in different contracting states, but find themselves in a court of a non-contracting state whose rules of private international law point to the law of a contracting state. None of these situations were present in this case, so the need to refer to the rules of private international law in a determination of the CISG as governing law is superfluous.
(iii) Lack of Conformity and Reasonable Time
One of the key issues in the case was whether the buyer, Forti Moulding, gave notice of lack of product conformity within a reasonable time to the seller. This is a requirement of Article 39 of the Convention, and is also one of the most litigated articles in the courts of the signatory states, accounting for about one-quarter of all cases worldwide. The reason for such a large number of cases is likely due to the vague and subjective nature of the term "reasonable time," and the fact that criteria for determining a "reasonable time" period was never included in the Convention, even though the term is used in approximately 37 provisions of the CISG. Even without taking into account the definitional complexities of this term, most sales controversies grow out of disagreements concerning whether goods conform to the contract. While Article 38 provides rules on how soon the buyer "must examine" the goods, Article 39 provides that a buyer notify the seller "within a reasonable time" after it discovers, or ought to have discovered, that the product does not conform to the contract. The latter article also provides that notice of non-conformity in all cases must be no later than two years after delivery. By comparison, from a Canadian common law perspective, this is a drastic provision, as no provincial sale of goods act contains prescriptive periods for initiating an action, or imposes time limits to preclude buyers from complaining about non-conforming goods. One common element in the jurisprudence of all signatory states of the CISG, however, is the obligation of the buyer to demonstrate the reasonableness of the time in which it gave notice of the non-conformity to the seller. Under the CISG, failure to notify the seller of the non-conformity within a reasonable time will usually deprive the buyer of all remedies, including the right to claim damages. This is a relatively harsh sanction, and may help to explain why Forti Moulding attempted to argue against the application of the CISG as the governing law in this case.
In considering the issue regarding the alleged non-conforming goods, the court rejected the claim by Forti Moulding because timely notice had not been given as required by Article 39. In addition, the buyer had not made any written complaints as to the lack of conformity until it filed its Statement of Defense with the court a few years later. Furthermore, the court rejected reliance on Article 40, which provides that the seller cannot rely on the limitation period if it knew, or should have been aware, of the non-conformity, and did not disclose this fact to the buyer. As there was no evidence to support a conclusion that the seller was aware of the defects, the end result was that the buyer could not rely on Article 40 to counteract the debilitating effects of Article 39. A similar approach was also used when deciding the issue concerning the mitre saw. The court held that La San Guiseppe gave no warranty on the saw when it sold it to Forti Moulding. However, the court should have explored Article 35(2)(a) of the CISG, which provides for an implied warranty of merchantability on all sold goods, unless "the parties have agreed otherwise."
In an interesting comment that appears to demonstrate a lack of understanding of the interpretive methodology of the CISG, Swinton J. recited the defendant's argument that it made complaints orally to La San Guiseppe on many occasions. She then commented that "the defendant argued that the complaints are not barred, and the serious defects in the goods, as well as overshipments, entitle it to remedies in accordance with the Sale of Goods Act, R.S.O. 1990, c. S.1." Similarly, further into her judgment, Swinton J. finds that there is "no basis for the claims that the goods were not of merchantable quality nor in compliance with their description under ss. 14 through 16 of the Sales of Goods Act." She commented no further on how the Ontario Sales of Goods Act can coexist with the CISG as the governing law in this case. As already noted in Nova Tool, courts should not interpret provisions of the CISG and invoke, or analogize, them to domestic law provisions covering the same issues. To do so is to misapply the CISG, and would lead to fragmentation and inconsistency in the application of the Convention, which is contrary to the objective of uniformity. In fairness to Swinton J., as Ziegel notes, it is possible that in these references to the Ontario Sales of Goods Act she was duped into responding to the buyer's pleadings to invoke domestic law. The correct approach would have been to hold firm to the position that there was no need to refer to or apply Ontario's internal sales rules, as the CISG was the applicable law governing the case. In the CISG's attempt to codify the law on contracts for the international sale of goods, it was designed to replace existing domestic laws and case law. In this respect, as Felemegas notes, "it was not meant to be complementary to national laws; rather, it was intended to be an exhaustive regulation." Even with the gaps that do exist in the CISG, the first attempt should have been to try to resolve them, not by reference to relevant provisions of Ontario sales law, but rather by analogizing them to the "general principles" on which the Convention is based. Utilization of the "general principles" of the CISG can be an important, but not exclusive, mode for filling gaps in the Convention. To some scholars, such as Felemegas, this self-contained interpretive methodology is comprehensive enough in scope that "it should be a rare, or non-existent, case where there are no relevant general principles to which a court might have recourse under Art. 7(2)." Unfortunately, this has not been the case in Canadian courts, which frequently seem inclined to rely on domestic law and legal principles -- even when gap-filling is unnecessary.
As to the alleged overshipment, the court found that the parties had agreed to a ten percent variation of the ordered quantity and that on previous occasions higher quantities had been accepted and paid for by the buyer. In a now-familiar pattern, Swinton J. rejected the claim pursuant to Article 52(2) of the CISG, "and s. 29(2) of the Sale of Goods Act," where "there can be no complaint several years later." This is the third occasion in which the court has co-mingled Ontario's internal sales with the CISG. As already noted, the homeward trend of applying provincial sale of goods act analogues to an international sales dispute is antithetical to the principles under Article 7 of the CISG. Furthermore, even in her reference to CISG Article 52(2), Swinton J. misapplies the provision. What it states is that the buyer has the option to either reject the excess quantity, or to pay for it and retain the overshipped goods. More precise wording could have been used if, by this reference, the court instead meant to say that due to the lengthy delay in reporting non-conforming goods, the buyer was estopped from denying that it had agreed to retain the excess goods.
In concluding, the court dismissed the defendant's counterclaim, and awarded judgment in favour of the seller for the amount owing, plus pre- and post-judgment interest "in accordance with s. 128 of the Courts of Justice Act." What the court failed to recognize is that, as a case governed by the CISG, Article 78 of the Convention, which covers the seller's entitlement to interest, should have been applied in lieu of domestic law. Under Article 78, recovery of interest is authorized on the payment price or any sum in arrears. While the CISG is silent on the computation of the rate of interest, reference to Article 7, the legislative history of the Convention, and scholarly opinion would likely lead to the conclusion that the rate of interest should be that in the country where the injured party has its place of business, in this case, Italy. By contrast, application of the Courts of Justice Act would lead to a rate of interest prevailing in the jurisdiction that is deemed to be the proper law of contract, that is, Ontario.
Similarly, the court decided that the currency conversion of the sum owing of 48,707460 Italian Lira should also be decided with reference to domestic law, per the judgment date rule. There is no provision in the CISG that addresses the proper date for currency conversion. This being the case, the court should have engaged in gap-filling, according to the procedures of Article 7(2). Obviously, the court did not consider the determination of a date for exchange rate conversion as being governed by the Convention, as no gap-filling analysis was conducted. As the matter was governed by the CISG and a gap existed, the court was required to first look to the general principles of the convention. If this did not provide a solution, the court should have then looked to the rules of private international law. Therefore, in this case, the outcome may have led to the same end result.
While an imperfect and inconsistent decision in terms of its treatment of the CISG, the court's attempt to deal with the Convention was superior to the handling it received in Nova Tool. In this respect, from a positive perspective, La San Guiseppe can be deemed a step forward in Canadian jurisprudence on the CISG; more realistically, it also suggests that much progress remains.
CHAPTER 5: MANSONVILLE PLASTICS v. KURTZ: BREACH OF CONTRACTUAL OBLIGATIONS AND THE CISG
As already noted in the cases discussed thus far, most sales disputes arise out of some disagreement over whether the goods conform to the contract. Even the most thorough contract may fail to cover the issue that ultimately leads to litigation. Consequently, it is often up to the courts to determine the exact nature of each parties understanding and expectation at the time of the sale. In different legal jurisdictions, this problem is dealt with in various ways. For example, in common law jurisdictions, this issue is covered under the concept of "implied warranty," "expressed warranty," or "condition" regarding product quality or fitness for a purpose. By contrast, civil law jurisdictions use a different approach, and deal with issues of quality on the basis of distinctions between "latent" defects (vices cachés) and "apparent" defects (vices apparents). Similarly, the concept of "merchantability" or "merchantable quality," is a standard of conformity that is found in English common law. Its counterpart is the "average quality rule" found in the German, Austrian, French, and Swiss civil codes.
As these examples illustrate, these words are unique to specific jurisdictions and are charged with legal meaning. To resolve these differences, the CISG requires the displacement of domestic legal concepts, such as "warranty," when determining each party's respective understanding and expectation upon contract formation. This explains why the CISG uses words that describe specific events, or results, that are typical in an international transaction, and not technical terms charged with legal meaning specific to a legal regime. This innovative approach to a common legal language within the CISG has been dubbed a new lingua franca. This was a desired outcome among the delegates at the convention that created the CISG. John Honnold, who served as the head of UNCITRAL during the drafting of the CISG, noted that delegates at Vienna focused on hypothetical situations and sought consensus on desired outcomes typical in an international business transaction. This allowed them to rise above the conceptual barriers of their own legal background, and to reach common and acceptable solutions that would be able to transcend national borders. Similarly, courts are required to apply the plain or generic language embodied in the CISG in the quest for international uniformity. This is an "open-textured" approach. As Amy Kastely notes on her rhetorical analysis of the CISG, "[t]o unify the law among nations means to subject people around the world to a single set of rules and principles and to have them understand and conform to these rules and principles as they would to the laws of their own communities." However, this "requires the establishment of a shared language in which legal deliberation can be conducted." Without this understanding and sense of community, there would develop divergent court and arbitral opinions on the CISG. This would also ultimately destroy the Convention's goal to create a truly international law on sales contracts that bridges various legal regimes. Unfortunately, as the following case illustrates, Canadian courts have resisted membership in this textual community; they have struggled with the notion that the CISG requires them to utilize legal terminology and concepts that are not of domestic origin. In other words, Canadian courts have been reluctant to discard their interpretative baggage.
In Mansonville Plastics (B.C.) Ltd. v. Kurtz GmbH, the plaintiff ("Mansonville") of Surrey, British Columbia, claimed damages of approximately $2.7 million against the defendants (collectively known as "Kurtz") claiming deficiencies and defects in relation to two pieces of equipment that Mansonville purchased from Kurtz. Kurtz is an international equipment manufacturer with its head office in Germany and production facilities in Austria. It also has a sales and service office in Wisconsin, USA. The equipment Mansonville purchased was used for the manufacture of polystyrene (or "styrofoam") construction products. In its claim, Mansonville alleged breach of contract and breach of statutory warranties of fitness. This related to the claimed late delivery of equipment from Kurtz, as well as from the inability of the machines to produce styrofoam of the quality claimed by the company's representatives at the time of the sale. The equipment failure lasted for approximately two years, but subsequent adjustments to the machinery ultimately produced satisfactory product. However, some deficiencies in the equipment could not be corrected, and required the on-going expenditure of additional manufacturing time and materials to produce styrofoam of an acceptable standard to the industry. Kurtz defended the action on the basis that there were no breaches of contract or statutory warranties. It took the position that many variables are involved in manufacturing styrofoam, and claimed the equipment was mechanically sound, and that it had operated within its normal parameters. In any event, Kurtz also maintained that Mansonville's claims were time-barred under German law, which it argued was the applicable law.
(ii) Applicable Law and the CISG
A sales contract cannot exist without a governing law, which provides a mechanism for the interpretation and enforcement of the contract in cases of dispute. In most jurisdictions around the world, the choice of governing law in an international sales contract can be determined by the parties. The application of the CISG is governed by Article 1. In an international sale of goods transaction, the Convention automatically applies if both parties are from signatory states or if the rules of private international law lead to an application of the law of a signatory state. Furthermore, the CISG is self-inclusive in that Article 6 requires that the Convention be excluded if the parties do not want it to govern their contract. It must be noted that if a contract is silent on the application of the CISG, but, for example, the contract generally stipulates that the laws of British Columbia, are to apply, the Convention is thought to be applicable as it is incorporated into the province's domestic law. As the contract between Masonville and Kurtz did not stipulate the governing law, domestic conflict of law rules provide that the private international law of the state which has the "closest and most substantial connection" to the contract would be applied. While the CISG is silent on the choice of law issue, the "closest connection" test appears to be in harmony with Article 10 of the CISG. It provides that "if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance." Thus, the first issue to be resolved by the court was to determine the jurisdiction with the closest connection to the contract and, secondly, whether Mansonville's claims were time-barred by the applicable law. All parties agreed that should German law be deemed to apply, Kurtz would be able to use the time limitations defence to effectively bar the claim. Contrarily, the parties noted that should Austrian or British Columbia law apply, the claim would not be time- or statute-barred. For these reasons, the laws from these three jurisdictions were all deemed to be potentially applicable by Tysoe J. U.S. law was not considered, even though Kurtz had a sales and support centre in Wisconsin. Tysoe J. felt that although the U.S. office was involved in the servicing of the equipment sold to Masonville, this did not make it a vendor or a party to the contract.
While all of the jurisdictions involved in the case have implemented the CISG, Tysoe J. provided no explanation as to why the claim would be barred in Germany, but not in British Columbia or Austria. Presumably, he was considering the various limitations laws concerning procedure and not the CISG, which theoretically provides uniform treatment to all parties in any signatory jurisdiction. As such, the CISG is designed to discourage "forum shopping" as it applies the same law to all litigants, regardless of whether one is in a home or a foreign court. However, with the CISG as the law governing the transaction, it would be thought that the time limitations issue would have been determined with some reference to the CISG, at least regarding the matter concerning the amount of reasonable time within which a notice of lack of conformity must be given.
After all, almost one month had lapsed between the time that the equipment was set-up and operating properly and notice sent to Kurtz that there were apparent production problems. Considering this delay, the CISG's notice requirement under Article 39 should have been addressed by the court. Instead, Tysoe J. determined the time-bar and statute-bar issues on the basis of domestic case law and common law principles. In the final analysis, the court determined that Germany, and then Austria, had the least connections to the transaction.
