Reproduced with permission from the author and 15 Journal of Law and Commerce (1995) 1-126

Franco Ferrari [*]

(. . .)

The Issue of the Rate of Interests on Sums in Arrears

The last issue to be discussed in this paper, the issue of interests on sums in arrears, was one of the most debated issues during the 1980 Vienna Conference. [827] And although this issue has been examined very often not only in legal writing, [828] but in many court decisions [829] and several arbitral awards [830] as well, it still creates difficulties, for the reasons that will be pointed out infra. [831]

[The decisions and awards cited in notes 829 and 830 are: Court decisions. Argentina: Elastar v. Bettcher, Juzgado National de Primera Instancia 20 May 1991. Germany: LG Stuttgart 31 August 1989; LG Hamburg 26 September 1990; OLG Frankfurt 13 June 1991; LG Frankfurt 16 September 1991; LG Heidelberg 3 July 1992; OLG Frankfurt 18 January 1994; KG Berlin 24 January 1994; OLG Düsseldorf (6 U 119/93) 10 February 1994; OLG München 2 March 1994; OLG Frankfurt 20 April 1994. Arbitral Awards. ICC Arbitral Award 7153 of 1992; Austrian Arbitral Award SCH - 4318 of 15 June 1994; Austrian Arbitral Award SCH - 4366 of 15 June 1994.]

This issue did not, on the contrary, cause any difficulties under the ULIS, since Article 83 ULIS [832] provided for "a rule for interest in arrears in the event of payment in arrears of the price which provided for one percent above the official discount rate in the creditor's country." [833] This formula has not been retained by the drafters of the Vienna Sales Convention, although there were various attempts to do so. [834] Apart from these attempts to fix the rate of interest in the same way as the ULIS, other attempts [835] were made to precisely determine the rate of interests, but they were not successful either. [836] The German view in favour of a fixed interest rate was rejected, [837] as was the view of the Czechoslovakian Delegation, according to which the applicable rate of interest should be the discount rate prevailing in the country of the debtor. [838] The same is true with the viewpoint held jointly by Denmark, Finland, Greece and Sweden, according to which interest should be calculated on the basis of the customary rate for commercial credits at the creditor's place of business. [839]

The different political, [840] economic [841] and religious [842] views made it impossible to agree upon a formula to calculate the rate of interest. [843] Thus, the Vienna Sales Convention contains a provision -- considered to work as a compromise among the different views presented during the Vienna Conference [844] -- Article 78, [845] which limits itself to merely providing for "the general entitlement to interest" [846] in case of payments in arrears. [847]

[The statement Article 78 limits itself to merely providing for "the general entitlement to interest" has often been repeated in judicial applications of Article 78; see, among others, German cases: OLG Frankfurt 13 June 1991; OLG Koblenz 17 September 1993; OLG Frankfurt 18 January 1994; OLG München 2 March 1994.]

In other words, Article 78 only sets forth the obligation to pay interest as a general rule, [848] and it does so independently from the damage caused by the payment in arrears, [849] as pointed out by several court decisions, which expressly stated that the entitlement to interests does not exclude the possibility to claim damages ex Article 74 [AG Oldenburg (Germany) 24 April 1990; LG Hamburg (Germany) 26 September 1990; OLG Frankfurt 18 January 1994]. [850] And since Article 78 does not set forth a time starting from which interests may be calculated either, [85l] it has been said that "Art. 78 is more conspicuous for the questions it fails to answer than the questions it answers. In particular, it does not stipulate the rate of interest or how the rate is to be determined by a tribunal in the absence of explicit guidance in the Convention." [852]

