(A/CONF.97/C.1/L.9, L.13, L.25, L.26)
4. The CHAIRMAN asked the Working Group to report on the results of its work.
5. Mr. FARNSWORTH (United States of America), reporting on changes in article 3 [became CISG article 3 ] other than those only affecting the French text, said that the working group recommended two amendments: in paragraph 1, the term "seller" should be replaced by "party who furnishes the goods", which was parallel to the term used in paragraph 2, and the order of the paragraphs should be reversed. Otherwise the original text should remain unchanged.
6. Mr. PLANTARD (France), reporting on changes only affecting the French text, said that the working group had accepted the French proposal (A/CONF.97/C.1/L.9) for the present paragraph 2. However, it had been decided to reinstate the words "n'ait à fournir" from the original text in place of "ne fournisse" in the third line.
7. Mr. GORBANOV (Bulgaria) suggested that the term recommended by the working group for paragraph 1 was still too close to "seller" and that it should be replaced by the phrase "one of the parties to the contract".
8. Miss O'FLYNN (United Kingdom) said that her delegation withdrew its amendment to paragraph 2 (A/CONF.97/C.1/L.26), in view of the adverse views which had been expressed at the previous meeting (A/CONF.97/C.1/SR.2).
9. The CHAIRMAN asked if the Committee wished to adopt article 3 [became CISG article 3 ], as amended by the working group, and refer it to the Drafting Committee, together with the suggestion made by the Bulgarian representative.
10. It was so agreed.
(A/CONF.97/C.1/L.4, L.14, L.20, L.21)
11. Mr. PLANTARD (France) speaking on behalf of the delegations of Finland, the United States and his own country, said that they were withdrawing their individual amendments (A/CONF.97/L.21, L.4, L.20) in favour of a joint proposal, based on the French text (A/CONF.97/C.1/L.20), with the last part of the sentence amended to read ". . . of the seller for death or injury caused by the goods to any person".
12. Although the joint amendment (A/CONF.97/C.1/L.51) was relevant only to certain legal systems, the matter was of importance to the countries affected. A full explanation of the problems arising in countries which based liability for defective products on the seller's latent defects guarantee was set out in document A/CONF.97/8/Add.4, page 6. In such countries, it was not possible for a buyer who suffered personal injury to bring an action of tort against the seller of defective goods. National legislation relating to personal injury from, for example, defective food or pharmaceutical products offered greater protection than the draft Convention, which was not designed for that purpose, but applied rather to commercial loss.
13. Mr. REISHOFER (Austria) said that his delegation could support the joint amendment, since it appeared to exclude from the scope of the Convention all problems relating to product liability, which the work of UNCITRAL was not intended to cover.
14. Mr. TR0NNING (Denmark) said that he supported the joint amendment but thought it did not go far enough. It should be extended to include all cases of product liability, such as liability of the seller for damage to goods other than those sold. The rules of the draft Convention were not satisfactory in such cases, the main drawback being the time limit of only two years. The issue was a complicated one which had not been sufficiently studied, and it would therefore be preferable to exclude all such cases from the scope of the Convention.
15. The European Economic Community was working on rules to govern product liability, in which the time limit would be longer. As the seller of the goods could also be the producer, there was likely to be conflict between the EEC rules and the draft Convention.
16. Mr. MASKOW (German Democratic Republic) welcomed the proposal, which would facilitate claims for personal injury in his country, where product liability was construed as contractual law. However, it would be better to exclude damage to goods as well, since that was not specifically dealt with in the draft Convention.
17. Mr. KOPAC (Czechoslovakia) drew attention to the first sentence of article 4 [bis] [became CISG article 5 ], which made it clear that the draft Convention did not cover liability for defective goods under national law. The joint amendment was satisfactory as it stood.
18. Miss O'FLYNN (United Kingdom) said that her delegation supported the joint amendment as far as it went, but would also be prepared to consider a more extensive proposal, as suggested by the Danish representative.