(iii) 'Statutory Warranties' and the CISG
Having deemed British Columbian law to prevail, Tysoe J. next considered the various claims of breach of contractual obligations between the parties. In the process, he utilized the common law term "statutory warranties," even though that phrase is found nowhere within the text of the CISG. Furthermore, although Article 35 of the CISG mirrors the common law concepts of express and implied warranties, it is perplexing that the plaintiff initiated this action on the basis of an alleged breach of "statutory warranties" when the CISG utilizes much more neutral terminology. This nuance was obviously overlooked by the court and counsel, but it is typical of the entrenched domestic legal concepts among jurists' in Canada. One possible explanation for this oversight is that, although Article 35 of the CISG is not identical to common law provisions on statutory warranties of fitness, they are substantially similar and would likely lead to a comparable result. However, as C.M. Bianca notes in his commentary on Article 35, the CISG makes a concerted effort to avoid "the various distinctions still acknowledged in domestic laws between conditions and warranties [in common law], and specially the difficult [civil law] distinction between delivery of goods of a different kind (aliud pro alio) and defects or lack of qualities." Article 35 replaces these distinctions with the concepts of non-fundamental and fundamental breach of contract. In other words, the CISG focuses, not on the technical language of a specific legal regime, but on an action, in this case being whether or not the seller has provided goods conforming to the terms of the contract. If the goods are found to be defective or without the due qualities, the contract has not been properly performed. Thus, under the CISG, non-conforming goods are regarded as a defective performance of the seller's delivery obligation.
One of Masonville's assertions was that Kurtz was late in its delivery of the equipment. Kurtz defended its position by noting that Mansonville forfeited the right to complain about late delivery because it was the first party to breach its obligations under the contract. This breach concerned the requirement to provide Kurtz with a deposit upon order of the goods through a letter of credit. During the delay in receiving this payment, Kurtz suspended its work on the equipment. While payment in full was eventually provided to Kurtz, it arrived two weeks late. The court found that this delay was not a sufficient defence for Kurtz's own tardiness in supplying late goods to the buyer. Even by taking into account the two week delay in payment from the buyer, Kurtz was still six weeks late in supplying its equipment.
In the first reference to the CISG, Tysoe J. noted correctly that "the fact that Mansonville was in breach of its obligations under the contract does not necessarily excuse Kurtz from the performance of its obligations." In limited circumstances, the CISG allows for anticipatory breach or suspension of performance if it becomes apparent that the other party is unable to substantially perform because of a serious deficiency in its ability to honour its contractual obligations. The aim is to provide a remedy while keeping a contract alive. With an apparently respectable grasp of the CISG, the court stated:
"Kurtz relies on the United Nations Convention on Contracts for the International Sale of Goods (the "Convention"), which is made applicable in British Columbia by the International Sale of Goods Act, R.S.B.C. 1996, c. 236 (and which is also applicable in Austria and Germany). Article 71 of the Convention provides that a party to a contract may suspend the performance of his obligations if it becomes apparent that the other party will not perform a substantial part of his obligations. Subsection (3) of Article 71 states that a party suspending performance must immediately give notice of the suspension to the other party."
As Tysoe J. recognized, one limitation on suspension of performance is that the suspending party must give immediate notice of the suspension to the other party. This notice requirement enables the defaulting party to give adequate assurance of its performance. If a party declares that it will not perform its obligations, notice does not need to be provided. Fortunately, the court determined that the notice and assurance requirements were adequately provided by the respective parties.
Tysoe J. was less successful in his treatment of Kurtz's obligation to provide goods that were fit for the purpose know to the seller at the time of the conclusion of the contract. As already noted, even though the CISG does not utilize the common law term "statutory warranties," Tysoe J. analyzed the transaction on the basis of this domestic legal concept. In the process, the requirement to observe the international character of the CISG was neglected. His analysis began under the heading "Statutory Warranties of Fitness," and noted:
"Article 35 of the Convention reads, in part, as follows:
'(1) The seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.
(2) Except where the parties have agreed otherwise, the goods do not conform with the contract unless they:
(a) are fit for the purpose for which goods of the same description would ordinarily be used;
(b) are fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract...'."
In a typical example of the homeward trend, Tysoe J. concluded this section by combining domestic law and common law principles with the CISG. He stated that "[s]ections 17 and 18 of the B.C. Sale of Goods Act, R.S.B.C. 1996, c. 410 are to like effect." Not only is this comparison a simplification, but, as already noted in the Nova Tool and La San Guiseppe cases, mixing domestic law with the Convention is antithetical to the requirements of CISG Article 7, and suggests judicial parochialism. As John Felemegas observes in his study on Article 7, "[a]ny interpretation of the CISG's terms that relies on specific national connotations will be calamitous because what is wanted is an interpretation of the CISG that is not only uniform, but truly international as well." With this brief reference, Tysoe J. demonstrated the court's inability to transcend its domestic orientation. In doing so, there was a failure to pursue an autonomous-international interpretation of the CISG.
Immediately following these references to the CISG and domestic law, Tysoe J. invoked the leading domestic case law on statutory warranties of fitness. Had he instead remained true to the requirements of Article 7 and treated the CISG as an autonomous-international document, Tysoe J. would have deferred to the relevant judicial opinions from other signatory states. While there are plenty of examples of cases that provide poor treatment of the CISG, many others are sensitive to the international character of the Convention, and are illustrative of the resistance to the homeward trend. It is these latter cases which tend to be praised by CISG academics and are the subject of much scholarly commentary. They are also readily available in translated form. As already noted above in the Nova Tool case, international cases on Article 35 of the CISG are growing, and it is case law of this type that the court needed to refer to in order to guide its approach in interpreting and applying the Convention in an internationally uniform manner. Instead, Tysoe J. referred to five domestic cases, and one U.S. case -- which seems incongruous considering the judicial parochialism evident in the decision -- to direct him in the treatment of Article 35. None of these cases concerned the CISG or involved the international sale of goods. Yet this did not prevent the court from finding that "Kurtz did not breach the statutory warranty of fitness under either the Convention or the B.C. statute."
The co-mingling of the CISG and local law appears to be an unfortunate, but common, feature of Canadian jurisprudence. But perhaps ignoring the CISG altogether is preferable to mixing it in an inappropriate way with domestic law. In the second half of his decision, Tysoe J. considered Masonville's accusation that Kurtz breached its contractual warranties to the buyer. This involved alleged promises made by Kurtz prior to the purchase of the equipment. However, there was no further reference to the CISG in the court's relatively detailed analysis of the claimed breach. This omission is glaring considering that the court acknowledged the application of the CISG as governing the transaction. It also referred to the Convention in the first half of the decision during the discussion on the breach of statutory warranties of fitness. Without explanation, Tysoe J. assessed the breach of contractual warranties with sole reference to domestic case law and the common law principle of the parol evidence rule. On this basis, he found that Kurtz did breach some contractual warranties to the buyer regarding the performance of the equipment. The CISG could have equally guided the court in this analysis. For international sales transactions, it provides norms and principles for contractual interpretation and the introduction of evidence. For example, Article 8 generally permits all relevant circumstances, including the negotiations, to be considered in the course of contract interpretation, and Article 9 incorporates certain trade usages into the contract. Similarly, Article 11 provides that a contract and its terms may be proved by any means, including by witnesses, and need not be in writing. These rules should trump domestic rules on the interpretation and evidence of contractual agreements.
(iv) Damages, Interest, and the CISG
The court found that Mansonville was entitled to be compensated in damages for the breach of contract resulting from the six week delay in delivery of the equipment, as well as for the breach of the contractual warranties regarding the initial and ongoing performance problems with the equipment. In assessing damages, the court considered several domestic cases, and heard expert testimony from both parties on the calculation of the economic loss allegedly incurred by Masonville. Citing provincial case law, Tysoe J. ruled that these calculations were based on assumptions which may not be valid, and that the assessment of damages could not be done with sole reference to mathematical calculations. As the governing law, the CISG could have provided similar guidance. Article 74 provides that an injured party may recover as damages "a sum equal to the loss, including loss of profit, suffered...as a consequence of the breach." This incorporates the notion that an action for damages is to place an injured party in the same economic position it would have been in had the contract been performed. The reference to "loss of profit" is made explicit because certain domestic legal systems do not recognize the concept of "loss" to include loss of profit. It must be noted, however, that while the court considered damages for breach of contractual warranties, the CISG has no separate provision for a breach of this type. Instead, Article 74 applies to all breaches of contract. But like domestic law, there are no specific rules in Article 74 describing the appropriate method for determining the loss suffered as a consequence of the breach. Courts are allowed to use their discretion to calculate a loss in a manner that is best suited to the circumstances.
In the final analysis, Masonville was awarded $575,100 plus pre-judgment interest. While the CISG contains two explicit references to interest, it provides no guidance for calculating interest and gives no indication of the circumstances under which pre-judgment interest should be awarded. Article 78, however, does introduce the broad principle of a general entitlement to interest. Furthermore, there are numerous CISG cases from other signatory states on the subject of interest, but they are not consistent their rulings. The three general approaches to the matter are: i) the CISG determines rate of interest by recourse to its "general principles" under Article 7(2); ii) the rate of interest is determined in conformity with the law applicable by virtue of the rules of conflicts of law of the forum; or, iii) the rate of interest is determined by the law of the forum without reference to its rules of conflicts of law. As the Masonville court made no reference to the CISG or to the conflict of law rules, by default it would have calculated interest by its internal rules. Some commentators have suggested that the basis for this position is that the calculation of interest is a procedural issue. As such, it is subject to the law of the forum, without reference to conflicts of law rules. However, most courts that have ruled on the interest calculation issue have adopted the approach that the conflict of law rules of the forum should determine which law will govern the awarding of interest under the CISG. Many CISG commentators also agree with this approach. The failure of the court in Masonville to raise or address the issue exemplifies the difficulty legal practitioners have had in accepting the CISG into fold of Canadian jurisprudence.
CHAPTER 6: SHANE v. JCB BELGIUM: THE CISG AND PRODUCTS LIABILITY
(i) Background to the Preliminary Motion
Certain matters are explicitly excluded from the application of the CISG. This is to afford the protection of domestic laws in certain areas, such as consumer sales and products liability. Thus, Article 2(a) provides that the Convention does not apply to sales "of goods bought for personal, family, or household use." Article 4 further proclaims the general rule that the Convention governs only the formation of contracts of sale and the rights and obligations of buyers and sellers arising from such contracts. A similar purpose underlies Article 5, and helps to establish definitive boundaries for the CISG. Thus, it excludes claims based on death or personal injury caused by the sale of goods. It states that the "Convention does not apply to the liability of the seller for death or personal injury caused by the goods to any person." However, liability for damage caused to property is not excluded by Article 5. The reasoning behind this article is to ensure that separate domestic laws apply to the complex area of products liability, even when the Convention governs other aspects of the transaction. The CISG approach is generally different from provincial sale of goods legislation, which makes sellers liable for a breach of warranty and/or physical or economic damage caused by defective goods, regardless of negligence. Furthermore, under domestic law a seller may be liable in tort for negligently supplying goods causing physical injury to a person or property.
Despite the apparent clarity of excluding products liability and personal injury claims from the CISG, the relationship between the Convention and products liability damages can be problematic. This is the result of various domestic legal regimes, some of which consider products liability law under the heading "tort," and others as "contract." For example, under contract law in Germany, the remedies of "positive Vertragsverletzung," or the responsibility of the "vendeur professional" under the French Civil Code, apply in cases of death or personal injury. This blurring of distinction -- or overlap -- has led one scholar to describe products liability law as being on the "borderland of tort and contract." Not surprisingly, courts must often define the relationship between contract and tort law. It now appears to be established in many common law jurisdictions, including Canada, that the place where the tort or injury was committed, the locus delicti, is the prevailing doctrine for choice of law in tort, the lex loci delicti. By contrast, the place where the contract was formed, the locus contractus, as well as the law of the place where the contract is concluded, the lex loci contractus, is the primary rule for determining choice of law in contract. The clash between these two doctrines often becomes evident in a concurrent tort and contract action involving a choice of law issue.
(ii) Forum Non Conveniens, Lex Loci Delicti, and Lex Loci Contractus
This tension between tort and contract, and the CISG and products liability damages claims in general, is raised in Shane v. JCB Belgium. Unfortunately, the case did not deal with the substance of the dispute between the parties, but instead involved a preliminary motion challenging jurisdiction under forum non conveniens. Thus, the case involved primarily procedural issues, which are clearly within the realm of domestic law. However, although the court did not judicially consider the application of Article 5 of the CISG to a product liability damage claim, it did identify key issues in this complex area of law. In doing so, it addressed the CISG in only a cursory manner.
The Shane case involved an action by Stephen and Donald Shane (the "Shanes") for damages concerning a JCB tractor that was purchased by the plaintiff's directly from the defendant, JCB Belgium N.V. In August of 2001, shortly after the tractor was shipped to the Shanes' farm in Ontario in August of 2001, it caught fire and burned. Subsequently, the Shanes commenced an action for damages for negligent manufacture and design of the tractor. While the Shanes made their claim in Ontario, where the damages were suffered, the defendant disputed the jurisdiction and claimed that Belgium was the most convenient and appropriate forum. The motion placed before the court was to determine if the Shanes could proceed with their claim for damages in Ontario (the lex loci delicti), or whether the Shanes should commence their action in Belgium, where the contract was formed (the lex loci contractus).
The relevant facts of the case are typically international in scope. The defendant, JCB Belgium, is part of a large, complicated multinational corporate structure. It is headquartered in Belgium and is the authorized distributor of JCB tractors in that country. However, the tractor purchased by the Shanes was designed and manufactured by JCB Landpower Ltd., which is located in Staffordshire, England. It is a wholly owned subsidiary of JC Bamford Excavators Limited, also located in Staffordshire, England. JCB Belgium is an indirect subsidiary of JC Bamford, the parent company of JCB Landpower Ltd. JCB tractors are also distributed and sold in Canada by JCB Excavators Limited, which is owned by JC Bamford Excavators Limited, the same company which owns the shares of the manufacturer of the tractor purchased by the Shanes.
