(h) Attorneys' fees as damages
Do the damages recoverable under CISG Article 74 include attorneys' fees spent to recover them?
In the United States, apparently not. See Zapata Hermanos Sucesores, S.A. v.
Hearthside Baking Co., Inc. (United States, N.D. IL 29 August 2001), reversed 313
F.3d 385 (7th Cir. 19 November 2002), cert. denied December 1, 2003. The district court had ruled that a party prosecuting a
claim for damages for breach of a contract governed by the CISG was entitled to recover
attorneys' fees as damages resulting from the breach. Under what is called the "American
Rule," generally, absent an agreement providing otherwise, the cost of engaging counsel
to prosecute a claim for breach of contract is not recoverable. Noting that this is the
minority view internationally, the district court concluded that attorneys' fees are a
foreseeable consequence of a breach within the meaning of CISG Article 74. On appeal, the
United States Court of Appeals for the Seventh Circuit reversed. It reasoned that the
principles for determining when a losing party must reimburse the other party for
attorneys' fees are part of procedural, not substantive law. It concluded that there is no
support in the background of the Convention or in the cases decided under it for reading
the word "loss" in Article 74 as intended to include attorneys' fees. On appeal, the U.S. Supreme Court
invited the Solicitor General to file a brief expressing the views of the federal government.
In a brief in which the Legal Adviser of the Department of State joined, the Solicitor
General asserted that "the court of appeals correctly held that the term 'loss' in Article 74
of the Convention does not include attorneys' fees" and supported denial of the petition
for certiorari on that and other grounds. The decisions of both lower courts and the briefs
filed in the Supreme Court are published on this data base. Look under the case history
section of the case presentation.
In its Opinion No. 6 Calculation of Damages under CISG Article 74, the CISG-Advisory Council reached the same conclusion, but for different reasons.
A. CISG Research Guide
A leading article on researching the CISG is Claire M. Germain, "The United Nations
Convention on Contracts for the International Sale of Goods: Guide to Research and
Literature", Review of the Convention on Contracts for the International Sale of
Goods (Kluwer Law International 1995) 117-145.
There are many studies of the CISG as a whole and of the many aspects of its
provisions. You might try the following:
- Holdsworth, Judith L., Practical Application of the United Nations Convention on Contracts for the International Sale of Goods (CISG)
- Volumes 4-5, International Contract Manual, S. Eiselen and A. H. Kritzer, Thompson West (2008). These volumes update Prof. Kritzer's Guide to Practical Applications of the United Nations Convention on Contracts for the International Sale of Goods (1991-1994). This work explains both the UCC and the CISG.
- Guide to the International Sale of Goods Convention (Looseleaf, 2
volumes. Compilation of studies on numerous CISG topics. W. A. Hancock,
Editor.) Published by Business Laws, Inc.
In addition to the cisgw3 database of which this Guide is a part, the following are websites
containing useful information on the Convention and related subjects.
- There is an Autonomous Network of CISG Websites with materials on the CISG
in websites produced by universities and law firms in Africa, Arab States,
Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany,
Greece, Israel, Japan, Mexico, Spain, Latin America and Switzerland.
- Unilex is a helpful source for case abstracts, case texts and bibliography citations
on the CISG and the UNIDROIT Principles of International Commercial
Contracts. This service is available on the Internet <http://www.unilex.info/> and
in a printed text marketed by Transnational Publishers of Ardsley, NY.
In addition, there is:
- International Chamber of Commerce, <http://www.iccwbo.org/>.This site contains
the ICC's international arbitration rules and information on its publications,
services and products, including a form contract for the international sale of
manufactured goods for resale designed with the provisions of the CISG in mind.
The form is available on disk.
- The U.S. Department of State's Private International Law site
<http://www.state.gov/s/l/c3452.htm>. This database contains information on international legal developments affecting
commercial transactions and the intentions of the United States regarding them. It
also contains the texts of the CISG, the 1978 United Nations Convention on the
Carriage of Goods by Sea (The Hamburg Rules), the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards and other treaties
affecting commercial matters and lists of the countries which are parties to those
The International Trade Law Monitor <http://www.lexmercatoria.org/>, edited by Ralph Amissah, is also a good site to bookmark.
B. CISG News
CISG News is an electronic newsletter devoted to developments regarding the CISG and
the legal aspects of contracts for the international sale of goods with links to this and other
parts of the cisgw3 database of the Institute of International Commercial Law of the Pace
University School of Law, and other Internet sites.