19. Mr. ROGNLIEN (Norway) said that his delegation agreed that personal injury should be excluded from the scope of the Convention. But difficulties would arise if material damage (damage to property) remained within its scope without any modification. That would cause problems in Norway, where the sales law currently in force only partially covered product liability, a large part remaining under the law of tort; the victim had to choose the grounds on which to base his claim. There would be no difficulty with the joint amendment if it was not to be interpreted a contrario in relation to material damage, but permitting the interpretation that claims for such damage grounded on tort and not on contracts of sale fell outside the scope of the Convention. Otherwise, a wider exclusion, covering property, was required.
20. Mr. HJERNER (Sweden) expressed concern at the possibility of excluding from the scope of the Convention the greater part of the relationship between buyer and seller by unqualified references to product liability, a concept which had not as yet been defined. It was usually taken to refer to claims by consumers aganst distributors or manufacturers, which fell outside the contractual buyer/seller relationship. In that sense, it had nothing to do with the draft Convention, since consumer transactions were by definition outside its scope. If, however, the Committee were to go so far as to accept the Danish suggestion to exclude damage to property, it would remove from the purview of the draft Convention such cases as the supply of defective spare parts for aircraft or defective raw materials which damaged the final product. It would then not be clear which rules prevailed in those cases. Problems of the choice of law would arise and parties to contracts of sale would have to inform themselves about unfamiliar systems. That would be a setback for efforts at legal unification. He would prefer the original draft of article 4 [bis] [became CISG article 5 ]. If necessary, as a compromise, he could agree to the joint amendment, but he could go no further.
21. Mr. HERBER (Federal Republic of Germany) shared that view. There was as yet no exact definition of product liability. The idea existed in national legislation based on tort, but the way in which it was dealt with differed from country to country. He would have liked the working group to study the question, with a view to establishing more precisely what was to be understood by product liability. However, his delegation could agree to the joint amendment.
22. Mr. MANTILLA-MOLINA (Mexico) said that product liability was a matter of considerable importance and deserved careful consideration; simply to exclude it from the Convention would not solve the problem. In cases where, for example, a child was harmed by a certain drug, the family might wish to sue the seller, who would not be the pharmacist, but the producer of the drug. He was inclined to feel that the proposed new article 4 bis [became CISG article 5 ] was out of place in the Convention and wished to reserve his position on it.
23. Mr. KUCHIBHOTLA (India) said he could not support the joint amendment, which he saw as a severe restriction on the scope of the Convention.
24. Mr. SHAFIK (Egypt) agreed that the question of product liability was important, particularly for developing countries, which imported large amounts of both food and pharmaceutical products. He did not feel, however, that it should be dealt with under the Convention. It was a separate question, which came rather within the field of tort. The new article should cover not just damage to goods but damage to property in general.
25. Mr. FRANCHINI-NETTO (Brazil) supported the views expressed by the Mexican representative.
26. Mr. PLANTARD (France) said that if the joint amendment made no reference to damage to property, that was because it was the sponsors' opinion that such damage was included in commercial or economic loss and not a failure on their part to recognize its importance. If damage to property were to be excluded there would be a conflict with other provisions of the Convention including those which covered the conformity of goods.
27. Mr. FOKKEMA (Netherlands) proposed a compromise formula which would distinguish between cases where the relation was simply between buyer and seller and cases where action was taken by a buyer against a previous seller. The text would read "The Convention does not affect the rights which, according to the applicable national law, a buyer can invoke as against a previous seller, for damage caused to persons or to other goods by a product sold."
28. The CHAIRMAN did not think that proposal would be acceptable. It was clear that the Convention did not cover relations between the buyer and a previous seller; it was concerned with contracts of sale.
29. The joint amendment appeared to command the largest measure of support. He suggested that it should be forwarded to the Drafting Committee.