While the parties to the case agreed that there was a substantial connection with Ontario that was sufficient for it to assume jurisdiction simplicitor, JCB Belgium claimed that Belgium was the forum conveniens. Notwithstanding the parties' agreement, Smith J. conducted an analysis of the "real and substantial connection test" and ultimately found that Ontario had grounds to assume jurisdiction over the case. The court invoked the seminal case of Moran v. Pyle to provide it with firm ground in support of Ontario as the governing forum. In Moran, the Supreme Court considered the issue of where an action can be initiated when the negligent design and manufacture of products is alleged. It determined that if a foreign defendant negligently designs and manufactures a product, and that product is knowingly tendered in the domestic realm through normal commercial channels, and a user of the product is injured or suffers damages, then the courts of the forum in which the plaintiff suffered damages are entitled to exercise jurisdiction over the foreign defendant. This approach towards liability differs with the CISG. Under the Convention, liability would be based on Article 35, that is, under nonconforming or defective goods, as well as Article 74, which involves the damage resulting from the substandard goods. The latter article also incorporates the notion that questions of negligence are irrelevant to a buyer's right to recover from the seller for damage caused by nonconforming goods. Thus, unlike a domestic case involving tort, under the CISG there is no need for a buyer to prove a lack of due care for negligently designed or manufactured goods that cause harm to property.
Related to the "real and substantial connection test" was a second issue, forum non conveniens. The court needed to resolve whether Ontario was the most appropriate jurisdiction for the case to be heard, or whether Belgium was a more suitable venue. It was during this discussion that the court considered the application of the CISG to the case. As Canada and Belgium are signatories to the Convention, both parties agreed that the CISG governed their contract, and the court concurred. The court further reasoned that because the offer was extended from JCB in Belgium, it could be inferred that the contract was made there, but governed by the terms of the CISG. However, the CISG does not provide a rule on jurisdiction or venue. Furthermore, the contract was silent on which forum should apply to any claim for damages. To guide the court in this regard, Smith J. needed to determine where the tort occurred. He considered two possibilities: Staffordshire, England, where the tractor was manufactured and designed, or Ontario, where the damage occurred when the tractor caught fire and burned.
In considering the location of the tort, Smith J. dismissed the significance of the CISG and Belgium contract law. He stated: "The law which the parties agree applies is the CISG and as such the application of Belgium contract law is not a factor of great weight." As a preliminary motion, it might be expected that Smith J. did not need to delve into the deeper issues involving the CISG. However, the question of the CISG at the nexus of contract and products liability law was worthy of only obligatory mention and cursory treatment. The extent to which the CISG applied under Article 4 (contracts) and Article 5 (product liability damage claims) to the substantive and procedural aspects of this case was not to be discussed, even though during a subsequent motion on costs, the same justice was to admit that "the issues involving the International Sale of Goods Act... were complex." A factor of greater importance to Smith J. was "the law where the tort occurred should be applied for claims in negligence." The fact that liability for damage caused to property is not excluded by Article 5 may not have occurred to the court, even though it acknowledged on numerous occasions that "the terms of the contract are governed by the CISG." The oversight is an unfortunate omission. It could have provided important guidance to other contracting states and jurists in this complex area of law. There was to be no discussion on the principles by which an Ontario court could assume jurisdiction over a foreign manufacturer based upon a property damage claim allegedly involving negligent design and/or manufacture. The issue was to be avoided even though Smith J. appeared to be aware of the national and international import of the case. At the outset of the decision, he acknowledged the significance of this judgment:
"The Court's decision will affect many consumers and businesses who purchase manufactured goods from a foreign jurisdiction and subsequently, suffer damages caused by a defect in the manufacture or design of the goods where they live or carry on business."
Having determined that the negligent design took place in England (which is not a signatory to the CISG), Smith J. was able to evade the novel and intricate issues involving the CISG by focusing almost exclusively on tort and where the damages were suffered. In the final analysis, he invoked the Supreme Court ruling in Tolofson v. Jensen, where the court held that "the law to be applied in torts is the law of the place where the activity occurred, i.e., the lex loci delicti." The relationship between the CISG and contracts and product liability damage would need to be discerned by another court.
CHAPTER 7: DIVERSITEL COMMUNICATIONS v. GLACIER BAY: FUNDAMENTAL BREACH REVISITED
The case of Diversitel Communications Inc. v. Glacier Bay Inc. involved a motion by the plaintiff ("Diversitel"), for summary judgment against the defendant ("Glacier Bay"), for breach of contract for failure to meet a delivery schedule for the supply of goods. More specifically, in August of 2002, Diversitel, a Canadian company located in Ottawa, Ontario, entered into a contract with Glacier Bay of Oakland, California, for the supply of vacuum panel insulation. Diversitel required delivery of the insulation to meet the terms of an existing contract for the production, delivery, and installation of power generators to Canada's Department of National Defence (DND) in the Arctic by the end of July, 2003. As a term of its contract with Glacier Bay, Diversitel established a specific schedule for the delivery of the insulation by the defendant. With this timetable, Diversitel appeared to establish the primacy of time for product delivery as an essential condition in the contract. Diversitel paid Glacier Bay $40,000 U.S. when it issued its purchase order in August of 2002. While Glacier Bay admitted that it breached the terms of the contract by its failure to deliver on time, it claimed this was due to problems that it encountered with its own principal supplier. Diversitel terminated the contract in early November, 2002, and commenced legal action for the return of its $40,000 U.S. In its defence, Glacier Bay claimed that Diversitel terminated the contract without appropriate justification, and counterclaimed for damages for breach of contract and for loss of profits. It further took the position that Diversitel may have received better pricing from an alternate supplier, and this was the real motivation behind the plaintiff ending the contract.
(ii) Fundamental Breach
In support of its position, Diversitel invoked the CISG as the governing law in the case. This was not disputed by the defendant. Diversitel argued that a failure to deliver what was contracted for constituted a fundamental breach of contract in accordance with Article 25, which states:
"A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result."
Reliance on Article 25 was crucial for the plaintiff because the remedies available to the buyer and seller under CISG are based on the characterization of the breach involved. Thus, if the breach is deemed to be fundamental, Diversitel would be justified in having avoided the contract. If the breach is deemed to be non-fundamental, Diversitel would be remitted to a claim in damages. Article 25 provides little guidance on what events constitute a fundamental breach. There is some consensus that "[f]or the purposes of art. 25 a breach is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract unless he could not reasonably have foreseen such a result." Note also how general terminology is used to define fundamental breach, with words such as "detriment," "substantial," and to "deprive." Such vagueness appears to be due to a compromise reached by the drafters of the Convention to avoid legal terminology that was the product of a specific legal regime. This was in an effort by the drafters to create a uniform, harmonized international sales law that would transcend national borders. Unfortunately, the court failed to heed to the Convention's lofty goals in this regard.
When examining the applicable law in this case, Toscano Roccamo J. initially appeared inclined to support an expansive role for the CISG. However, that she was already more than two-thirds of the way through her ruling before she first mentioned the CISG should have suggested that the Convention was not about to be well received. Toscano Roccamo J. noted that
"[t]he plaintiff relies on the International Sale of Goods Contracts Convention Act, S.C. 1991, c. 13, which has been in effect in Ontario since 1992 because of the International Sale of Goods Act, R.S.O. 1990 c.I.10. These two acts brought into effect in Canada the United Nations Convention on Contracts for the International Sale of Goods and would apply to commercial parties resident in countries which are parties to the Convention..."
(iii) Effective Dismissal of the CISG
As Canada and the United States were both signatories to the CISG, and this commercial transaction was not subject to any of the Convention's exclusions, there was no disputing it as the governing law in the case. After this initial statement on the CISG, Toscano Roccamo's J. was not about to delve into law of the Convention. While she began the discussion with an apparent recognition of the supremacy of the CISG, this was not to continue. Her next statement set the tone for the remainder of the judgment. The CISG was to be subordinated to common law principles:
"Under the International Sale of Goods Act, supra, the plaintiff submits that a failure to deliver what was contracted for may constitute a fundamental breach of contract in accordance with article 25. The Act further provides that a seller must deliver by the date specified in the contract, pursuant to article 33. Article 49 provides that a buyer may declare the contract avoided in a case of fundamental breach thereby giving way to a claim for restitution, pursuant to article 81(2) in the schedule of the Act. The plaintiff submits that the International Sale of Goods Act may therefore establish a lower threshold for the proof of fundamental breach than that required by the common law. I was given no authority, nor argument that persuades me this is so."
As the governing law to the transaction, proof of fundamental breach should have been guided exclusively by CISG Articles 25, 33, and 49. There was no "gap" to be filled with the inclusion of a common law principle on fundamental breach. A proper reading of the CISG would have made this clear. As all-inclusive provisions, Articles 25, 33, and 49 provide all the guidance necessary to make a determination of fundamental breach. Furthermore, as DiMatteo notes, "[t]he concept of fundamental breach under Article 25 is very restrictive." It does not necessarily have a "lower threshold" than the common law equivalent. Like the common law rule, the breach must concern an essential term of the contract in order for it to be considered fundamental. Similarly, in CISG case law among signatory states, court "and arbitral decisions have focused on three types of breaches as potentially fundamental -- late delivery, deficiencies in the goods, and failure to uphold specific contractual terms." Two of these types of breaches (late delivery and failure to uphold specific contractual terms) were at issue in the case. However, perhaps common law principles were simply too entrenched in the court's psyche for it to consider that the CISG mandates that national legal principles be supplanted by an international treaty. Instead, the homeward trend was to trump the CISG, despite the efforts of the plaintiff's counsel to argue the contrary. As with most cases on the CISG in Canada, the CISG was to be treated as an interloper, and was ultimately dismissed as being of relevance to the case. This became abundantly clear during the next paragraph in the judgment. As this is the first time that a Canadian court has considered CISG case law from other signatory states, the paragraph is reproduced in its entirety:
"The plaintiff submitted a bundle of case law on UNCITRAL texts which reflects how a number of European Courts have construed late delivery under article 33 as tantamount to fundamental breach of contract, pursuant to article 49 of the [CISG] Act. In an unpublished decision released May 24, 1999 from Germany: Oberlandesgericht Celle; 20 U 76/94 the plaintiff, an Egyptian businessman, entered into a contract with the defendant, a German company trading in used printing machines for the sale of nine used printing machines that were to be shipped to Egypt. According to the contract, the plaintiff was obliged to pay a considerable part of the contract upfront, which he did. The defendant was obliged to send its product in two shipments, the first including six machines and the second, three machines. However, the first shipment delivered by the defendant contained only three machines. After having demanded shipment of the missing machines several times, the plaintiff declared the contract at an end and requested the return of its money. The Court concluded that the plaintiff had applied articles 33 and 49 among others under the [CISG] Act, supra, and properly exercised the right to declare the contract avoided. Even though the Court concluded the additional delivery period of two weeks afforded by the plaintiff to the defendant was perhaps too short to save the contract, the Court concluded the total period and the actual declaration of avoidance was reasonable. Although this case is an instructive application of the various articles under the [CISG] Act, supra, I am not satisfied the [CISG] Act necessarily lowers the bar for proof of fundamental breach, as established under the common law."
Even though counsel presented a "bundle of case law" on the CISG, the court mentioned only one foreign case in its decision. Even there it provided a disservice to the CISG. It provided a quick review of the foreign case, and then failed to use the relevant articles of the CISG. In particular, the court discussed Article 49 without analyzing the related Article 25, which was mentioned earlier in the decision. Articles 25 and 49 are not only related, in this case they are co-dependent. Article 49 allows for the avoidance of a contract in the event of a fundamental breach. However, a court cannot consider whether failure to deliver on time is fundamental to the contract without first considering Article 25. The latter article provides the parameters for making this determination. Without a consideration of the terms "substantially," "deprive," and "foreseeability," as incorporated in Article 25, and without the guidance of foreign cases applying the Article 25, there is little to prevent the court from defaulting to the homeward trend perspective of fundamental breach.
Conceding that the German case was "an instructive application" of "various articles" under the CISG, the court effectively dismissed the interpretive methodology embodied in Article 7 of the CISG by failing to seriously consider this and other pertinent foreign cases. Instead, the court deferred to the rules for proof of fundamental breach "as established under the common law." Toscano Roccamo's J. statement is exemplary of the homeward trend. It reflects the notion that national courts may give the Convention token acknowledgement, but ultimately ignore its mandate for an autonomous-international interpretation of the CISG in favor of one that is fully domestic in orientation. The problem for the CISG is that if any semblance of applied uniformity is to be achieved, it is imperative that courts consider relevant foreign decisions as voluntarily or persuasive precedent. The use of precedent is for guidance only and does not need to be binding. Where there are variations in decisions, the court should be selective, and reconcile divergent decisions with the appropriate use of the CISG's interpretive methodology. In other words, as DiMatteo notes, "courts' decisions should separate well-reasoned cases from the poorly reasoned ones, explain why they are so, and give persuasive effect to the cases using the proper interpretive methodology."
Sensing that the court might not pay heed to the CISG, the court noted that counsel for the plaintiff agreed that regardless of the court's interpretation of the CISG, it met the common law test in establishing a fundamental breach of contract. In fact, both the plaintiff and the defendant agreed that the test to be met in order to establish a fundamental breach of contract was established in the domestic case of Sail Labrador Ltd v. Challenge One (The). Perhaps becoming aware that the court was not agreeable to legal issues concerning the CISG, Diversitel's counsel capitulated to the homeward trend. The CISG was not mentioned again, not even in the appeal. Ultimately, Diversitel won this motion for summary judgment on the basis of the common law concept of fundamental breach of contract. This may have been a sweet victory for the plaintiff, but it was certainly another defeat for the CISG in Canada.
CHAPTER 8: BROWN & ROOT SERVICES v. AEROTECH HERMAN NELSON: THE CONTINUING PLIGHT OF THE CISG IN CANADA
The most recent court decision on the CISG has cast further doubt on the notion that Canada might be able to make a significant contribution to the international community's quest for a uniform international sale of goods law -- at least in the near future. The latest disappointment involves rulings by Manitoban trial and appeal courts in Brown & Root Services v. Aerotech Herman Nelson. Recently, the Supreme Court also refused to grant the application for leave to appeal in the case. This is the eighth domestic case involving the CISG since Canada acceded to the Convention in 1992. Since that time, most Canadian cases have remained unreported, and there is still doubt as to whether legal practitioners fully grasp the significance of the CISG. However, after more than fourteen years as domestic law, the excuse that the CISG is a relatively new law -- or that case law is limited or unavailable -- is becoming less acceptable.
Considering the poor treatment the CISG has received in previous cases, perhaps we should not be entirely surprised with the Manitoba courts' bewildering handling of this law. As already noted, courts have sometimes ignored the CISG entirely, or treated it as an interloper, or considered it to be synonymous with domestic sales law. In Brown & Root, however, counsel for the defense argued for the applicability of the CISG, yet courts at all three levels failed to take heed. While it could be argued that in the end, justice was still served, the outcome for the CISG in Brown & Root is wholly unsatisfactory.