1. The CISG Advisory Council
On September 26, 2003, the CISG-AC ("Advisory Council on the United Nations
Convention on Contracts for the International Sale of Goods (CISG)") announced its
first opinion, Electronic Communications under the CISG.
Its former Secretary, Dr. Loukas Mistelis, Centre for Commercial Law Studies, Queen Mary,
University of London, described the CISG-AC as a private initiative to respond to the
need to address some controversial, unresolved issues relating to the CISG which merit
interpretative guidance and to promote a uniform interpretation of the CISG. Dr. Mistelis has
said: "The primary purpose of the CISG-AC is to issue opinions relating to the interpretation
and application of the Convention on request or on its own initiative. Requests may be
submitted to the CISG-AC, in particular, by international organizations, professional
associations and adjudication bodies. The first opinion is a response to an informal request
by the International Chamber of Commerce for the Council to reflect on issue of electronic
communications and the ability of the CISG to respond to such challenges."
The founding members of the CISG-AC were Professor Dr. Eric E. Bergsten, Emeritus of
Pace University, formerly Secretary General of UNCITRAL, Professor Dr. Michael Joachim
Bonell, University of Rome La Sapienza, formerly Secretary General of UNIDROIT, the late Professor E. Allan Farnsworth, Columbia University, New York, Professor Dr. Alejandro
Garro, Columbia University, Professor Sir Roy Goode, University of Oxford, Professor Dr.
Sergei N. Lebedev, Moscow Institute of International Relations, Professor Dr. Jan Ramberg,
Emeritus, Stockholm University, the late Professor Dr. Dr. h.c. Peter Schlechtriem, Emeritus,
University of Freiburg, Professor Hiroo Sono, Kyushu University and Professor Dr. Claude
Witz, Universität des Saarlandes and Université Robert Schuman, Strasbourg. The Council has elected four new members: Prof. Michael Bridge, London School of Economics, Prof. John Y. Gotanda, Villanova Law School, Prof. Dr. MĒ del Pilar Perales Viscasillas, Universidad Carlos III, Madrid, and Prof. Dr. Ingeborg Schwenzer, University of Basel.
In October, 2007, the Council elected Prof. Bergsten to serve as Council
Chair and chose Professor Sieg Eiselen, Department of Private Law,
University of South Africa, to serve as its Secretary.
2. Selected CISG Cases
- In two extensively reasoned decisions, U.S. courts of first instance have reached opposite conclusions on the issue of whether the CISG is in effect in Hong Kong.
CNA Int'l Inc. v. Guangdon Kelon Electronical Holdings (yes); Innotex Precision, Ltd. v Horei Image Products, Inc. (no). In Electrocraft Arkansas, Inc. v. Super Electric Motors, Ltd., the court initially followed CNA Int'l, but later invited the parties to address the issue in the light of Innotex.
- Scaform International v. Lorraine Tubes, S.A.S., June 19, 2009, a decision of Belgium's Hof van
Cassatie, concerns the application of CISG Articles 79 and 7 to a case in which a steel tube seller's
cost for raw material increased by 70%. The court interpreted and applied CISG Article 79 and Article 7. The court said that an unforeseen disproportionate increase in the burden of performance may be an
Article 79 impediment and ruled that the seller was entitled, and the buyer obligated to renegotiate.
- Bundesgerichtshof VIII ZR 67/04, March 2, 2005, a decision of Germany's Federal
Supreme Court concerns the application of the CISG to a failure of the goods to comply with
public law regulations governing their marketing. For additional information on the significance
of this case, see Professor Schlechtriem's commentary.
- Bundesgericht 4C.198/2003/grl, November 13, 2003, a decision of the Swiss Federal Supreme Court, points out an important difference in meaning between the English and French texts of Article 39(1) and the German translation of Article 39(1).
- In Amco Ukrservice & Promriladamco v. American Meter Company the issue was whether the CISG barred joint venture contract related claims because the contract lacked price and quantity terms. "Although the CISG may have governed discrete contracts for the sale of goods that the parties had entered pursuant to the joint venture agreements, it does not apply to the agreements themselves."
- Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., Inc., 313 F.3d 385 (7th
Cir. 2002), reversing 2001 WL 1000927 (United States, N.D. IL 2001), cert. denied, December 1, 2003 concerns the
recovery of attorneys' fees as CISG damages for breach. The parties' Supreme Court briefs and friends of the court briefs are on this data base with links in the
case history section of the case presentation. The Supreme Court invited the Solicitor
General to file a brief expressing the views of the federal government. In a brief in which
the Legal Adviser of the Department of State joined, the Solicitor General asserted that
"the court of appeals correctly held that the term 'loss' in Article 74 does not include
attorneys' fees" and supported denial of the petition for certiorari on that and other
grounds. The government brief contains significant comments on the meaning of Article
7(1) as it applies to the decisions of foreign courts and the place of such decisions in the
- Chicago Prime Packers, Inc. v. Northam Food Trading Co. applies CISG Article 38, buyer's examination, Article 39, notice on non-conformity, and Article 78, prejudgment interest, and follows Zapata's declaration that attorneys' fees are not Article 74 damages.