30. It was so agreed.
31. Mr. ROGNLIEN (Norway), introducing his delegation's amendment (A/CONF.97/C.1/L.14), said that it was intended to deal with the problem that arose when the seller, having reserved property rights in the goods, wished to take them back. The background to the proposal was explained on pages 15 and 16 of document A/CONF.97/8. If a contractual clause existed reserving the right of property in goods for the purpose of securing payment due under the contract, and the seller wished to take back the goods because the, buyer had not paid the full price (all instalments), the question to be decided was whether or not that constituted avoidance of contract. If it did not, there was no provision in the Convention to deal with the problem. If it did, then settlement between the parties would be covered by articles 66 et seq. [became CISG article 81 et seq.]. While article 69 [became CISG article 84 ] covered the refunding by the seller of the price of the goods and the accounting by the buyer for benefits derived from the goods, no reference was made in it to the valuation of the used goods to be restituted. The rules of the Convention were unsatisfactory for regulating the settlement of accounts between the parties in such cases, while most national laws had special provisions for instalment sales and the settlement between the parties where the seller exercised his reserved property rights. He also referred to ULIS 1964 article 5, paragraph 2 and article 4 (a) and (b) of the present draft Convention [became CISG article 4(a) and (b) ].
32. The CHAIRMAN asked whether there was any support for the Norwegian amendment.
33. Mr. PLANTARD (France) said that although the Norwegian amendment was a reasonable one, he considered the question was already covered by article 5 [became CISG article 6 ] of the Convention. The proposed addition to article 4 was therefore not necessary.
34. Mr. ROGNLIEN (Norway) said that on that understanding and with reference to article 4 (a) and (b) [became CISG article 4(a) and (b) ] he would withdraw his proposal.
(A/CONF.97/L.10., L.18, L.30, L.32, L.41)
35. The CHAIRMAN suggested that since the Indian amendment (A/CONF.97/C.1/L.30) was of a drafting character, it should be referred to the Drafting Committee.
36. It was so decided.
37. Mr. SHORE (Canada) proposed that his delegation's amendment (A/CONF.97/C.1/L. 10) should be referred to the Second Committee for discussion before it was considered by the First Committee. Although his delegation preferred the "opting-in" approach to the "opting-out" method, it had decided in a spirit of compromise to support the text proposed by Australia in document A/CONF.97/C.2/L.3, which would be considered by the Second Committee. In any event, however, it would not be possible for the Committee to discuss the Canadian "opting-out" proposal until it knew what action the Second Committee was going to take on the "opting-in" proposal.
38. Mr. INAAMULLAH (Pakistan) announced that his delegation had submitted an amendment to article 5 [became CISG article 6 ].
39. Mr. DABIN (Belgium) said that, in view of the considerable importance of article 5 [became CISG article 6 ] and hence of the Canadian proposal, it might be wiser for the Committee to have an exchange of views on the matter without attempting to reach an immediate conclusion. A discussion of the same kind could take place in the Second Committee.
40. Mr. HJERNER (Sweden) said that the "opting-in" formula had been discussed in competent circles for many years; on every occasion, however, a solid majority had emerged against it. He did not believe it was possible to wait for the outcome of the Second Committee's discussion on the Australian proposal (A/CONF.97/C.2/L.3). The whole problem of "opting-out" and "opting-in" should be discussed by the First Committee forthwith.
41. Mr. KIM (Republic of Korea) urged that the issue should be discussed by the Committee immediately.
42. Mr. MICCIO (Italy) said that article 5 [became CISG article 6 ] dealt with very general questions, which required a thorough understanding of all the provisions of the draft Convention. While he would oppose any suggestion to transfer the article to the final clauses, he believed that, for methodological reasons, it should only be dealt with after all the other articles had been discussed.
43. Mr. HERBER (Federal Republic of Germany) noted that the Australian proposal (A/CONF.97/C.2/L.3) was being construed as an "opting-in" clause in the sense of the United Kingdom reservation to the 1964 Hague Convention. The proposal thus constituted a reservation clause, and hence, even if it were adopted by the Conference, only some of the Contracting States would avail themselves of it. Article 5 [became CISG article 6 ] would then be of no use to those Contracting States, but was nevertheless a very important provision for all other States.
44. Miss O'FLYNN (United Kingdom) said that she agreed with the previous speaker's arguments but arrived at a somewhat different conclusion. Article 5 [became CISG article 6 ] would always be required for those Contracting States that did not avail themselves of the reservation embodied in the Australian proposal.
45. On the procedural issue, she felt it would be more profitable for the Canadian proposal (A/CONF.97/C.1/L.10) and the Australian proposal (A/CONF.97/C.2/L.3) to be discussed together.