In order for the Convention to succeed as a uniform, harmonized international sales law, legal practitioners must utilize the interpretive methodology embodied within the CISG. Regard must be had to its international character and the need to promote uniformity in its application at the international level. This dictates that the CISG be interpreted by courts in an autonomous manner, and not through the lens of domestic law. However, as the Canadian cases previously discussed illustrate, this is where errors most often seem to arise. Brown & Root is no exception. Unless the judiciary develops a better understanding of this autonomous interpretive methodology, the future of the Convention in Canadian law may continue to languish.
(ii) Facts of the Case
In December 1995, Brown & Root Services Corporation and Kellogg Brown & Root, Inc. (collectively "Brown & Root") of Houston, Texas, contracted to provide logistical support for the U.S. military in Hungary/Bosnia. (Brown & Root is a business unit of Halliburton, a large U.S. government contractor). As part of this support, Brown & Root was required to provide heaters for the tents of U.S. troops. With the onset of freezing temperatures, the company urgently sought to locate a supplier. Utilizing the help of a manufacturers' sales representative, it began negotiations with Aerotech Herman Nelson Inc. ("Aerotech"), a Winnipeg firm, to purchase a large quantity of new heaters, along with spare parts and related goods and services. In this transaction Aerotech's promotional material asserted that the heaters were "new product." However, in order to expedite the installation and operation of the heaters overseas, Paul Sigurdson, Aerotech's sole owner and director, was to send five of its technicians to Hungary to arrive concurrently with the heaters. With this understanding, Brown & Root prepared and forwarded a facsimile notice of award to Aerotech for 240 heaters. Two days later this was increased to 282 heaters. As agreed upon, the purchase price in the final purchase order was $1,392,071.50. This included the heaters, spare parts kits, cable, manuals, and five on-site technical representatives (for up to ten days).
Following the transfer of the full purchase price by bank wire, the first shipment of 141 heaters was air freighted at Brown & Root's expense from Winnipeg to Kaposvar, Hungary. It arrived on December 21st and the second load followed the next day. The spare parts kits and manuals were never shipped. The transportation cost to Brown & Root was $321,905.55 U.S. Immediately after the arrival of the heaters, it became apparent to Brown & Root representatives at Kaposvar that the heaters were not new, but were used (or surplus), and had numerous missing or defective parts. On December 22nd, Brown & Root executives spoke with Sigurdson. He denied that the heaters were used. Brown & Root verbally rejected the heaters, stating that they would not be accepted "until they're up and operational." Brown & Root insisted that the technicians be sent over immediately as promised, but they did not arrive until January 4, 1996.
Brown & Root immediately directed all efforts toward making the heaters functional. The technicians began work on January 5th but returned home after one week due to a lack of progress and the unavailability of spare parts. In February 1996, all heaters were withdrawn from the field by Brown & Root and were not used thereafter, with the exception of six heaters which inadvertently remained in use -- three operational -- for about another year. By March, the legal department at Brown & Root provided formal written notice to Aerotech that the contract was being rescinded.
Subsequently, Brown & Root brought an action alleging that Aerotech and Sigurdson fraudulently misrepresented that the heaters were new, and that they fundamentally breached their agreement with the company by materially misrepresenting the nature of the heating equipment, and their ability to supply technicians and spare parts. Brown & Root sought reimbursement for the cost of the heaters and related equipment in the amount of $1,359,571.50 (U.S.). It also sought the cost of the shipment of the goods, plus punitive damages for fraud.
Aerotech counterclaimed for losses it allegedly incurred for the cost of the five technicians and their airfares to Hungary, as well as excess baggage charges, and vehicle rental costs. Aerotech contended that Brown & Root knew it was purchasing equipment that had yet to be reconditioned, hence, received what it had bargained for, and accepted the goods. It also indicated that Brown & Root failed to supply adequate power generators necessary to properly operate the heaters. Further, Aerotech maintained it was willing to honour the warranty on the equipment.
At trial, McKelvey J. of the Court of Queen's Bench of Manitoba found that Brown & Root expected the heaters would be a new product in keeping with the terms of the contract, and there "was an obvious intention to mislead the buyer, albeit the used state of the heaters was evident." She concluded that the terms of the contract were those set out in the formal purchase order from Brown & Root to Sigurdson. Not only did Aerotech take no steps to advise the buyer of the true state of the heaters, but rather "Aerotech took steps to disguise the fact that the goods were used by virtue of altering hour meters, painting, cleaning, reserializing and changing manufacture plates." She emphasized that "a reasonable buyer would have anticipated that new product was an intended and, indeed, an expressed term. There were clear misrepresentations by Aerotech and Sigurdson in this case." Concluding "that fraud has been proven," McKelvey J. ruled in favour of Brown & Root and awarded it the following: the cost of the heaters and other related equipment in the amount of $1,359,571.50 (U.S.); the cost of shipment of goods to Kaposvar in the amount of $321,905.55 (U.S.); punitive damages in the sum of $50,000.00; the costs of the action; and, pre-judgment interest. The defendants' counterclaim was also dismissed. She ordered that payments made in U.S. dollars in December, 1995, be converted into Canadian currency using the conversion rate applicable on the date of her judgment, September 20, 2002, (the "judgment date" rule).
In affirming the decision at trial, the appeal court acknowledged that Brown & Root had only "conditionally" rejected the heaters on December 22, 1995. However, the fact that the company had attempted to repair the heaters did not constitute acceptance or bar rescission. A majority of the court also upheld the trial court's currency conversion "judgment date" rule, even though this approach has not been utilized in previous Supreme Court decisions. On this latter issue, Twaddle J.A., dissented, and deferred to the recognized "breach date" currency conversion rule.
(iii) Applicable Law
Considering the international dimensions of this case, it is remarkable that the trial and appeal courts do not specifically address the issue of applicable law. As J. Anthony Van Duzer recently noted, there continues to be a "lamentable state of ignorance" in cases involving the CISG. True to form, both courts applied Canadian and common law principles to the contract formation where the CISG clearly ought to have governed. And where the CISG was briefly mentioned, there appears to be a serious lack of understanding regarding its scope and applicability.
The trial court indicated that this is a transaction for the sale of goods between a U.S. and a Canadian seller in which the buyer's standard purchase order terms and conditions applied. These terms and conditions formed the basis of the contract. They included the assertion that "[u]nless otherwise provided herein, this sales contract shall be governed by the laws of the State of Texas in effect on the date of execution by Buyer." Considering this statement, Texas law would appear to have applied. However, with puzzling silence, the court failed to address the issue as to why Texas law was not utilized as the applicable law. It must be noted that even if Texas law had applied, the CISG would have ultimately trumped domestic (that is, Texan) sales law. The CISG automatically applies to all U.S. foreign sales transactions when the parties are from two signatory states -- unless the parties exclude it. In the sole reference to the CISG in the trial court's opinion stated:
"Aerotech maintains that fundamental breach is not a consideration given the fact that B & R received what it bargained. The International Sale of Goods Act, S.M. 1989-90, c. 18, Cap. S11 and particularly articles 38 and 49 were argued to enhance the position of Aerotech in that B & R took too long if it was intending to assert a fundamental breach or repudiation of the contract. Aerotech maintains that the conduct of B & R from December 22nd onward was demonstrative of keeping the contract alive, at least until the end of the heating season. I am persuaded that B & R repudiated the contract within a reasonable time."
With this exception, the court referred only to Canadian cases and law, and a number of common law principles. Strangely, no conflict of laws analysis was conducted. This would be understandable had this case arisen from an inter-provincial sale of goods, as there are few conflict of law issues arising from inter-provincial trade. In an international case, where the parties are from different states, and each pleads for the application of different laws, this omission was inexcusable.
The CISG did not fare any better at the Court of Appeal. There, the only reference to the CISG stated:
"[b]oth The International Sale of Goods Act, C.C.S.M., c. S11, and The Sale of Goods Act, C.C.S.M., c. S10, provide that when a purchaser receives delivery of goods, having had a reasonable opportunity to inspect them, any act done inconsistent with ownership by the seller will constitute acceptance. In considering this provision, 'the courts have adopted a strict interpretation favourable to the seller.' See Stairman Steel Ltd. v. Franki Canada Ltd. (1985), 23 D.L.R. (4th) 180 at 193."
Again, the appeal court referred only to Canadian cases and law. Furthermore, in a single sentence it combined the CISG with local The Sale of Goods Act, failing to differentiate between the two laws. No consideration was given to the fact that the former law is exclusively for international sales; the latter law should be applied only to domestic transactions. Mixing the two laws simplified matters to an unacceptable degree.
(iv) The CISG and Provincial Sales Law
Both courts failed to address the crucial issue of when the CISG applies and takes precedence over provincial sale of goods legislation. As a matter of law, unless specifically excluded, the CISG applies to "contracts of sales of goods between parties whose places of business are in different states when the states are contracting states." Since the CISG was not excluded by the contract between Brown & Root and Aerotech, and since both parties had their places of business in different "contracting states," the CISG should have been the applicable law, and it should have governed the contract. In other words, it superseded the domestically-oriented provincial The Sale of Goods Act. Furthermore, the element of misrepresentation and fraud should not have displaced the CISG as the law governing the terms of the contract. Misrepresentation and fraud can still be proven outside the realm of the CISG. The Convention need not be supplanted entirely. Additionally, reference to Article 4(a) of the CISG would have allowed the court to address the issue of the validity of the contract. It is provided therein that a party can seek recourse to domestic law where a case concerns the validity of the contract, and includes questions of fraud, duress, and illegality. These specific issues can be resolved by reference to domestic law.
Instead, both courts interpreted the legal rights of the parties on the basis of The Sale of Goods Act, and focused exclusively on Canadian common law principles. There was no mention of CISG Article 4. They also ignored Article 38 concerning the examination of goods and notice of non-conformity, as well as Article 48, which governs contract avoidance and breach thereof. In doing so, they obviously felt it unnecessary to consider the relationship between fraud and misrepresentation to contracts governed by the CISG. At a minimum, such an analysis could have informed the courts, and provided the international dimension that is so badly lacking in their decisions. Considering the different legal and interpretive rules between the CISG and The Sale of Goods Act, the outcome for the parties might have been remarkably altered had a proper analysis been conducted.
(v) The Quest for International Uniformity
By introducing the CISG, the Manitoban courts should have paid special attention to Article 7, which establishes the main interpretive rules of the Convention. As already noted, Article 7(1) provides that, "[i]n the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade." This requires national courts to avoid recourse to domestic legal concepts. To this end, Article 7(1) emphasizes the importance of having due regard for international character of the CISG, as well as for the need to promote uniformity across all signatory states. Reliance on domestic law will inevitably lead to different, contradictory, and confusing rules, and would ultimately defeat the purpose of the CISG. Yet this appears to be the path that Canadian courts have been on thus far.
CHAPTER 9: CONCLUSION
Most Canadian cases on the CISG have shared remarkable similarities with Brown & Root. As in Brown & Root, there have been no laudable efforts for proper CISG interpretation; indeed, most cases are, instead, lamentable. As an exemplary multicultural nation, it might be anticipated that Canadian courts would be naturally predisposed to embrace foreign jurisprudence and legal doctrine, especially when such an opportunity is sanctioned by law. After all, Canada is not only a liberal democracy with a history of involvement in international commerce, it is also known for being one of the most culturally diverse and tolerant nations in the world. Indeed, diversity has defined the nation since its formation in 1867.
However, as the cases analyzed in this research paper illustrate, Canadian courts have tended to treat the CISG in a cursory manner, and have ultimately made decisions reflexively, on the basis of domestic law. Not only have they ignored the mandate of Article 7, but no Canadian court decision to date has treated the CISG in a serious manner, that is, without reference to domestic legal concepts. In other words, Canadian CISG jurisprudence is still permeated with domestic gloss. To the international community, this suggests that Canadian legal practitioners lack a certain analytical sophistication with international law, or suffer from legal parochialism. This begs the question: is there evidence that the courts of other signatory states are much more enlightened than Canadian courts with their decision-making, particularly in terms of utilizing the CISG's interpretive methodology? In other words, with the persistence of the homeward trend, are Canadian courts lagging behind their foreign brethren? Or does this problem exist in the court decisions of all signatory states?
According to a recent study, the homeward trend remains a problem with most signatory states. Some of the problem appears due to the ambiguous and vague language incorporated in the CISG. Oftentimes, a high level of abstraction was necessary in order to accommodate the diverse political considerations during the drafting of the Convention. While this created a law that is formally and linguistically uniform in numerous jurisdictions, subsequent litigation creates many opportunities for divergent interpretations of the Convention's provisions. Perhaps for this reason, DiMatteo et al., in their fifteen year review of CISG jurisprudence, found that, "[a]t one extreme, some courts have largely ignored the CISG's mandate that interpretations are to be formulated with an eye toward the international character of the transaction and the need for uniformity of application." This appears to be the category in which Canadian jurisprudence belongs. At the other extreme are courts that have made a concerted effort to apply the above mandates of the CISG seriously, and reject the temptation of the homeward trend. One example was the U.S. Court of Appeals for the Eleventh Circuit in MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino, where the court cited foreign jurisprudence on the CISG as well as referred to academic commentary. It then noted that
"the CISG was to provide parties to international contracts for the sale of goods with some degree of certainty as to the principles of law that would govern potential disputes. Courts applying the CISG cannot, therefore, upset the parties' reliance on the Convention by substituting familiar principles of domestic law."
However, as DiMatteo notes, the vast majority of CISG cases fall somewhere in the middle, between the two extremes of recognition and insensitivity to the interpretive requirements of the Convention. They conclude on a positive note by acknowledging that there are signs that courts are becoming more serious in applying the CISG's interpretive methodology. At the very least, this development illustrates the fundamental difficulties that Canada -- and perhaps other nations -- face when trying to implement uniform international law. Indeed, as one legal scholar states, "diverging interpretations by national courts is a problem of all international uniform laws." Perhaps this is simply evidence that the CISG, like other uniform laws, is an evolving, living code. As it develops, it is hoped that courts in Canada -- and elsewhere -- will apply the interpretive methodology of the Convention more rigorously. Doing so will produce a coalescing of national CISG jurisprudence, and will create a more uniform law for the international merchants of the future.