- In BP Oil International v. Empresa Estatal Petroleos de Ecuador, the United States
Court of Appeals for the Fifth Circuit follows St. Paul Guardian Ins. Co. v.
Neuromed Medical Systems & Support, GmbH, below, in thinking that INCOTERMS
are incorporated through Article 9(2).
- Chateau des Charmes Wines Ltd. v. Sabate USA, Sabate S.A. examines the impact of the Convention's articles on formation and modification on a seller's contention that forum-selection clauses in its invoices were part of an oral contract.
- Chicago Prime Packers, Inc. v. Northam Food Trading Co. contains an
informative analysis of Article 38's buyer's examination requirement and Article
39's notice of lack of conformity requirement.
- Usinor Industeel v. Leeco Steel Products, Inc., 2002 WL 6555540 (United States,
N.D. IL 2002), construes CISG Article 4(b) and says that Article 9 of the UCC,
not the CISG, governs the effect of a retention of title clause in a contract falling
under the Convention when the rights of a secured party are affected. Citing an
Australian case, the Usinor court also calls attention to the fact that "courts should
consider the decisions issued by foreign courts on the CISG."
- Asante Technologies, Inc. v. PMC-Sierra, Inc., 164 F. Supp. 2d 1142 (United
States, N.D. CA 2001), applies Article 1 and Article 10 CISG to a contract
between two Delaware corporations and deals with removal of a CISG case from
state to federal court.
- St. Paul Guardian Ins. Co. v. Neuromed Medical Systems & Support, GmbH, (United States, S.D.NY 2002), stands for the proposition that, pursuant to CISG
Article 9(2), Incoterms definitions should be applied to the contract despite the
lack of an explicit Incoterms reference in the contract. The court cited two theses
published on the cisgw3 database: Neil Gary Oberman, "Transfer of Risk From
Seller to Buyer in International Commercial Contracts: A Comparative Analysis
of Risk Allocation Under CISG, UCC and Incoterms", a Laval thesis; and
Annemieke Romein, "The Passing of Risk: A comparison between the passing of
risk under the CISG and German Law", translated text of a Heidelberg thesis. See
also the annotated text of Article 9 CISG.
- Magellan International Corp. v. Salsgitter Handel GmbH, 76 F. Supp. 2d 919 (United States, N.D. IL 1999), concerns the pleading requirements for stating a
claim for breach of contract under the CISG for purposes of Fed. R. Civ. P.
12(b)(6), the availability of specific performance, and the unavailability of
- MCC Marble Ceramic Center, Inc. v. Ceramica Nuova D'Agostina, S.p.A., 144 F.
3rd 1384 (United States, 11th Cir. 1998). This leading case deals with the parol
evidence rule, the admissibility of evidence of subjective intent and the
interpretation of CISG Article 8. For additional information on this subject, see the
annotated text of CISG Article 8 and CISG-AC Opinion No. 3.
- Beijing Light Automobile Co., Ltd v. Connell Limited Partnership, Stockholm
Chamber of Commerce Arbitration Award of 5 June 1998, (English text available).
There have been over 250 cases on the CISG's provisions on notice of lack of
conformity of goods, Article 39. This is a leading case on relief from the
Convention's notice provisions under Article 40.
- Bundesgerichtshof, VIII ZR 287/98, 3 November 1999 (case text and English
translation available). In this case, the German Supreme Court ruled that the Article
39(1) reasonable period included time in which to decide what to do next, time to
consult an expert and obtain the expert's views and a "regular" one-month period. See
a comment on this case by Prof. Schlechtriem in which he both praises and criticizes the decision and CISG Advisory Council Opionion No. 2, Examination of the Goods and Notice of Non-Conformity: Articles 38 and 39.
- Bundesgerichshof, VIII ZR 121/98, 24 March 1999 (case text and English translation
available). This is a leading decision by the Supreme Court of Germany on Article 79,
the CISG's counterpart to force majeure.
- Les Verreries de Saint Gobain, SA v. Martiswerk GmbH, Cour de Cassation,16 July
1998 (case text and English translation available). This is a decision by the Supreme
Court of France that illustrates the manner in which battles of the forms are being
handled under the CISG.