The lack of a specific formula to calculate the rate of interest on sums in arrears has led some courts as well as several legal writers to consider this issue as being a gap praeter legem, i.e., as being governed by, but not expressly settled in, the CISG, whereas other courts and legal scholars consider the issue de quo as falling outside the scope of application of the CISG, i.e., as being a gap intra legem. [853]This had necessarily to lead to diverging solutions, since under the CISG, the aforementioned kinds of gaps have to be dealt with differently. [854] According to Article 7(2) CISG, the gaps praeter legem (or internal gaps) have to be filled by resorting to the general principles on which the Convention is based or, in the absence of such principles, by having recourse to the law applicable by virtue of the rules of private international law. [855] On the contrary, if an issue is considered as falling outside the Convention's scope of application, [856] i.e., if it is an external gap, it must be solved in conformity with the law applicable by virtue of the rules of private international law [for a recent application, see OLG Koblenz (Germany) 16 January 1992], [857] i.e., without any tentative recourse to the "general principles" of the CISG. [858]

Unfortunately, the CISG does not set forth any useful criterion to determine in concreto when a gap is to be considered as being a lacuna praeter legem as opposed to a lacuna intra legem, [859] although this distinction appears to be quite important for the consequences in which it results. [860] Undoubtedly, the setting forth of a criterion to be used to decide whether a gap must be considered a lacuna intra legem or one praeter legem would have favored the uniform application of the Vienna Sales Convention. [861]

The absence of such a criterion raises, as already mentioned above, [862] the question of whether the lack of a formula fixing the rate of interest must be dealt with as a lacuna praeter legem or as a lacuna intra legem. [863]

On the one hand, it has been said that the issue of determining the rate of interest is not governed by the Vienna Sales Convention [864] and that it is, therefore, governed by the applicable domestic law. [865] Although many scholars hold this view, they appear not to agree on how to determine the applicable domestic law. Indeed, some scholars favor the view according to which the applicable domestic law is to be determined by virtue of the rules of private international law, [866] thus, making applicable, "in general, the subsidiary law applicable to the sales contract [since no] special connecting points seem to have developed for the entitlement to interest." [867] Other scholars, [868] however, argue in favor of either the application of the law of the creditor, independently from whether this is the lex contractus, or the application of the law of the debtor. [869]

On the other hand, there are a few authors holding the contrasting view according to which the issue de quo has to be dealt with as a lacuna praeter legem, on the grounds that "[t]he mandate of Article 7(1) to construe the Convention to promote 'uniformity in its application' requires us to seek a principle governing the scope of Article 78 that can be considered as a basis for uniform application of the Convention." [870] Indeed, the "[d]eference to domestic law . . . seems inconsistent with the policy underlying Article 78." [871] Thus, it has been suggested that "the interest to be paid is defined by the function of the assessment of damages, i.e., to put the seller in the same position he would have been had the sum been paid in time," [872] a formula which, however, must be criticized for leading to a confusion of the line between damages and interest which Article 78 has expressly drawn. [873]

The aforementioned dispute is not merely a doctrinal one, as evidenced by the number of different solutions adopted in the courts. These different solutions can mainly be divided into two categories:

those favoring the view that the rate of interest has to be calculated on the basis of the domestic law [German cases cited: LG Stuttgart 31 August 1989; AG Oldenburg 24 April 1990; LG Hamburg 26 September 1990; OLG Frankfurt 13 June 1991; LG Frankfurt 16 September 1991; OLG München 3 March 1994][874]; and

those holding that the issue de quo must be resolved by resorting to the "need to promote uniformity in the application" of the CISG and, thus, to the general principles of the Convention.