Conventions, Treaties, and International Documents
Convention Relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods, 1 July 1964, 834 U.N.T.S 169, 3 I.L.M. 864 (1964).
Convention Relating to a Uniform Law on the International Sale of Goods, 1 July 1964, 834 U.N.T.S 107, 3 I.L.M. 855 (1964).
United Nations Convention on Contracts for the International Sale of Goods, April 11, 1980, 1489 U.N.T.S. 3, 19 I.L.M. 671.
UNGA, 20th Sess., 1404th Plen. Mtg., UN Doc. G.A. Res. 2102 (20 December 1965).
______, 21th Sess., 1497th Plen. Mtg., UN Doc. G.A. Res. 2102 (17 December 1966).
United Nations Commission on International Trade Law, Legislative History: 1980 Vienna Diplomatic Conference, UNDOC. A/CONF.97/9, (New York: UN, 1980), available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/Fdraft.html>.
United Nations Commission on International Trade Law, Yearbook: Volume I: 1968-1970, UNDOC. A/CN.9/SER.A/1970 (Sales No. E.71.V.1), (New York: UN, 1971).
Vienna Convention on the Interpretation of Treaties, 23 May 1969, 1155 U.N.T.S. 331, 8 I.L.M. 679.
Constitution Act, 1982, being Schedule B to the Canada Act, 1982 (U.K.), 1982, c. 11.
International Commercial Arbitration Act, C.C.S.M. c. C151.
International Commercial Arbitration Act, R.S.O. 1990, c. I.9.
International Sale of Goods Contracts Convention Act, S.C. 1991, c. 13.
International Sale of Goods Act, R.S.B.C. 1996, c. 236.
International Sale of Goods Act, R.S.O. 1990, c. I.10
International Sale of Goods Act, S.M. 1989-90, c. 18, C.C.S.M., c. S11
The International Sale of Goods Act, S.S. 1990-91, c. I-10.3
Sale of Goods Act, R.S.O. 1990, c. S.1.
Jurisprudence: Canadian CISG Cases
Beechy Stock Farm (1996) Ltd. v. Managro Harvestore Systems (1977) Ltd. (2002) SKQB 120.
Brown & Root Services Corp. v. Aerotech Herman Nelson Inc., 2002 MBQB 229, aff'd 2004 MBCA 63.
Diversitel Communications Inc. v. Glacier Bay Inc. (2003) ON S.C. 03-CV-23776SR, aff'd (2004) CanLII 11196 (ON C.A.) and (2004) CanLII 8368 (ON C.A.).
Ford Aquitaine Industries SAS v. Canmar Pride (Ship), 2005 FC 431 (CanLII).
La San Giuseppe v. Forti Moulding Ltd.,  O.J. No. 3352, Court File No. 98-CV-142493CM (ON S.C.).
Mansonville Plastics (B.C.) Ltd. v. Kurtz GmbH (2003) B.C.S.C. 1298.
Multiactive Software Inc. v. Advanced Service Solutions Inc. (2003) BCSC 643.
Nova Tool & Mold Inc. v. London Industries Inc.,  O.J. No. 5381, Court File No. 97-GD-41311 (Ont. Ct., G.D.), aff'd,  O.J. No. 307, No. C31315 (ON C.A.).
Shane v. JCB Belgium N.V. (2003) ON S.C. 02-CV-19871.
Jurisprudence: Foreign CISG Cases Involving Canadian Parties
Ajax Tool Works, Inc., Plaintiff, v. Can-Eng Manufacturing Ltd., Defendant, January 29, 2003, United States District Court for the Northern District of Illinois, Eastern Division, no. 01 C 5938.
Asante Technologies, Inc. v. PMC-Sierra, Inc., 30 July 2001, U.S. District Court for the Northern District of California.
Chateau des Charmes Wines, v. Sabaté USA, Inc., and Sabaté S.A., 10 November 2003, U.S. District Court, Northern District of California.
Chicago Prime Packers, Inc. v. Northam Food Trading Co., et al., 29 May 2003, U.S. District Court, Northern District, Illinois, Eastern Division, no. 01 C 4447.
Geneva Pharmaceuticals Technology Corp. v. Barr Laboratories, Inc. et al. / Apothecon, Inc. v. Barr Laboratories, Inc. et al., 10 May 2002, U.S. District Court for the Southern District of New York.
GPL Treatment v. Louisiana-Pacific, 12 April 1995, Oregon Ct.
Impuls I.D. International, S.L., Impuls I.D. Systems, Inc., and PSIAR, S.A. v. Psion Teklogix Inc., 22 November 2002, U.S. District Court, Southern District of Florida.
KSTP-FM, LLC v. Specialized Communications, Inc. and Adtronics Signs, Ltd., 9 March 1999, Minnesota District Court.
Lombard and Confranca v. Boucherie Debeaux, Ets. Barbaud et al., 2 October 2001, Supreme Court [France - English translation].
Additional Foreign Jurisprudence
Al Palazzo S.r.l v. Bernardaud di Limoges S.A., Tribunale di Rimini, No. 3095, Italy, November 26, 2002, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/021126i3.html>.
Bundesgerichtshof, 24 March 1999, German Supreme Court, [VIII ZR 121/98], available online Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/990324g1.html>.
MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino, 144 F.3d 1384 (11th Cir. 1998).
Moran v. Pyle National (Canada) Ltd.,  1 S.C.R. 393.
Muscutt v. Courcelles,  O.J. No. 2128 (Ont. C.A.).
National Corn Growers Assn. v. Canada (Import Tribunal)  2 S.C.R. 1324.
Obergericht des Kantons Luzern, Switzerland judgment of 29 December 1997, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cases/970108s1.html>.
OGH, SZ 1 Ob 74/99k, Austria, Jun. 29, 1999, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/990629a3.html>.
Pushpanathan v. Canada (Minister of Citizenship and Immigration) (1998), 160 D.L.R. (4th) 193 (S.C.C.).
R. v. Oaks,  1 S.C.R. 103.
R. v. Parisien,  1 S.C.R. 950.
R. v. Ward (1994), D.L.R. (4th) (S.C.C.).
Rechtbank van Koophandel Veurne, [District Court] [Kh] A/00/00665, Belgium, April 25, 2001, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/010425b1.html>.
Reference Re Public Service Employee Relations Act (Alta.),  1 S.C.R. 313.
Rheinland Versicherungen v. S.r.l. Atlarex and Allianz Subalpina S.p.A., Tribunale di Vigevano, No. 405, Italy, July 12, 2000, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/000712i3.html>.
Rio Algom Limited v. Sammi Steel Co. (1991), 47 C.P.C. (2d) 251 (Ont. Gen. Div.).
Scatolificio La Perla S.n.c. di Aldrigo Stefano e Giuliano v. Martin Frischdienst GmbH, Tribunale di Padova, No. 40466 of Rig 2002, Italy, March 31, 2004, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/040331i3.html>.
SO. M. AGRI s.a.s di Ardina Alessandro & C. v. Erzeugerorganisation Marchfeldgemüse GmbH & Co. KG, Tribunale di Padova, No. 40552, Italy, February 25, 2004, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/040225i3.html>.
Sport d'Hiver di Genevieve Culet v. Ets. Louys et Fils, Italy, 31 January, 1996, District Court Cuneo, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/960131i3.html>.
Thomson v. Thomson,  3 S.C.R. 551.
Tolofson v. Jensen,  3 S.C.R. 1022.
Zapata Hermanos v. Hearthside Baking Co., Inc., 313 F.3d 385 (7th Cir. 2002) available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/021119u1.html>. Ibid. Petition for Writ of Certiorari, available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cisg/biblio/zcertpet.html>.
Camilla Baasch Andersen, "Furthering the Uniform Application of the CISG: Sources of Law on the Internet" (1998) 10 Pace Int'l L. Rev. 403.
______, "Reasonable Time in Article 39(1) of the CISG -- Is Article 39(1) Truly a Uniform Provision?" in Pace ed., Review of the Convention on Contracts for the International Sale of Goods (CISG) 1998, (Boston: Kluwer Law International, 1999) at 63-176.
______, "The Uniform International Sales Law and the Global Jurisconsultorium" J.L. & Com. [forthcoming in 2005].
CISG-AC Opinion no. 2, Examination of the Goods and Notice of Non-Conformity: Articles 38 and 39, 7 June 2004. Rapporteur: Professor Eric E. Bergsten, Emeritus, Pace University School of Law, New York.
Gesa Baron, "Do the UNIDROIT Principles of International Commercial Contracts form a new lex mercatoria?," online: Pace Law School CISG Database <http://www.cisg.law.pace.edu/cisg/biblio/baron.html>.
Bernard Audit, "The Vienna Sales Convention and the Lex Mercatoria" in Thomas E. Carbonneau ed., Lex Mercatoria and Arbitration, (Huntington, NY: Juris Publishing, 1998) at 173-194.
James Bailey, "Facing the Truth: Seeing the Convention on Contracts for the International Sale of Goods as an Obstacle to a Uniform Law of International Sales" (1999) 32 Cornell Int'l L.J. 273.
C.M. Bianca and M.J. Bonell, Commentary on the International Sales Law, (Milan: Dott. A Giuffrè Editore, S.p.A, 1987), and online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/bianca-bb35.html>.
Antonio Boggiano, "The Experience of Latin American States," International Uniform Law in Practice, (New York: Oceana, 1988) 47 and online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/text/introduction.html#note1>.
Martin Boodman, "The Myth of Harmonization of Laws" (1991) 39 Am. J. Comp. L. 699.
Susanne Cook, "The need for Uniform Interpretation of the 1980 United Nations Convention on Contracts for the International Sale of Goods" (1988) 50 U. Pitt. L. Rev. 197.
______, "The UN Convention on Contracts for the International Sale of Goods: A Mandate to Abandon Legal Ethnocentricity" (1997) 16 J.L. & Com. 257.
Trevor Cox, "Chaos Versus Uniformity: The Divergent Views of Software in the InternationalCommunity" (2000) 4 Vindobona J. Int'l Com. L. & Arb. 3.
Vivian Grosswald Curran, "The Interpretive Challenge to Uniformity" (1995) 15 J.L. & Com. 175.
Joanne M. Darkey, "A U.S. Court's Interpretation of Damage Provisions Under the U.N. Convention on Contracts for the International Sale of Goods: A Preliminary Step Towards an International Jurisprudence of CISG or a Missed Opportunity?" (1995) 15 J.L. & Com. 139.
George R. Delaume, "Comparative Analysis as a Basis of Law in State Contracts: The Myth of the Lex Mercatoria," (1988-1989) 63 Tul. L. Rev. 575.
Frank Diedrich, "Maintaining Uniformity in International Uniform Law via Autonomous Interpretation: Software Contracts and the CISG" (1996) 8 Pace Int'l L. Rev. 303.
Larry A. Dimatteo, "The CISG and the Presumption of Enforceability: Unintended Contractual Liability in International Business Dealings" (1997) 22 Yale J. Int'l L. 111.
Larry A. DiMatteo et al., "The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence" (2004) 34 Nw. J. Int'l L. & Bus. 299.
Laura A. Donner, "Impact of the Vienna Sales Convention on Canada" (1992) 6 Emory Int'l L.R. 743.
Gyula Eörsi, "General Provisions" in Galston & Smit ed., International Sales: The United Nations Convention on Contracts for the International Sale of Goods, (Huntington, NY: Juris Publishing, 1984) at Ch. 2, pages 2-1 to 2-36, online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/eorsi1.html>.
______, "Problems of Unifying Law on the Formation of Contracts for the International Sale of Goods" (1979) 27 Am. J. Comp. L. 311.
______, "Unifying The Law (A Play In One Act, With A Song)" (1977) 25 Am. J. Comp. L. 658.
John Felemegas, "The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation," Review of the Convention on Contracts for the International Sale of Goods, (Boston: Kluwer Law International, 2000-2001) at 115-265.
Franco Ferrari, "Applying the CISG in a Truly Uniform Manner: Tribunale di Vigevano (Italy)" (2001) 1 Unif. L. Rev. 203.
______, "Recent Developments: CISG: Specific Topics of the CISG in Light of Judicial Application and Scholarly Writing" (1995) 15 J.L. & Com. 1.
______, "Ten Years of the United Nations Sales Convention: CISG Case Law: A New Challenge for Interpreters?" (1998) 17 J.L. & Com. 245.
______, "Tribunale di Vigevano: Specific Aspects of the CISG Uniformly Dealt With" (2001) 20 J.L. & Com. 225.
______, "Uniform Interpretation of the 1980 Uniform Sales Law" (1994) 24 Ga. J. Int'l & Comp. L. 183.
______, "Uniform Law of International Sales: Issues of Applicability and Private International Law" (1995) 15 J.L. & Com. 159.
Harry M. Flechtner, "The Several Texts of the CISG in a Decentralized System: Observations on Translations, Reservations and other Challenges to the Uniformity Principle in Article 7(1)" (1998) 17 J.L. & Com. 187.
Eleanor M. Fox, "Harmonization of Law and Procedures in a Globalized World: Why, What, and How?" (1992) 60 Antitrust L.J. 393.
G.H.L. Fridman, Sale of Goods in Canada, 4th ed. (Toronto: Carswell, 1995).
David Frisch, "Commercial Common Law, the United Nations Convention on the International Sale of Goods, and the Inertia of Habit" (1999) 74 Tul. L. Rev. 495.
Clayton P. Gillette and Robert E. Scott, "The PoliticalEconoy of International Sales Law" (April 23, 2005) New York University Law and Economics Research Paper Series, Working Paper No. 05-02, online: Social Science Research Network <http://ssrn.com/abstract=709242>.
Government of Canada, Department of External Affairs, "Federalism and International Relations," Ottawa: 1968.
Leonardo Graffi, "Case Law on the Concept of 'Fundamental Breach' in the Vienna Sales Convention" (2003) 3 I.B.L.J. 338.
John D. Gregory, "The Proposed UNCITRAL Convention on Electronic Contracts" (2003) 59 Bus. Law. 313.
Sylvette Guillemard, "A Comparative Study of the UNIDROIT Principles and the Principles of European Contracts and some Dispositions of the CISG Applicable to the Formation of International Contracts from the Perspective of Harmonisation of Law," Review of the Convention on Contracts for the International Sale of Goods, (Boston: Kluwer Law International, 2000-2001) at 83-113.
