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A Study of the Interplay between the Conventions Governing International Contracts of Sale

Analysis of the 1955 Hague Convention on the Law Applicable to Contracts of International Sales of Movable Goods; the 1980 Rome Convention on the Law Applicable to Contractual Obligations; and the 1980 United Nations Convention on Contracts for the International Sale of Goods

Carolina Saf
Queen Mary and Westfield College
September 1999


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3. Interpretation of the Convention

3.1 Method of Interpretation

The importance of interpretation should not be underestimated. Clearly the choice of some principles and criteria of interpretation, i.e. methods of interpretation, over others will ultimately be decisive for the precise meaning and application of the individual provisions of the Conventions. Moreover, a method of interpretation could be abused so as to alter the intended meaning of the provision in a more favourable direction, or even to circumvent it. This applies of course to any legislation, whether of national or international origin. However, in applying domestic statutes, one can rely on long established principles and criteria of interpretation to be found within each legal system. This is not the case in regard of international agreements, at least not to the same extent.[67] Accordingly, it is recommendable to include methods of interpretation within a Convention, particularly where its future Contracting States will have different legal traditions. Otherwise those subjected to its rules could be tempted to interpret those rules in accordance with their own national standards and thus seriously threaten a uniform interpretation and application.

3.1.1 The Hague Convention

Preamble

Les Etats signataires de la présente Convention;

Désirant établir des dispositions communes concernant la loi applicable aux ventes d'objets mobiliers corporels;

Ont résolu de conclure une Convention à cet effet et sont convenus des dispositions suivantes:

In the preamble to the Convention reference is made to the desire of the Contracting States to establish uniform conflict rules regarding international sales of tangible goods. However, there is no reference in regard of their interpretation. It was thought best solved by the individual Contracting States. On the other hand, the actual conflict rules are rather straight forward.[68] The rules likely to suffer from different interpretative contents are those concerning the scope of the Convention,[69] since there are no general definitions within it.[70] The Swedish Secretary of State for Justice expressed the following view when recommending the Swedish ratification of the Convention:[71]

"With regard to the uncertainty of the expressions sale of international character and ordre public the possibilities of the courts [to uphold the mandatory rules of their countries] could be said to be great. Any uniform application of the rules in this respect can hardly be expected. This is . . . of course a weakness of the regulation. But presumably one can hardly get any further on the way of conventions."

3.1.2 The Rome Convention

Article 18 - Uniform interpretation

In the interpretation and application of the preceding uniform rules, regard shall be had to their international character and to the desirability of achieving uniformity in their interpretation and application.

According to Article 18 the courts are not allowed to define concepts in the uniform rules by reference to national systems of law, instead these should be given independent community meanings.[72] It is stated in the preamble that the Convention is a continuation of the harmonisation endeavours of law within the Community. It must also be remembered that the Convention is a part of the Community legal order and is therefore likely to be interpreted and applied in the light of the principles established by the Treaties of Rome and by other Conventions concluded under Article 220 of the Treaty.[73]

Accordingly, the implications of Article 18 are that the courts are under an obligation to use the method of teleological interpretation [74] and "interpret [the Convention rules] by reference mainly to its structure and objectives in order to make it fully effective."[75] Such objectives are, e.g. the unification of the conflict rules; predictability; and further development of the European Community's internal market.

The Giuliano and Lagarde Report explains that the problem of classification must be solved within the spirit of this Article, since there is no special Convention rule concerning this issue.[76]

3.1.3 The Vienna Convention

Article 7

(1) 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.

(2) Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.

As has already been explained, the Convention forms part of the internal law of the Contracting States. However, "[the Convention] remains an autonomous body of law even after its formal incorporation into the different national legal systems",[77] which is a characteristic particularly emphasised in the context of its interpretation. Arguably, a court should not be allowed to rely on ordinary national principles and criteria of interpretation, since this would risk corrupting the Convention's international character and the promotion of its uniform application. Instead, the general approach should be liberal and flexible, giving regard to the underlying purposes and policies of the individual provisions and the Convention as a whole.[78] However, the promulgation of six authentic language versions of the Convention and the different reservations adopted by some Contracting States, suggest that this body of law is not truly autonomous at all. Consequently, strict global uniformity is impossible and arguably even inappropriate. In addition, the so called homeward trend, i.e. nationally based application, is difficult to avoid.[79]

Article 7 contains three different provisions: the first part of paragraph 1 states the basic criteria for interpretation of the Convention rules; the second part of paragraph 1 concerns the relevance of the principle of good faith within the scope of the Convention; and paragraph 2 concerns the gap-filling process.