46. Mr. WAGNER (German Democratic Republic) said that, for the reasons given by previous speakers, he strongly favoured an immediate discussion of article 5 [became CISG article 6 ] .
47. Mr. SÉVON (Finland) said that even if a State made the reservation in question, it would still allow its commercial circles to include in their contracts clauses whereby alterations were made to certain provisions of the Convention. There would therefore always be a need for article 5 [became CISG article 6 ], regardless of the outcome of the Second Committee's discussion on the Australian proposal. He accordingly saw no reason for deferring the discussion of the article.
48. Mr. PLUNKETT (Ireland) supported the idea of discussing the Australian proposal and the Canadian amendment together.
49. Mr. BOGGIANO (Argentina) said it was essential that article 5 [became CISG article 6 ] should be dealt with in the First Committee.
50. The CHAIRMAN asked whether the Committee wished to defer discussion on the Canadian proposal (A/CONF.97/C.1/L.10) until the Second Committee had dealt with the Australian proposal for a new article (A/CONF.97/C.2/L.3).
51. Noting that only a minority favoured that proposal, he said that, if there were no objections, he would consider that it had been rejected.
52. It was so agreed.
53. The CHAIRMAN invited the Committee to discuss paragraph (1) of the Canadian amendment to article 5 [became CISG article 6 ] (A/CONF.97/C.1/L.10).
54. Mr. WAGNER (German Democratic Republic) said that he welcomed the idea contained in the proposed paragraph (1) but found the formulation unduly complicated. In order to simplify it, he proposed the deletion of the concluding phrase, beginning with the words "but the parties may . . ." and ending with the words "manifestly unreasonable".
55. Mr. SHORE (Canada) accepted that proposal.
56. Mr. WAITITU (Kenya) fully supported the Canadian proposal for article 5 [became CISG article 6 ], paragraph (1).
57. Mr. ROGNLIEN (Norway) said that he was not altogether satisfied with the proposed paragraph (1). The second sentence appeared to suggest that parties who agreed to exclude the Convention wholly might thereby be able to exclude "the obligations of good faith, diligence and reasonable care" prescribed by the Convention, even if such principles were to be contained in article 7 [became CISG article 8 ] or part II of the Convention.
58. Mr. HJERNER (Sweden) said that he could not support the Canadian proposal precisely because of the reference it made to the three principles mentioned by the previous speaker. He saw no mention anywhere in the draft of the principles of "diligence and reasonable care"; as for the principle of "good faith", it was mentioned only once, in article 6 [became CISG article 7 ], but in a totally different context.
59. Mr. SHORE (Canada) explained that the present text of article 5 [became CISG article 6 ] would enable the parties to a contract to exclude any provision of the Convention whatsoever. They ought not, however, to be able to exclude a provision such as that contained in article 6 [became CISG article 7 ], which required the parties to perform their contractual obligations in good faith. The same was true of the other two principles mentioned in the second sentence of the Canadian text.
60. Mr. FARNSWORTH (United States of America) said that, like the Swedish representative, he could not support the Canadian amendment. An a contrario interpretation would suggest a general obligation of good faith.
61. Mr. KIM (Republic of Korea) said that the Canadian proposal was unacceptable as a matter of principle. The exclusions covered by article 5 [became CISG article 6 ] were confined to the contractual obligations between the parties. There could be no question, for example, of excluding article 2 on the scope of application of the Convention, or the principle of good faith.
62. Mr. DABIN (Belgium) said that there were many provisions besides those of good faith, diligence and reasonable care that were fundamental. They included article 23 [became CISG article 25 ] on fundamental breach, article 37 [became CISG article 39 ], paragraph (2), on the obligation to give notice, article 44 [became CISG article 48 ] on the right to remedy failure to perform and article 65 [became CISG article 79 ] on exemptions.
63. The CHAIRMAN asked if the Committee wished to adopt paragraph 1 of the Canadian amendment (A/CONF.97/C.1/L.10) as sub-amended by the German Democratic Republic.
64. Noting that a substantial majority was against the proposal, he said that if there were no objections, he would take it that the Committee rejected it.
65. It was so agreed.