Philip Hackney, "Is the United Nations Convention on the International Sale of Goods Achieving Uniformity?" (2001) 61 La. L. Rev. 473.
Rene Henschel in "Conformity of Goods in International Sales Governed by CISG Article 35: Caveat Venditor, Caveat Emptor and Contract Law as Background Law and as a Competing Set of Rules" (2004) 1 Nordic J. Com. L. article 2.
Robert A. Hillman, "Applying the United Nations Convention on Contracts for the International Sale of Goods: The Elusive Goal of Uniformity" (1995) 1 Cornell Review of the Convention on Contracts for the International Sale of Goods 21.
Hannu Honka, "Harmonization of Contract Law Through International Trade: A Nordic Perspective" (1996) 11 Tul. Eur. & Civ. L.F. 111.
John Honnold, "The Sales Convention in Action -- Uniform International Words: Uniform Application?" (1988) 8 J.L. & Com. 207, online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/honnold-sales.html>.
______, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed., (The Hague: Kluwer Law International, 1999).
Charlotte M. Janssen, "A Glimpse at the Implications of the Convention on the International Sale of Goods for a Canadian Practitioner," International Drafting Essentials: How to Internationalize Your Commercial Contracts, (Toronto: Ontario Bar Association, 2002) at 2-21.
Amy H. Kastely, "The Right to Require Performance in International Sales: Towards an International Interpretation of the Vienna Convention" (1988) 63 Wash. L. Rev. 607.
______, "Unification and Community: A Rhetorical Analysis of the United Nations Sales Convention" (1988) 8 Nw. J. Int'l L. & Bus. 574.
Troy Keily, "Good Faith & the Vienna Convention on Contracts for the International Sale of Goods" (1999) 3 Vindobona J. Int'l Com. L. & Arb. 15.
______, "Harmonisation and the United Nations Convention on Contracts for the International Sale of Goods" (2003) 1 Nordic J. Comm. L. at <http://www.njcl.utu.fi>.
Lord Justice Kennedy, "The Unification of Law," (1909) 10 J. Soc'y of Comp. Legis. 21.
Hugh M. Kindred et al., International Law: Chiefly as Interpreted and Applied in Canada, 6th ed., (Toronto: Edmund Montgomery Publications, 2000).
James M. Klotz, "Critical Review of the ICC Model International Sale Contract" (1998) 4 Int'l Contract Advisor 3.
______, Going Global? Power Tools for Negotiating International Business Deals, (Toronto: Global Business Press, 2000).
______, International Sales Agreements, An Annotated Drafting and Negotiation Guide, Can. ed., (Aurora: Canada Law Book, 1997).
Phanesh Koneru, "The International Interpretation of the UN Convention on Contracts for the International Sale of Goods: An Approach Based on General Principles" (1997) 6 Minn. J. Global Trade 105.
Joseph Lookofsky, "Digesting CISG Case Law: How Much Regard Should We Have?" (2004) 8 Vindobona J. Int'l Com. L. & Arb. 181.
______, "International Interpretation under Article 7(1)" (2003) 13 Duke J. Comp. & Int'l L. 266.
______, Understanding the CISG in the USA, 2nd ed., (Boston: Kluwer Law International, 2004).
Francesco G. Mazzotta, "CISG Article 78: Endless Disagreement Among Commentators, Much Less Among the Courts" (2004) online: Pace Law School CISG Database <http://www.cisg.law.pace.edu/cisg/biblio/mazzotta78.html>.
Errol P. Mendes, "The U.N. Sales Convention and US-Canada Transactions; Enticing the World's Largest Trading Bloc to Do Business Under a Global Sales Law," (1988) 8 J.L. & Com. 109.
Loukas A. Mistelis, "Regulatory Aspects: Globalization, Harmonization, Legal Transplants, and Law Reform -- Some Fundamental Observations" (2000) 34 Int'l Law. 1055.
R.J.C. Munday, "The Uniform Interpretation of International Conventions," (1978) 27 Int'l & Comp. L.Q. 450.
Maureen T. Murphy, "United Nations Convention on Contracts for the International Sale of Goods: Creating Uniformity in International Sales Law" (1989) 12 Fordham Int'l L.J. 727.
Antonin I. Pribetic, "'Bringing Locus into Focus': A Choice-of-Law Methodology for CISG- based Concurrent Contract and Product Liability Claims" (November, 2004), online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/pribetic1.html>.
______, "'Strangers in Strange Land' -- Transnational Litigation, Foreign Judgment Recognition, and Enforcement in Ontario" (2004) 13 J. Transnat'l L. & Pol'y 347.
Ana Mercedes Lopez Rodriguez, "Lex Mercatoria," (2002) RETTID 46-56, online: Juridisk Institut Aarhus Universitet. <http://www.rettid.dk/artikler/20020046.pdf#search='lex%20mercatoria'>.
Arthur Rosett, "Critical Reflections on the United Nations Convention on Contracts for the International Sale of Goods" (1984) 45 Ohio St. L.J. 265.
______, "Unification, Harmonization, Restatement, Codification, and Reform in International Commercial Law" (1992) 40 Am. J. Comp. L. 683.
Lisa M. Ryan, "The Convention on Contracts for the International Sale of Goods: Divergent Interpretations" (1995) 4 Tulsa J. Comp. & Int'l L. 99.
Peter Schlechtriem, "The Borderland of Tort and Contract -- Opening a New Frontier?," (1988) 21 Cornell Int'l L.J. 467, online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/sclechtriem.html>.
______, Uniform Sales Law -- The UN Convention on Contracts for the International Sale of Goods, (Vienna: Manz, 1986) online: Pace Law School CISG Database <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-05.html>.
Eric C. Schneider, ed., "Cross-References and Editorial Analysis, Article 74," online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/text/cross/cross-74.html>.
Charles Sukurs, "Harmonizing the Battle of the Forms: A Comparison of the United States, Canada, and the United Nations Convention on Contracts for the International Sale of Goods," (2001) 34 Vand. J. of Transnat'l L. 1481.
T.S. Twibell, "Implementation of the United Nations Convention on Contracts for the International Sale of Goods (CISG) Under Shari'a (Islamic Law): Will Article 78 of the CISG be Enforced When The Forum is an Islamic State?" (1997) 9 Internat'l Leg. Perspect. 25.
UNCITRAL Secretariat Commentary, "Guide to CISG Article 74," online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-74.html>.
J. Anthony Vanduzer, "The Adolescence of the United Nations Convention on Contracts for the International Sale of Goods in Canada," The Practice of International Law in the 21st Century: It's Everybody's Business, (Ottawa: Canadian Bar Association, 2001) at 1-18.
______, "A Seller's Responsibility for Third Party Intellectual Property Claims: Are the UN Sales Convention Rules Better?" (2001) 4 Can. Internat'l Law. 187.
Oliver Volckart and Antje Mangels, "Are the roots of the modern 'lex mercatoria' really medieval?" (1999) 65 S. Econ. J. 427.
Bruno Zeller, "The CISG -- Getting off the Fence" (2000) 74 L. Inst. J. 73.
______, "The UN Convention on Contracts for the International Sale of Goods (CISG) -- A Leap Forward Towards Unified International Sales Laws" (2000) 12 Pace Int'l L. Rev. 79.
Jacob S. Ziegel, "Analysis from a Provincial Common Law Perspective" in Ziegel and Claude Samson, Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods, (Toronto: Uniform Law Conference, 1981) at 33-167.
______, "Canada's First Decision on the International Sales Convention" (1999) 32 Can. Bus. L. J. 313.
______, "Commentary on Party Autonomy and Statutory Regulation: Sale of Goods" (1993) 6 J. Contract L., 123.
______, "Comment on Roder Zelt- und Hallenkonstruktionen GmbH v. Rosedown Park Pty Ltd.," Review of the Convention on Contracts for the International Sale of Goods, (Boston: Kluwer Law International, 1999) at 53-62.
______, "The Future of Commercial Law in Canada," (1986) 20 U.B.C. Law R. 1.
______, "The Future of the International Sales Convention from a Common Law Perspective," (2000) 6 N.Z. Bus. L.Q. 336.
Sara Zwart, "The New International Law of Sales: A Marriage Between Socialist, Third World, Common, and Civil Law Principles" (1988) 13 N.C. J. Int'l L. & Com. Reg. 109.
* Peter Mazzacano is an LL.M. graduate student at Osgoode Hfall Law School at York University and the Editor of CISG Canada at <http://www.cisg.ca> and an editor of UNILEX at <http://www.unilex.info/> at the International Institute for the Unification of Private Law (UNIDROIT). He is also a member of The Society of Legal Scholars in the UK.
1. Gerard Malynes, The Merchant's Almanac of 1622 or Lex Mercatoria, the Ancient Law-Merchant, (London: n.p., 1622) reprinted by Katie F. Hamilton, (Phoenix: Metheglin Press, 1996).
Malynes provides numerous references to ancient commercial laws and customs as being uniform among all trading states, from the time of Solon in ancient Greece to the publication of his Lex Mercatoria. In typical form, he comments on page one: "For albeit that the government of the said kingdoms and common-weales doth differ one from another: 1 In the making of lawes and ordinances for their owne government...yet the Law-Merchant hath always beene found semper eadem, that is, constant and permanent without abrogation, according to her most auncient customes, concurring with the law of nations in all countries." Grammar, spelling, and italics in the original.
Some scholars have disputed the notion that the lex mercatoria was a unified, transnational body of commercial law. This view typically argues that a functional lex mercatoria is partly fabrication because it was incapable of producing a set of rules without having some recourse to national laws. See e.g. George R. Delaume, "Comparative Analysis as a Basis of Law in State Contracts: The Myth of the Lex Mercatoria," (1988-1989) 63 Tul. L. Rev. 575. See also Oliver Volckart and Antje Mangels, "Are the roots of the modern 'lex mercatoria' really medieval?" (1999) 65 S. Econ. J. 427.
2. Pelly v. Royal Exch. Assurance Co. (1757), 97 E.R. 342 at 346.
3. As of August 1, 2005. United Nations Convention on Contracts for the International Sale of Goods, April 11, 1980, 1489 U.N.T.S. 3, 19 I.L.M. 671, hereinafter cited as the "CISG."
The signatory states , in alphabetical order are: Argentina, Australia, Austria, Belarus, Belgium, Bosnia-Herzegovina, Bulgaria, Burundi, Canada, Chile, China, Colombia, Croatia, Cuba, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Finland, France, Gabon, Georgia, Germany, Ghana, Greece, Guinea, Honduras, Hungary, Iceland, Iraq, Israel, Italy, Kyrgyzstan, Latvia, Lesotho, Lithuania, Luxembourg, Mauritania, Mexico, Mongolia, Netherlands, New Zealand, Norway, Peru, Poland, Republic of Korea, Republic of Moldova, Romania, Russian Federation, Saint Vincent & the Grenadines, Serbia & Montenegro, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Syrian Arab Republic, Uganda, Ukraine, United States of America, Uruguay, Uzbekistan, Venezuela, and Zambia. Significant exceptions include Brazil, Indonesia, India, Japan, Malaysia, and the United Kingdom.
4. Camilla Baasch Andersen, "Furthering the Uniform Application of the CISG: Sources of Law on the Internet" (1998) 10 Pace Int'l L. Rev. 403, at 403. See also online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/>.
5. See James Bailey, "Facing the Truth: Seeing the Convention on Contracts for the International Sale of Goods as an Obstacle to a Uniform Law of International Sales" (1999) 32 Cornell Int'l L.J. 273; Vivian Grosswald Curran, "The Interpretive Challenge to Uniformity" (1995) 15 J.L. & Com. 175; and, Philip Hackney, "Is the United Nations Convention on the International Sale of Goods Achieving Uniformity?" (2001) 61 La. L. Rev. 473.
6. "Functional uniformity" must be differentiated from "absolute" or "strict uniformity." It is closer to the concept of "harmonization," in that the goal is to lessen the legal impediments to international trade. See Larry A. DiMatteo et al., "The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence" (2004) 34 Nw. J. Internat'l L. & Bus. 299 at 309-310. See also Charles Sukurs, who utilizes the term "vertical uniformity," which is similar to the concepts of "functional uniformity" or "harmonization." Charles Sukurs, "Harmonizing the Battle of the Forms: A Comparison of the United States, Canada, and the United Nations Convention on Contracts for the International Sale of Goods," (2001) 34 Vand. J. of Transnat'l L. 1481 at 1500-1503.
7. Jurisconsultorium or jurisconsultus may be defined as the consideration of legal doctrine, jurisprudence, case law, and scholarly writings from all jurisdictions, including foreign or international jurisdictions, or comity. This term is discussed by Vikki Rogers and Albert Kritzer in "A Uniform International Sales Law Terminology", in I. Schwenzer and G.Hager, eds., Festschrift für Peter Schlechtriem zum 70. Geburtstag, Tübingen: J.B.C. Mohr / Paul Siebeck (2003) 223-253, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/rogers2.html>.
9. Article 7(1).
10. Andersen, supra note 4 at 406.
11. This term "ipso facto stare decisis" has been coined by Rene Henschel in "Conformity of Goods in International Sales Governed by CISG Article 35: Caveat Venditor, Caveat Emptor and Contract Law as Background Law and as a Competing Set of Rules," (2004) 1 Nordic J. Com. L. article 2 at 9, available online at <http://www.njcl.fi/1_2004/article2.pdf>. The term "supranational stare decisis" appears to have been created by Larry A. DiMatteo in "The CISG and the Presumption of Enforceability: Unintended Contractual Liability in International Business Dealings," (1997) 22 Yale J. Int'l L. 111, at 133, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/dematteo.html>.
12. DiMatteo et al., supra note 6.
13. Cited in DiMatteo et al., ibid. at 303.
14. Antonio Boggiano, "The Experience of Latin American States," International Uniform Law in Practice, (New York: Oceana, 1988) 47 (italics in the original).
15. Fothergill v. Monarch Airlines, 2 All E.R. (1980) 696, 715, quote found online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/text/introduction.html#note1>.
16. Air France v. Saks, 470 U.S. 392 at 404 (1985).
17. El Al Israel Airlines, Ltd. v. Tsui Yuan Tseng, 525 U.S. 155 at 176 (1999).
18. Franco Ferrari, "Applying the CISG in a Truly Uniform Manner: Tribunale di Vigevano (Italy)," (2001) 1 Unif. L. Rev. 203 at 206.