In regard to this latter category, several cases are worth mentioning. On the one hand, there are two decisions of Argentinean courts [Juzgado Nacional de Primera Instancia en lo Comercial No. 7 of 20 May 1991 and Juzgado Nacional de Primera Instancia en lo Comercial No. 10 of 6 October 1994], [875] which invoked Article 9 CISG [876] in order to solve the issue of the applicable rates of interest [877] and "determined the amount of interest payable according to the relevant trading customs," [878] thus "avoid[ing] the difficult problem of determining which domestic law applies." [879] On the other hand, one must mention two recent arbitral awards of the Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft in Österreich [Arbitral Award SCH-4318 of 15 June 1994; and Arbitral Award SCH-4366 of 15 June 1994] [880]according to which "the applicable interest rate is to be determined autonomously on the basis of the general principles underlying the Convention,'' [881] on the grounds that recourse to domestic law would lead to results contrary to those promoted by the CISG, at least in those cases where the applicable domestic law would be that of a country which expressly prohibits the payment of interest. [882] This is why in the foregoing awards the issue of the rate of interest was solved by resorting to the general principle of full compensation, [883] which led to the application of the law of the creditor, since it is he who has to borrow money in order to be as liquid as he would be had the debtor paid the sum he owed in due time. This solution, however, contrasts with the legislative history: during the 1980 Diplomatic Conference a proposal to link the rate of interests to the law where the creditor had its place of business was rejected. [884] Independently from this criticism, it is doubtful whether the solution suggested by the aforementioned arbitral awards really offers a new solution, as it wanted to do according to the awards themselves. As has been rightly pointed out by one commentator, [885] the arbitral awards do not lay down a uniform substantive law rule derived from the general principles of the CISG. They merely lay down a conflict of laws rule, since this rule refers to the law of the State where the creditor has his place of business, an approach which, in the end, does not offer anything new but a uniform rule of private international law which, for the reason mentioned above, [886] is to be rejected.

As far as the court decisions are concerned, where the issue de quo is solved by resorting to domestic law, a distinction must be made: there are, on the one hand, cases applying the domestic law by virtue of the rules of private international law [AG Oldenburg (Germany) 24 April 1990; LG Hamburg (Germany) 26 September 1990; OLG Frankfurt (Germany) 13 June 1991], [887] on the other hand, cases where the domestic law of the creditor is applied without, however, it being the law made applicable by the rules of private international law [LG Stuttgart (Germany) 31 August 1989; LG Frankfurt (Germany) 16 September 1991]. [888]

Even though many solutions which differ greatly from each other can be found both in scholarly writing and judicial practice, there seems to be the tendency to apply the lex contractus, i.e., the law which would be applicable to the sales contract if it were not subject to the Vienna Sales Convention. [889] Thus, in respect of the formula to calculate the rate of interest, the interest rate of the country of the seller generally applies, [890] at least where the rules of private international law of the forum are based upon criteria comparable to those set forth by the 1980 EEC Convention on the Law Applicable to Contractual Obligations. [891] Absent a choice of law, this Convention makes applicable the law with which the contract has the closest connection, as already mentioned above. [892] This is presumed to be the law where the party who is to effect the "characteristic performance'' [893] has its habitual residence, [894] and since the characteristic performance has to be effected by the seller, [895] it is the interest rate of the country where the seller has its place of business which generally is applicable.

Quid iuris, however, where the seller's law does prohibit the payment of interest? In this line of cases, the claim does not become unenforceable as suggested by several authors. [896] It is here suggested, that Article 78 remains enforceable even in this line of cases, but that in order to calculate the rate of interest recourse should be had to the level of interest generally applied in international commerce in the particular trade concerned. [897]

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Go to entire text of Ferrari commentary

FOOTNOTES

* Professor of Comparative Private Law, Katholieke Universiteit Brabant, Tilburg, the Netherlands; J.D. (Honors), University of Bologna, Italy; LL.M., University of Augsburg, Germany. Copyright, Franco Ferrari.

(. . .)

827. See, in this regard, Enderlein & Maskow, supra note 58, at 310, stating that "[t]he regulation of interest has caused considerable difficulties both in preparing and holding the [1980 Vienna] diplomatic conference." See also Kritzer, supra note 56, at 498.

828. For papers on the issue de quo, see, most recently, Franco Ferrari, Tasso degli interessi ed applicazione uniforme della Convenzione di Vienna sui contratti di vendita internazionale, RIVISTA DI DIRITTO CIVILE II 277 (1995); Gert Reinhart, Fälligkeitszinsen und UN-Kaufrecht, PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 376 (1991).