The reference to `its international character´ in the first part of Article 7(1) means that it is necessary to interpret its terms and concepts autonomously within the context of the Convention itself. That is to say, the traditional meaning of a term or a concept within a particular domestic law cannot be decisive. The contents and formal presentation of the Convention and its provisions are a result of negotiations and as such based on a common understanding, which must be respected in their application and interpretation.[80]

The second part of Article 7(1) concerns `good faith in international trade´. It is an additional criterion to be used in the interpretation of the Convention, but its relevance is not limited to this: it is also a general principle capable of imposing additional positive obligations on the parties to the contract. However, since the principle is construed in the light of the specific conditions and requirements of international trade, it will not be applied in accordance with any national legal system. Instead, just as the rest of the Convention, it has an autonomous meaning derived from the Convention itself.[81]

Article 7(2) concerns the process of gap-filling. In order for this provision to apply, the issue at hand must be governed by the Convention but not expressly settled within it. That is to say, issues outside the scope of the Convention [82] will not be settled under Article 7(2) but under non-Convention rules of law as identified by the conflict rules of the lex fori.[83]

It is clear that the provision calls for the code-style interpretation familiar to the civil law systems, since the Convention, representing a veritable codification on the international sales law, wholly replaces the existing domestic law. It is not to be interpreted in the same strict manner as the statutory law in the common law countries which only replaces the common law rules and principles within its strictly defined scope based on its wording.[84]

There are two complementary methods to be used: application by analogy of specific provisions and application of general principles derived from the rules of the Convention. An analogous application of a particular provision presupposes that the case at hand is similar to the ones governed by the provision. However, this is not sufficient, because the rule could be of such exceptional character that it should be applied e contrario instead. Provided that there is no such impediment, the provision can be applied only if the case is so analogous to the ones falling under it, that it would be inherently unjust not to apply the rule analogously.[85]

The recourse to general principles differs "as it constitutes an attempt to find a solution for the case at hand not by a mere extension of specific provisions dealing with analogous cases, but on the basis of principles and rules which because of their general character may be applied on a much wider scale."[86] Some of these principles are expressly stated, such as the principles of good faith and party autonomy, but most of them must be derived from one or more Convention rules, as is the case with the principles of the reasonableness test on the parties' behaviour; of favor contractus; of cooperation between the parties; of estoppel / venire contra factum proprium; and of reasonable measure to mitigate loss. Furthermore, some of these principles are directly applicable, such as the principle of party autonomy, whereas others must be further specified in the particular case in order to provide an adequate solution, such as the principle of the reasonableness test. Even this specification referred to should be performed in an autonomous way, i.e. within the Convention.[87]

The last resort, according to Article 7(2), is the applicable law, which due to the anational character of the Convention only will be used if and to the extent a solution cannot be found any other way. Advocates and activists of the Convention might well prefer to settle matters clearly deemed insoluable by its drafters "within" the Convention.[88] It is clear though, that the provision renders the applicable law not only admissible but even obligatory, when fulfilled.[89]

According to Article 6, the parties may exclude the application of this Convention or, subject to Article 12, derogate from or vary any of its provisions.[90] This is not possible in regard to Article 7. The Convention is an autonomous body of law and as such it will be interpreted in accordance with the criteria specifically laid down in it.[91]

3.1.4 Conclusion

It is clear that the historical contexts of the respective Conventions have affected the choice of methods of interpretation and in particular the very existence of an obligation to use a specific method. The Hague Convention is one of the earlier conventions in this field and simply agreeing on uniform conflict rules, albeit with various national scopes of application, was at the time of its coming into existence considered an achievement. Since then the international efforts to facilitate and encourage international trade have increased. The Vienna Convention is one of these later efforts and is actually more or less a revision of earlier achievements of uniform laws.[92] It contains obligations to use particular interpretative methods in order to ensure its uniform and autonomous application. The Rome Convention differs from the other two, in that it already belongs to a legal context of established principles and criteria of interpretation, i.e. the Community law. It constitutes one of many means to develop the internal market of the European Community.

3.2 Aids to Interpretation

3.2.1 The Hague Convention

The preparatory work by the Conférence de la Haye, the Documents 1951 p. 4 et seq. is an important aid to understanding the Convention.[93] However, since the questions of definition and limitation of its scope were explicitly left to the Contracting States to solve, i.e. classification by the lex fori, the importance of these preparatory works is at least in this respect limited.