19. The Pace Law School CISG database and UNILEX website both contain case translations in English of case law from a wide range of signatory states. These services are also free of charge. See the Queen Mary Case Translation Programme on the Pace Law School CISG Database at <http://cisgw3.law.pace.edu/cisg/text/queenmary.html> and UNILEX online at <http://www.unilex.info/dynasite.cfm?dssid=2375&dsmid=14276>.
20. Tribunale di Cuneo, 31 January 1996, and Obergericht Luzern, 8 January 1997, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/text/schedule.html> and Obergericht des Kantons Luzern, Switzerland judgment of 29 December 1997, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/970108s1.html>.
21. Bundesgerichtshof, 24 March 1999, German Supreme Court, [VIII ZR 121/98], available online Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/990324g1.html>.
22. See Medical Marketing v. International Medico Scientifica, 17 May 1999, available online Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/990517u1.html>.
23. The provinces began to ratify the CISG in 1988, even though Parliament did not make it law at the federal level until May 1, 1992. See, e.g., Ontario: S.O. 1988, ch. 45; Prince Edward's Island: S.P.E.I. 1988, ch.33.
24. Beechy Stock Farm (1996) Ltd. v. Managro Harvestore Systems (1977) Ltd. (2002) SKQB 120; Brown & Root Services Corp. v. Aerotech Herman Nelson Inc., 2002 MBQB 229, aff'd 2004 MBCA 63; Diversitel Communications Inc. v. Glacier Bay Inc. (2003) ON S.C. 03-CV-23776SR, aff'd (2004) CanLII 11196 (ON C.A.) and (2004) CanLII 8368 (ON C.A.); Ford Aquitaine Industries SAS v. Canmar Pride (Ship), 2005 FC 431 (CanLII); La San Giuseppe v. Forti Moulding Ltd.,  O.J. No. 3352, Court File No. 98-CV-142493CM (ON S.C.); Mansonville Plastics (B.C.) Ltd. v. Kurtz GmbH (2003) B.C.S.C. 1298; Multiactive Software Inc. v. Advanced Service Solutions Inc. (2003) BCSC 643; Nova Tool & Mold Inc. v. London Industries Inc.,  O.J. No. 5381, Court File No. 97-GD-41311 (Ont. Ct., G.D.), aff'd  O.J. No. 307, No. C31315 (ON C.A.); Shane v. JCB Belgium N.V. (2003) ON S.C. 02-CV-19871.
25. Beechy Stock Farm (1996) Ltd. v. Managro Harvestore Systems (1977) Ltd., Ford Aquitaine Industries SAS v. Canmar Pride (Ship), and Multiactive Software Inc. v. Advanced Service Solutions Inc. Ibid.
26. Brown & Root Services Corp. v. Aerotech Herman Nelson Inc., Diversitel Communications Inc. v. Glacier Bay Inc., La San Giuseppe v. Forti Moulding Ltd., Mansonville Plastics (B.C.) Ltd. v. Kurtz GmbH, Nova Tool & Mold Inc. v. London Industries Inc., and Shane v. JCB Belgium N.V., supra note 24.
26a. The lex mercatoria is also known as the Law Merchant. In fact, the Latin and English terms are often used interchangeably.
27. Errol P. Mendes, "The U.N. Sales Convention and U.S.-Canada Transactions; Enticing the World's Largest Trading Bloc to Do Business Under a Global Sales Law," (1988) 8 J.L. & Com. 109, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/mendes.html>.
28. Supra note 1 at 5. Grammar and spelling in the original. Malynes refers to the trade endeavors of Jacob, Joseph, and Moses, as well as Minos, Lycurgus, Phalcas, and others.
29. Ana Mercedes Lopez Rodriguez, "Lex Mercatoria," (2002) RETTID 46-56 at 46, online: Juridisk Institut Aarhus Universitet <http://www.rettid.dk/artikler/20020046.pdf#search='lex%20mercatoria>.
30. Mendes, supra note 27.
31. Rodriguez, supra note 29.
32. Gesa Baron, "Do the UNIDROIT Principles of International Commercial Contracts form a new lex mercatoria?," online: Pace Law School CISG Database <http://www.cisg.law.pace.edu/cisg/biblio/baron.html>.
34. Rodriguez, supra note 29 at 46-47.
35. Mendes, supra note 27.
37. 3 Burr. 1663, 97 Eng. Rep. 1035 (K.B. 1765).
38. Baron, supra note 32.
39. Mendes, supra note 27.
40. Now repealed and replaced by the Sale of Goods Act, 1979 (U.K.), c. 54.
41. Jacob Ziegel, "The Future of Commercial Law in Canada," (1986) 20 U.B.C. Law R. 1 at 4 n.10.
42. Laura A. Donner, "Impact of the Vienna Sales Convention on Canada," (1992) 6 Emory Int'l L.R. 743 at 746.
43. Mendes, supra note 27, citing W. Mitchell, Essay on the Early History of the Law Merchant 27 (1st ed., 1969) at 90.
44. Rodriguez, supra note 29 at 51.
45. Lord Justice Kennedy, "The Unification of Law," (1909) 10 J. Soc'y of Comp. Legis. 21 at 214-215, and also found in Amy H. Kastely, "Unification and Community: A Rhetorical Analysis of the United Nations Sales Convention" (1988) 8 Nw. J. Int'l L. & Bus. 574 at 583.
46. Mendes, supra note 27.
47. Rodriguez, supra note 29 at 47.
49. Mendes, supra note 27.
51. Convention Relating to a Uniform Law on the International Sale of Goods, 1 July 1964, 834 U.N.T.S 107, 3 I.L.M. 855 (1964).
52. Convention Relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods, 1 July 1964, 834 U.N.T.S 169, 3 I.L.M. 864 (1964).
53. Mendes, supra note 27.
54. UNCITRAL, Report on the First Session, reprinted in United Nations Commission on International Trade Law, Yearbook: Volume I: 1968-1970, UNDOC. A/CN.9/SER.A/1970 (Sales No. E.71.V.1), (New York: UN, 1971) at 5-12.
55. In the words of the Hungarian Delegation: "[t]he diversity of the rules of private international law applied by different States is a disturbing element, which leads to 'limping marriages,' to mutually contradictory judgements in different countries and makes the establishment of international relations complicated and difficult in the field of economic and commercial activities." Ibid. at 9.
56. UNCITRAL, supra note 54 at 12.
57. UNGA, 20th Sess., 1404th Plen. Mtg., UN Doc. G.A. Res. 2102 (20 December 1965).
58. UNCITRAL, supra note 54 at 12.
59. Quote found in Mendes, supra note 27.
60. UNGA, 21th Sess., 1497th Plen. Mtg., UN Doc. G.A. Res. 2102 (17 December 1966).
63. UNCITRAL, supra note 54 at 74. Italics in the original.
64. Nor did Canada adopt these conventions.
65. Quote found in Mendes, supra note 27.
66. Camilla Baasch Andersen, "The Uniform International Sales Law and the Global Jurisconsultorium," J.L. & Com. [forthcoming in 2005].
67. Mendes, supra note 27.
68. T.C. Drucker, A Common Law Perspective on International Sales Contracts, in Meridith Memorial Lectures 58, 66 (1982), cited in Mendes, supra note 27.
69. The original eleven states were Argentina, China, Egypt, France, Hungary, Italy, Lesotho, Syria, United States, Yugoslavia, and Zambia.
70. Constitution Act, 1982, being Schedule B to the Canada Act, 1982 (U.K.), 1982, c. 11. See also Government of Canada, Department of External Affairs, "Federalism and International Relations," 1968, 11-33.
71. Sukurs, supra note 6 at 1501.
72. United Nations Commission on International Trade Law, Legislative History: 1980 Vienna Diplomatic Conference, UNDOC. A/CONF.97/9, (New York: UN, 1980), available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/Fdraft.html>.
73. See, e.g., Ontario: S.O. 1988, ch. 45; Prince Edward Island: S.P.E.I. 1988, ch.33.
74. International Sale of Goods Contracts Convention Act, S.C. 1991, c. 13.
75. Alberta: International Conventions Implementation Act , S.A. 1990, c. I-6.8: British Columbia: International Sale of Goods Act , R.S.B.C. 1996, c. 236; Manitoba: International Sale of Goods Act , S.M. 1989-90, c. 18, C.C.S.M., c. S11; New Brunswick: International Sale of Goods Act , S.N.B. 1989, c. I-12.21; Newfoundland and Labrador: International Sale of Goods Act , R.S.N.L. 1990, c. I-16; Northwest Territories: International Sale of Goods Act , R.S.N.W.T. 1988, c. I-7; Nova Scotia: International Sale of Goods Act , S.N.S. 1988, c. 13; Nunavut: International Sale of Goods Act , R.S.N.W.T. 1988, c. I-7 [pursuant to s.29 of the Nunavut Act, S.C. 1993, c. 28]; Ontario: International Sale of Goods Act , R.S.O. 1990, c. I.10; Prince Edward Island: International Sale of Goods Act , S.P.E.I. 1988, c. 33; Quebec: An Act Respecting the United Nations Convention on Contracts for the International Sale of Goods , R.S.Q., c. C-67.01; Saskatchewan: The International Sale of Goods Act , S.S. 1990-91, c. I-10.3; Yukon: International Sale of Goods Act , S.Y. 1992, c. 7.
76. Jacob S. Ziegel, "Canada's First Decision on the International Sales Convention" (1999) 32 Can. Bus. L. J. 313.
77. See for example Troy Keily, "Harmonisation and the United Nations Convention on Contracts for the International Sale of Goods" (2003) 1 Nordic J. Comm. L. at <http://www.njcl.utu.fi>.
78. Nova Tool & Mold Inc. v. London Industries Inc.,  O.J. No. 5381, Court File No. 97-GD-41311 (Ont. Ct., G.D.), aff'd  O.J. No. 307, No. C31315 (Ont. C.A.).
79. Article 7(1).
82. Article 7(2).
83. Vienna Convention on the Interpretation of Treaties, 23 May 1969, 1155 U.N.T.S. 331, 8 I.L.M. 679. Articles 31 and 32 of the Vienna Convention also provide that a treaty is to be interpreted in good faith in accordance with the ordinary meaning to be given to its terms in their context and in light of its object and purpose. It further provides that recourse can be made to supplementary means of interpretation including the preparatory work of the treaty.
84. Ibid. Article 31.
85. See John Honnold, "The Sales Convention in Action -- Uniform International Words: Uniform Application?" (1988) 8 J.L. & Com. 207, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/honnold-sales.html>.
86. Gyula Eörsi, "General Provisions" in Galston & Smit ed., International Sales: The United Nations Convention on Contracts for the International Sale of Goods, (Huntington, NY: Juris Publishing, 1984) at 2-1 to 2-36, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/eorsi1.html>.
87. R.J.C. Munday, "The Uniform Interpretation of International Conventions," (1978) 27 Int'l & Comp. L.Q. 450 at 450.
88. As per Article 1(1)(a), which provides: "This Convention applies to contracts of sale of goods between parties whose places of business are in different States:
(a) when the States are Contracting States...".
89. Trial judgement at paragraph 61, supra note 78.
90. Sale of Goods Act, R.S.O. 1990, c. S.1.
91. Zeigel, supra note 76 at 317-318.
92. Affirmed, supra note 78. The appeal court did, however, make a minor monetary adjustment in favour of the appellant by applying a credit Nova had given to London.
93. Article 7.
94. This trend seems to have gained momentum, particularly with the growth of human rights cases.
95. See R. v. Oaks,  1 S.C.R. 103, at 120-121; Reference Re Public Service Employee Relations Act (Alta.),  1 S.C.R. 313, at 348-359; R. v. Ward (1994), D.L.R. (4th) (S.C.C.); and Thomson v. Thomson,  3 S.C.R. 551.
96. Pushpanathan v. Canada (Minister of Citizenship and Immigration) (1998), 160 D.L.R. (4th) 193 (S.C.C.).
97. R. v. Parisien,  1 S.C.R. 950, at 958. See also National Corn Growers Assn. v. Canada (Import Tribunal)  2 S.C.R. 1324.
98. International Commercial Arbitration Act, R.S.O. 1990, c. I.9. Most provinces have similar legislation. Section 12(2) of Manitoba's International Commercial Arbitration Act (C.C.S.M. c. C151) states:
"In applying subsection (1) to the International Law, recourse may be had to
(a) the Report of the United Nations Commission on International Trade Law on the work of its 18th session (June 3 - 21, 1985);
(b) the Analytical Commentary contained in the Report of the Secretary General to the 18th Session of the United Nations Commission on International Trade Law", as published in the Canada Gazette.
99. Rio Algom Limited v. Sammi Steel Co. (1991), 47 C.P.C. (2d) 251 (Ont. Gen. Div.).
100. Supra note 90.
101. Sport d'Hiver di Genevieve Culet v. Ets. Louys et Fils, Italy, 31 January, 1996, District Court Cuneo, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/960131i3.html>. The specific CISG articles considered were 35 and 39. However, articles 35 through 44 address the issues of the seller's obligation for non-conforming goods.
103. I am indebted to DiMatteo et al., supra note 6 at 391-400 for the material discussed in this section. The case is OGH, SZ 1 Ob 74/99k, Austria, Jun. 29, 1999, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/990629a3.html>.
104. Ibid. at 394.
105. Ibid. at 394. The case is: Rechtbank van Koophandel Veurne [District Court] [Kh] A/00/00665, Belgium, April 25, 2001, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/010425b1.html>.
108. Rheinland Versicherungen v. S.r.l. Atlarex and Allianz Subalpina S.p.A., Tribunale di Vigevano, No. 405, Italy, July 12, 2000, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/000712i3.html>.
111. Ibid. and also in DiMatteo et al., supra note 6 at 395.
112. Ferrari, supra note 18 at 215.
113. This point is noted in Andersen, supra note 66. Ms. Andersen notes that many of the new Italian judges were former students of Prof. Franco Ferrari and, hence, well versed in the nuances of the CISG.
114. Al Palazzo S.r.l v. Bernardaud di Limoges S.A., Tribunale di Rimini, No. 3095, Italy, November 26, 2002, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/021126i3.html>.
