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1980 Vienna Diplomatic Conference

Summary Records of Meetings of the First Committee

33rd meeting

Wednesday, 2 April 1980, at 10 a.m.

Chairman: Mr. LOEWE (Austria)

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Reconsideration of article 66 [became CISG article 81]

75. The CHAIRMAN said that the delegation of Canada wished to submit an amendment (A/CONF.97/C.1/L.239) to article 66 [became CISG article 81], which the Committee had already adopted. According to rule 32 of the rules of procedure, such a course required approval by a two thirds majority of the representatives present and voting. He would therefore ask the Canadian representative to explain his proposal.

[Canada (A/CONF.97/C.1/L.239):

Amend article 66 [became CISG article 81] by adding one of the following versions of newparagraph (3):

Alternative 1:

"(3) Notwithstanding paragraph (2), the seller shall not be entitled to claim restitution of his goods where the goods have been delivered to the buyer and the buyer is insolvent or the restitution of the goods would otherwise prejudice the rights of the buyer's creditors."

Alternative 2:

"(3) Notwithstanding paragraph (2), the seller shall not be entitled to claim restitution of the goods where the goods have been delivered to the buyer and, under the applicable municipallaw, title in the goods has passed to the buyer."]

76. Mr. ZIEGEL (Canada), introducing his delegation's draft amendment to article 66 [became CISG article 81 ](A/CONF.97/C.1/L.239), said that under Canadian law, as was also the case in other common law countries, once the goods had been delivered and title was deemed to have passed to the buyer, it would be too late to seek the return of the goods. It was therefore the invariable practice in such countries for the seller to take the necessary steps to reserve his title to goods.

77. The application of article 66 [became CISG article 81 ] as it stood would bring about a fundamental change in the situation. That might not be a matter of grave concern in so far as it related merely to the respective rights of buyer and seller, but it appeared that article 66 [became CISG article 81 ] would also encompass the possibility of the buyer's bankruptcy and other situations involving the rights of third parties. In such cases, therefore, it would be difficult to reconcile the article with domestic legislation. The latter could of course be amended, but in federal countries such as Canada, where jurisdiction was divided between the constituents, that was not an easy task. His delegation therefore proposed the addition of another paragraph to article 66 [became CISG article 81 ] in order to make it clear that it was not intended that the seller's rights should interfere with those of third parties or creditors in the event of the buyer's bankruptcy. There were two alternative texts, but their aim was identical.

78. The CHAIRMAN, speaking as the representative of Austria, said he did not think that the problem was peculiar to common law countries. The question of bankruptcy was a complex one in all legal systems and there were different schools of thought about the best way to decide the order of priority among creditors even under the same legal system. Furthermore, the problem did not affect sales only. In any case, article 4(b) of the draft Convention [became CISG article 4(b) ] made it clear that such matters fell outside its scope. The Canadian amendment was too simple to provide a satisfactory solution in all cases.

79. Mr. KOPAC (Czechoslovakia) concurred.

80. Mr. SHAFIK (Egypt) said that the matter should be kept outside the Convention. Under Egyptian domestic law, the seller in such a case would lose not only his right to restitution of the goods but also his right to damages.

81. Mr. ZIEGEL (Canada) said that he would not insist on a vote being taken on whether or not article 66 [became CISG article 81 ] should be reconsidered.

82. He did not feel that the Chairman's explanation entirely resolved the difficulty, since the seller's right of restitution might be interpreted as a right in rem and not merely as giving him the status of a preferred creditor in the event of bankruptcy.

83. Mr. FOKKEMA (Netherlands) said he wondered whether the use throughout the draft Convention of the phrase "avoidance of contract" was a happy choice. It appeared that lawyers from common law countries had far less difficulty with the phrase "discharge by breach". The attention of the Drafting Committee might, perhaps, be drawn to the matter.

84. The CHAIRMAN said that it might be regarded as rather late in the day to change a key phrase in the draft Convention.

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Pace Law School Institute of International Commercial Law - Last updated April 9, 1999
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