Consequently, a court in a Contracting State will have recourse to its own traditional national legal sources: e.g. statutory law; case law; the preparatory work of the Justice Department, etc. [94]; and legal doctrine. The definitions in the substantive law will be used when interpreting expressions such as `tangible goods´, unless the private international law has its own definitions in which case they will be used. The case law and the legal doctrine of other Contracting States could also be of help, at least if the respective legal systems have similar features regarding the issue at hand.

3.2.2 The Rome Convention

The main aid in the interpretation of the Convention is the Giuliano and Lagarde Report,[95] an official commentary written by members of the Working Group responsible for drafting the Convention. The different equally authentic language versions of the Convention should also be considered in applying the Convention. Decisions on interpretation of courts of other Contracting States, and even those of non-Contracting States provided they are based on the same principles, are of persuasive authority. Naturally, the weight of such judgments are dependent on their relevance and cogency and the status of the tribunal in question.[96]

There are also two Protocols [97] on the interpretation of the Convention by the European Court [98], neither of which is ratified. The first Protocol defines the scope of the jurisdiction of the European Court and the conditions under which it is to be exercised. The second Protocol confers powers on the European Court to interpret the Convention and contains rules of procedure. When ratified, these Protocols will enable, but not obligate, the courts of the Contracting States to refer a case to the European Court for a preliminary ruling. It should be noted that there is a distinct separation of functions between the European Court and the national courts. The former will be concerned only with the interpretation of the rule[s] referred and the latter with the application of the interpreted rules. The rulings will have the same authority as the Report.[99]

3.2.3 The Vienna Convention

It is clear that even though the application of the Convention is to be uniform and autonomous, divergent interpretations are still very possible and in fact very likely to occur. This could of course be avoided if an international tribunal with the competence to make preliminary rulings were introduced. However, given the fact that the Convention is not as the Rome Convention restricted to a particular regional area, it would be entirely unrealistic to expect all adhering States to subject themselves to the authority of such a tribunal.

Consequently, the task of ensuring the uniform application of the Convention has in practice been left to the national judges and arbitrators. However, interpretative aids do exist: First, there are several equally authentic language versions of the Convention. The difficulty in understanding a particular rule may not appear within all these versions. As far as a translation of the Convention is concerned, recourse to the official versions is obligatory. Where there are differences between different official language versions, recourse is to be had to the intention of the conference.[100]

Secondly, the case law of Contracting States is an important source of law. If not given the character of binding precedent, its pursuasive value should at least be taken into consideration. Naturally, the appropriate case law to rely upon in this respect should consist of concording and authoritative judgments from more than one Contracting State.[101] In the absence of such a case law, it is possible to either choose the most appropriate solution or to find a new one.

In the case of divergent solutions between various jurisdictions, it has been suggested that the proper interpretation should be the one which is used within the legal system as identified by the relevant conflict rules of the lex fori. The suggestion has been criticised since it involves recourse to conflict rules within the field of the uniform law. But, as Bonell puts it: [102]

"Since there exists an insuperable conflict of interpretation between the Contracting States . . . It is much better to acknowledge that with respect to the specific issue, the uniform law failed, at least for the time being, to bring about uniformity in the laws of the Contracting States, and to accept as the only possible remedy the recourse to the traditional conflict-of-laws approach."

There are several reasons for considering this suggestion as `the only possible remedy' in a situation of `insuperable conflict of interpretation between the Contracting States'. First, it is preferable to have an acknowledged lack of uniformity rather than a number of national "autonomous" interpretations, and ultimately a situation of "pope-banning" between the Contracting States in question. Secondly, compared to an application of the interpretation favoured by the lex fori, it would be more in line with the principles underlying Article 7(2). Thirdly, as between fora in different States which have uniform conflict rules, this solution would also lead to the same interpretation regardless of the forum chosen by the parties, thus enhancing predictability for the parties and equally preventing forum-shopping. This would to a certain extent also apply where the parties have made a choice of law, since most countries recognise the principle of party autonomy.[103] That is to say, in this case there is at least similar conflict rules, if not uniform ones.

Thirdly, there is the legislative history of the Convention, the travaux préparatoires, which consists of the acts and proceedings of the Vienna Conference and the summary records of the previous deliberations within UNCITRAL. However, its importance should not be overestimated, since it contains differences in opinions and the arguments put forward are not necessarily decisive for a particular rule. It could also be obsolete due to case law. Therefore the intentions of the drafters should only be relied upon when they are clear and supported by other elements of interpretation. The Secretariat Commentary to the 1978 Draft Convention has also often been referred to.[104]

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FOOTNOTES

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67. The Vienna Convention on the Law of Treaties, May 23, 1969, 1155 UNTS 331, SÖ 1975:1, Prop.1974:158.