115. SO. M. AGRI s.a.s di Ardina Alessandro & C. v. Erzeugerorganisation Marchfeldgemüse GmbH & Co. KG, Tribunale di Padova, No. 40552, Italy, February 25, 2004, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/040225i3.html> and Scatolificio La Perla S.n.c. di Aldrigo Stefano e Giuliano v. Martin Frischdienst GmbH, Tribunale di Padova, No. 40466 of Rig 2002, Italy, March 31, 2004, translation available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cisg/wais/db/cases2/040331i3.html>.
116. Trial judgement at paragraph 61, supra note 78.
117. Zapata Hermanos v. Hearthside Baking Co., Inc., 313 F.3d 385 (7th Cir. 2002) available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cases/021119u1.html>.
118. Ibid. Petition for Writ of Certiorari, available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cisg/biblio/zcertpet.html>.
119. Cited in Andersen, supra note 66.
120. La San Giuseppe v. Forti Moulding Ltd.,  O.J. No. 3352, Court File No. 98-CV-142493CM (ON S.C.).
122. Forti Moulding's counterclaim was for $94,341.12.
123. R.S.O. 1990, c. I.10.
124. Article 100(1).
125. Article 100(2).
126. This point is noted by Ziegel, supra note 76 at 319-320.
127. Paragraph 28.
128. Paragraph 29.
129. Article 1(b).
130. According to Camilla Baasch Andersen, "Reasonable Time in Article 39(1) of the CISG -- Is Article 39(1) Truly a Uniform Provision?" in Pace ed., Review of the Convention on Contracts for the International Sale of Goods (CISG) 1998, (Boston: Kluwer Law International, 1999) 63-176, at n. 32. Data as of August 5, 1998. See also CISG-AC Opinion no. 2, Examination of the Goods and Notice of Non-Conformity: Articles 38 and 39, 7 June 2004. Rapporteur: Professor Eric E. Bergsten, Emeritus, Pace University School of Law, New York, available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cisg/CISG-AC-op2.html>.
131. Nor was a "reasonable time" included in the travaux preparatoires.
132. Bruno Zeller, "Four-Corners -- The Methodology for Interpretation and Application of the UN Convention on Contracts for the International Sale of Goods" (May, 2003), online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/4corners.html> at Chapter 4(e).
133. Jacob S. Ziegel, "Analysis from a Provincial Common Law Perspective" in Ziegel and Claude Samson, Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods, (Toronto: Uniform Law Conference, 1981) 33-167, at Article 39. Of course, time limitations are imposed by the various provincial Limitation Acts.
134. DiMatteo et al., supra note 6 at 364-365.
135. This was filed in 1998.
136. Article 35(2)(a).
137. Paragraph 32.
138. Paragraph 39.
139. Ziegel, supra note 76 at 322.
140. John Felemegas, "The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation," Review of the Convention on Contracts for the International Sale of Goods, (Boston: Kluwer Law International, 2000-2001) 115-379 at 276.
141. Article 7(2).
142. Felemegas, supra note 140 at 276.
143. Paragraph 43.
144. Paragraph 45.
145. According to Jacob Ziegel, and Joanne M. Darkey. See Ziegel, supra note 76 at 323-324, and Joanne M. Darkey, "A U.S. Court's Interpretation of Damage Provisions Under the U.N. Convention on Contracts for the International Sale of Goods: A Preliminary Step Towards an International Jurisprudence of CISG or a Missed Opportunity?" (1995) 15 J.L. & Com. 139 at 148-149. See also Francesco G. Mazzotta, "CISG Article 78: Endless Disagreement Among Commentators, Much Less Among the Courts" (2004) online: Pace Law School CISG Database <http://www.cisg.law.pace.edu/cisg/biblio/mazzotta78.html>
146. Courts of Justice Act, R.S.O. 1990, c. C.43.
147. John Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed., (The Hague: Kluwer Law International, 1999) at 253.
148. DiMatteo et. al, supra note 6 at 398.
150. Felemegas, supra note 140 at 165. Felemegas found the source of this term from Jan Hellner, who stated, "[the CISG] should be able to function as a legal lingua franca for international sales among those who cannot agree ... [to] allow the law of one of the parties ... to be the law of the contract."
151. Keily, supra note 77 at 1.
152. "Open-textured" is a term found in DiMatteo et. al, supra note 6 at 398.
153. Kastely, supra note 45 at 576-577.
154. Ibid. at 621.
155. Mansonville Plastics (B.C.) Ltd. v. Kurtz GmbH (2003) B.C.S.C. 1298.
156. Statutory rules invalidating a choice of governing law are rare in contract law. It is more common to leave a choice of law intact, but to require specific substantive rules to be applied to the contract irrespective of the choice of governing law.
157. Article 1. There are certain exclusions, such as ships, domestic transactions, and consumer purchases.
158. Article 6. Note certain exclusions, ibid.
159. The court noted that this is per the test established in Imperial Life Assurance Co. of Canada v. Colmenares, 62 D.L.R. (2d) 138 (S.C.C.) at 143-144.
160. Article 10.
161. Article 39 states:
"(1) The buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it.
"(2) In any event, the buyer loses the right to rely on a lack of conformity of the goods if he does not give the seller notice thereof at the latest within a period of two years from the date on which the goods were actually handed over to the buyer, unless this time-limit is inconsistent with a contractual period of guarantee."
162. Paragraphs 38-39.
163. Paragraph 1.
164. Canadian jurists' are not alone in their ignorance of the CISG. The literature is replete with instances of jurists' in other jurisdictions failing in this regard as well. By contrast, some jurisdictions seem to have an advanced understanding of the CISG, being much more sensitive to its "international character."
165. Brackets added. Cesare Massimo Bianca, in C.M. Bianca and M.J. Bonell, Commentary on the International Sales Law, (Milan: Dott. A Giuffrè Editore, S.p.A, 1987) 270, and available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/bianca-bb35.html>.
167. Paragraph 76.
168. Paragraph 77.
169. Section (c), preface to paragraph 83.
170. Paragraph 83, quoting, in part, Article 35.
172. Felemegas, supra note 140 at 214.
173. Supra notes 101, 103, 105, 108, and 114.
174. See for example the CISG Queen Mary Case Translation Programme available online, Pace Law School CISG Database: <http://cisgw3.law.pace.edu/cisg/text/queenmary.html>.
175. Paragraphs 84-88.
176. Paragraph 88.
177. Paragraph 149.
178. UNCITRAL Secretariat Commentary, "Guide to CISG Article 74," online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-74.html>.
179. Articles 78 and 84(1). Under Article 78: "[i]f a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under Article 74." Under Article 84(1): "[i]f the seller is bound to refund the price, he must also pay interest on it, from the date on which the price was paid."
180. Mazzotta, supra note 145.
181. Eric C. Schneider, ed., "Cross-References and Editorial Analysis, Article 74," online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/text/cross/cross-74.html>.
183. Ibid. at n. 71.
184. Ibid. at n. 70.
186. Article 2(a).
187. Article 5.
188. Ziegel, supra note 133 at section on Article 5. Also available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/text/ziegel5.html>.
189. Peter Schlechtriem, Uniform Sales Law -- The UN-Convention on Contracts for the International Sale of Goods, (Vienna: Manz, 1986) excerpt available online: Pace Law School CISG Database <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-05.html>.
190. Peter Schlechtriem, "The Borderland of Tort and Contract -- Opening a New Frontier?," (1988) 21 Cornell Int'l L.J. 467, note 1, online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/sclechtriem.html>. Schlechtriem is citing a phrase from W. Prosser.
191. Antonin I. Pribetic, "'Bringing Locus into Focus': A Choice-of-Law Methodology for CISG-based Concurrent Contract and Product Liability Claims" (November, 2004), online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/biblio/pribetic1.html>.
193. (2003) ONSC 02-CV-19871.
194. Regrettably, there are few reported cases involving Article 5 among the signatory states. As of July 1, 2005, only two cases are listed on the Pace Law School CISG Database. One is from Switzerland, 26 April 1995 Handelsgericht [Commercial Court] Zürich, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cases/950426s1.html>. The other is from Germany, 2 July 1993 Oberlandesgericht [Appellate Court] Düsseldorf, available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cases/930702g1.html>.
195. Muscutt v. Courcelles,  O.J. No. 2128 (Ont. C.A.). The "real and substantial connection test" as found in Muscutt considers the following: a) the connection between Ontario and the plaintiffs' claim; b) the connection between Ontario and the defendant; c) unfairness to the defendant in assuming jurisdiction; d) unfairness to the plaintiff in not assuming jurisdiction; e) the involvement of other parties to the action; f) whether Ontario courts would recognize and enforce the foreign judgment rendered on the same jurisdictional basis; g) whether the case is inter-provincial or international; h) comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere.
196. Moran v. Pyle National (Canada) Ltd.,  1 S.C.R. 393.
197. Ibid. at 20.
198. Paragraph 27, where the court stated: "The parties do not dispute that the United Nations Convention on the International Sale of Goods ("CISG") applies and that the CISG was incorporated into Ontario law by the passing of the International Sale of Goods Act. The contract is deemed to have been made where the offer was extended from. In this case, the offer was extended from Belgium and accepted by a fax sent from Ontario."
199. Paragraph 41.
200. Shane v. JCB Belgium N.V. (2004) ON S.C. 02-CV-19871, paragraph 3. During this endorsement on costs, Smith J. stated: "The matter was quite complex. Both parties filed affidavits, the Defendant cross-examined on those affidavits and extensive books of authorities were filed by both parties. The issues initially involved jurisdiction of the court, although this was subsequently abandoned by the Defendant. The motion also involved the application of the International Sales of Goods Act, and the application of the United Nations Convention on the International Sale of Goods, a consideration of the legal system in Belgium as well as factors in deciding the forum conveniens between two countries."
201. Paragraph 41.
202. Paragraph 35.
203. Another interesting issue not addressed by the motions court was the extent to which the claim might have been excluded under the two year limitations period per CISG Article 39(2). The plaintiff did not give notice of its claim to JCB Belgium until after a two year period. However, this limitation applies to only nonconforming goods. This may help explain why the plaintiff decided to pursue a tort action based on negligence instead of an action on the basis of contractual liability for nonconforming goods.
204. Paragraph 2.
205. The applicability of the CISG to both the contractual and product liability damage issues in this action were additionally complicated by the involvement of two contracting states, Canada and Belgium, and one non-contracting state, England.
206.  3 S.C.R. 1022.
207. Ibid. at 15.
208. (2003) ON S.C. 03-CV-23776SR, aff'd (2004) CanLII 11196 (ON C.A.) and (2004) CanLII 8368 (ON C.A.).
209. Article 25.
210. Ziegel, supra note 133 at discussion on Article 25 and available online: Pace Law School CISG Database <http://cisgw3.law.pace.edu/cisg/text/ziegel25.html>.
211. Leonardo Graffi, "Case Law on the Concept of 'Fundamental Breach' in the Vienna Sales Convention" (2003) 3 I.B.L.J. 338 at 338-339.
212. Paragraph 26.
213. Emphasis added. Paragraph 27.
214. DiMatteo et al., note 6 at 412.
216. Paragraph 28.
218. Paragraph 27. See also note 212.
221. DiMatteo et al., supra note 6 at 304.
222.  1 S.C.R. 265. In Sail Labrador Ltd. v. Challenge One (The), the Supreme Court reviewed English case law and the issue of timeliness of performance of contracts. It concluded that in order to determine whether there has been a fundamental breach of contract, a court must first assess whether the parties have expressly made time of the essence of the contract through the incorporation of a "time of the essence" clause. If they have not, a court can still conclude that time is of the essence if the circumstances of the case call for such an interpretation.
223.Diversitel Communications Inc. v. Glacier Bay Inc., 2004 CanLII 8368 (ON C.A.).
224. Brown & Root Services Corp. v. Aerotech Herman Nelson Inc., 2002 MBQB 229, aff'd 2004 MBCA 63.
225. Application for leave to appeal was refused by the Supreme Court. E-mail correspondence to author, dated March 22, 2005 from Karen A. Johnston, Pitblado LLP, legal counsel for Aerotech Herman Nelson Inc.
226. For the list of cases, see notes 24 and 25, supra.
227. For example, James Klotz notes that as there are few cases on the CISG, "it is best to avoid its use until it is a known commodity." Canadian legal practitioners appear to be following his advice. See James M. Klotz, Going Global? Power Tools for Negotiating International Business Deals, (Toronto: Global Business Press, 2000) at 19-21.
228. Appeal decision, supra note 224 at paragraph vii.
229. Trial judgment at paragraph 64.
230. Ibid. paragraph 84.
231. Ibid. paragraph 96.
232. Ibid. paragraph 107.
233. Ibid. paragraphs 121-122.
234. Appeal decision, supra note 224 at paragraphs 15-16.
235. Ibid. paragraph xlviii.
236. Ibid. paragraphs 1-39.
237. Ibid. paragraphs 115-148.
238. J. Anthony Van Duzer, "The Adolescence of the United Nations Convention on Contracts for the International Sale of Goods in Canada," (paper presented to the Canadian Bar Association's International Law Section Annual Conference in Montréal, May 2001) online: Pace Law School CISG Database <http://www.cisg.law.pace.edu/cisg/biblio/vanduzer2.html> at 1.
239. Paragraph 17.
240. Trial judgment at paragraph 95.
241. Ibid. paragraph l.
242. Article 1(a).
243. Article 7.
244. DiMatteo et al., supra note 6 at 437.
245. Clayton Gillette and Robert Scott, "The Political Economy of International Sales Law" (April 23, 2005) New York University Law and Economics Research Paper Series, Working Paper No. 05-02, at 4. Available online: Social Science Research Network <http://ssrn.com/abstract=709242>.
246. Ibid. Gillette and Scott proceed to predict the demise of the CISG because of its failure to supply a truly uniform interpretive language to resolve all contractual problems.
247. DiMatteo et al., supra note 6 at 440.
248. 144 F.3d 1384 (11th Cir. 1998).
249. Ibid. at 1391.
250. DiMatteo et al., supra note 6 at 440.
252. Quote by Denis Tallon, in Leonardo Graffi, "Case Law on the Concept of 'Fundamental Breach' in the Vienna Sales Convention" (2003) 3 I.B.L.J. 338 and online: Pace Law School CISG Database at <http://cisgw3.law.pace.edu/cisg/biblio/graffi.html>.