- Oberster Gerichtshof, 2 Ob 191/98x, 15 October 1998 (case text and English
translation available). This is a decision by the Supreme Court of Austria that
illustrates the manner in which the CISG's reference to usages, Article 9, is being
interpreted. For additional information on usages under the CISG, see the annotated text of Article 9 CISG.
These are but a few of the available cases. You will find over 1,700 more under Cases on the CISG.
3. CISG-Advisory Council Opinions
Electronic Communications under the CISG (2003) - Drafted by Professor Christina
Ramberg, the first opinion announced by the CISG-AC addresses the issue of
electronic communications in context specific circumstances under numerous articles
of the CISG. The Council says that a contract may be concluded or evidenced by
electronic communications and that the term "writing" in the CISG includes any
electronic communication retrievable in perceivable form. The Council's opinion
indicates that, subject to qualifications paralleling those stated in the pertinent CISG
- A notice, request or other communication may be given or made electronically
whenever the addressee expressly of impliedly has consented to receiving electronic
messages of this type, in that format, and to that address;
- The term "dispatch" corresponds to the point in time when the notice has left the
- The term 'reaches' corresponds to the point in time when an electronic
communication has entered the addressee's server;
- The term "oral" includes electronically transmitted sound in real time and electronic
communications in real time; and
- In some articles the term "notice" includes electronic communications, but in others
the term "notice" includes electronic communications only if the addressee expressly
or impliedly has consented to receiving electronic communications of that type, in that
format and to that address.
Examination of the Goods and Notice of Non-Conformity: Articles 38 and 39 (7 June 2004) - Drafted by Professor Eric E. Bergsten, the second opinion announced by the CISG-AC considers the genesis of, the relationship in purpose and operation between, and the judicial interpretation of CISG Articles 38 and 39. It includes as an Annex a non-exhaustive table of cases with the decisions organized under the following issues: "Proper Examination?", "Notice Specific and Satisfactory?", and "Notice Timely?"
Parol Evidence Rule, Plain Meaning Rule, Contractual Merger Clause and the CISG 23 (23 October 2004) - Drafted by Professor Richard Hyland, CISG-AC Opinion No. 3 restates the difference between the CISG and domestic laws with respect the role of and weight to be given to contractual writings and outside evidence.
Contracts for the Sale of Goods to be Manufactured or Produced and Mixed Contracts (Article 3 CISG) (24 October 2004) - Drafted by Professor Pilar Viscasillas, CISG-AC Opinion No. 4 deals with distinguishing contracts for the sale of goods from service contracts under, and the relationship between, the two criteria established by Article 3 of the CISG. 48 footnotes direct the reader to parts of the travaux, commentaries and cases relating to the issues discussed in the opinion.
The Buyer's Right to Avoid the Contract in Case of Non-Conforming
Goods or Documents (7 May 2005) - Drafted by Professor Dr. Ingeborg Schwenzer, CISG-AC
Opinion No. 5 focuses on what the Council regards as the most important issues relating to a non-conforming tender. It explores the meaning of the provisions of the CISG in the context of the
conflicting concerns and interests that have to be balanced.
Calculation of Damages under CISG Article 74 (Spring 2006) -- Drafted by Professor John Y. Gotanda, CISG-AC Opinion No. 6 expresses the views of the Council on a variety of issues arising under Article 74, including burden and standard of proof, lost volume sales, loss of good will, and punitive damages.
Exemption of Liability for Damages under Article 79 of the CISG (12 October 2007) - Drafted by Professor Alejandro M. Garro, CISG-AC No. 7 expresses the views of
the Council on issues arising under the CISG's force majeure provision.
Calculation of Damages under CISG Articles 75 and 76 (15 November 2008) - Drafted by
Professor John Y. Gotanda, CISG-AC Opinion No. 8 expresses the views of the Council
regarding the application of Articles 75 and 76, including the interplay between them and
between them and Article 74, dealing with unreasonable substitute transactions (Article 75),
and circumstances and considerations affecting the determination of "current price" (Article 76).
Consequences of Avoidance of the Contract (15 November 2008) - Drafted by Professor
Michael Bridge, CISG-AC Opinion No. 9 expresses the thoughts of the Council on the fall-out
from avoidance, including details not expressly dealt with by the CISG, such as, the place of
redelivery and of repayment of the purchase price and the time within which mutual restitution
of performance has to take place.
Comments explaining the basis for each opinion are included.
The following publications and papers regarding the Convention are mentioned because their
subject matter is particularly timely or interesting. For more, go to the Bibliography.