68. Infra, Chapters 5 and 7.

69. Infra, Chapter 4.

70. Prop. 1964:149, pp. 10 et seq.; and Philip DIPP, p. 329.

71. Prop. 1964:149, p. 16, translation by the author.

72. The Report, p. 38; Prop. 1997/98:14, p. 53; and Cheshire & North, p. 464.

73. Plender, p. 8; and Cheshire & North, p. 463.

74. Cheshire & North, p 464; and Plender, p. 29.

75. Case 201/82 Gerling v. Amministrazione del Tesoro dello Stato [1983] E.C.R. 2503 at 2515 (§11), which did concern the application of the Brussels Convention, but the principle should be applicable on the Rome Convention too; Plender, p. 30.

76. The Report, p. 38; and infra, section 4.2.2.

77. Bonell, in Bianca & Bonell, p. 73.

78. Herber, in Schlechtriem, Art. 7, paras. 19 et seq.

79. Flechtner, paras. II.A.2 and B.

80. Prop. 1986/87:128, p. 100; Bonell, in Bianca & Bonell, pp. 72 et seq.; Bernstein, p. 21; and Herber, in Schlechtriem, Art. 7, para. 14. For an alternative view, see Flechtner.

81. Bonell, in Bianca & Bonell, pp. 83 et seq.; Bernstein, pp. 22 - 23; and Herber, in Schlechtriem, Art. 7, paras. 15 et seq.

82. Infra, sections 4.3 and 4.4.

83. Prop. 1986/87:128, p. 101; Bonell, in Bianca & Bonell, pp. 75 - 76; Bernstein, p. 24; and Herber, in Schlechtriem, Art. 7, paras 27 et seq.

84. Bonell, in Bianca & Bonell, pp. 76 et seq.; Bernstein, p. 24; and Herber, in Schlechtriem, Art. 7, para. 26.

85. Bonell, in Bianca & Bonell, pp. 78 - 79; Hellner, in particular section 4; and Herber, in Schlechtriem, Art. 7, paras. 29 - 30.

86. Bonell, in Bianca & Bonell, p. 80. See also Hellner; and Herber, in Schlechtriem, Art. 7, paras. 33 et seq.

87. Bonell, in Bianca & Bonell, p 81; Hellner, section 4; and Bernstein p. 25.

88. Bernstein, p. 27.

89. Bonell, in Bianca & Bonell, p. 83; and Herber, in Schlechtriem, Art. 7, paras 30 - 31.

90. Infra, section 4.3.3.

91. Bonell, in Bianca & Bonell, pp. 93 - 94.

92. The 1964 Hague Conventions on Uniform Law on the Formation of Contracts for the International Sale of Goods and on Uniform Law on the International Sale of Goods.

93. Philip DIPP, p. 321.

94. This source of law is much favoured in Sweden, but this will certainly not apply to all the Contracting States.

95. 1980 OJ C282/20.

96. Plender, p. 32; and Cheshire & North, pp. 464 - 465.

97. Infra, Appendices V and VI.

98. The Court of Justice of the European Community.

99. Prop. 1997/98:14; p. 14; Plender, pp. 36 et seq.; Philip EU-IP, pp. 191 - 192; and Cheshire & North, pp. 461 et seq.

100. Article 33(4) of the Vienna Convention on the Law of Treaties, May 23, 1969, 1155 UNTS 331, SÖ 1975:1, Prop. 1974:158. Prop. 1986/87:128, pp. 90 et seq.; Bianca & Bonell, p. 90; Ferrari, para. II.1; and Herber, in Schlechtriem, Arts. 1 - 6, paras. 28 - 29. In accordance with this, the Convention was in Sweden implemented through incorporation instead of the usually more favoured method of transformation, i.e. translation and adaption to Swedish statutorial standard; the Swedish International Sales of Goods Act.

101. Prop. 1986/87:128, p. 100. In order to enable exchange of decisions concerning the Vienna Convention and other UNCITRAL Conventions, an information system has been established under the name of `CLOUT' (`Case Law On UNCITRAL Texts'). There is also this very useful website: www.cisg.law.pace.edu/cisg.

102. Bonell, in Bianca & Bonell, p. 93. For further support of the idea that irreconcilable conflicts between different interpretations should be solved under the traditional conflict rules, see Honnold, section 464, last sentence.

103. Plender, p. 87.

104. Prop. 1986/87:128, p. 100; Bonell, in Bianca & Bonell p. 90; and Bernstein, p. 20.

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Pace Law School Institute of International Commercial Law - Last updated January 18, 2000
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