829. For court decisions dealing with the issue of the rates of interests on sums in arrears, see, among others, OLG Frankfurt, April 20, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 593 (1994); OLG München, March 2, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 595 (1994); OLG Düsseldorf, February 10, 1994, published in NEUE JURISTISCHE WOCHENSCHRIFT RECHTSPRECHUNGS-REPORT 506 (1994); KG Berlin, January 24, 1994, reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 683 (1994); OLG Frankfurt, January 18, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 240 (1994); OLG Koblenz, September 17, 1993, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 934 (1993); LG Heidelberg, July 3, 1992, reported in Michael J. Bonell, Rassegna giurisprudenziale in tema di vendita internazionale, 7 DIRITTO DEL COMMERCIO INTERNAZIONALE 651, 655 (1993); Municipal Court of Budapest, March 24, 1992, published in German in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 263 (1993); LG Frankfurt a.M., September 16, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 952 (1991); OLG Frankfurt a.M., June 13, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 591 (1991); Juzgado nacional de primera instancia en lo comercial, May 20, 1991, reported in Bonell, supra this note, at 653; LG Hamburg, September 26, 1990, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 400 (1991); AG Oldenburg i.H., April 24, 1990, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 336 (1991); LG Stuttgart, August 31, 1989, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 984 (1989).

830. See, e.g., Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft in Österreich, Nos. 4366 and 4318, partially reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 590 (1995); Arbitral Tribunal ICC, No. 7153, published in JOURNAL DU DROIT INTERNATIONAL 1006 (1992).

For a paper discussing the rate of interests in the practice of international arbitral tribunals (independently, however, from the CISG), see Paolo Cerina, Interest as Damages in International Commercial Arbitration, 4 THE AM. REV. OF INT'L ARB. 255 (1993).

831. See infra text accompanying notes 851-63.

832. See Article 83 ULIS:

"Where the breach of contract consists of delay in the payment of the price, the seller shall in any event be entitled to interest on such sum as is in arrears at a rate equal to the official discount rate in the country where he has his place of business or, if he has no place of business, his habitual residence, plus 1%."

For a judicial application of this formula, see, most recently, OLG Frankfurt, January 5, 1989, NEUE JURISTISCHE WOCHENSCHRIFT RECHTSPRECHUNGS-REPORT 636 (1990).

833. Enderlein & Maskow, supra note 58, at 310.

834. See, e.g., Article 58 of the 1976 Draft Convention; see also the proposal made by the Czechoslovakian Delegation (A/CONF.97/C.1/L/218) during the Vienna Conference, reprinted in OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE 137.

For the reasons which lead to the rejection of the formula laid down in Article 83 ULIS, see, among others, Schlechtriem, supra note 92, at 100.

835. For an overview of the different attempts, see, among others, Date-Bah, supra note 811, at 36-37.

836. For a short historical account on the issue of the rate of interest raised during the drafting period of the Vienna Sales Convention, see Barry Nicholas, Art. 78, in COMMENTARY ON THE INTERNATIONAL SALES LAW, supra note 12, 568 at 568.

837. See the Summary Record of the Considerations of the German Delegation, reprinted in OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 416, which stated that "[a]t all events, the innocent party should be entitled to interest on the sum due in an amount based on interest rates fixed by law or by the Convention itself and which represent a minimum figure."

838. See Summary Records of the Czechoslovakian Delegation's Considerations Made During the 29th Meeting, reprinted in OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 137, where the Czechoslovakian proposal is reprinted:

"(1) If the breach of contract consists of delay in the payment of the price, the seller is in any event entitled to interest on such sum as is in arrears at a rate equal to the official discount rate prevailing in the country where the buyer has his place of business, at the time of delay increased by one per cent or, if there is no such rate, at the rate applied to unsecured short-term international commercial credits increased by one per cent."

839. See the joint proposal of Denmark, Finland, Greece and Sweden (A/CONF.97/C.1/L.216), reprinted in OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 137.

840. See Reinhart, supra note 139, at 177-178, stating that the impossibility of agreeing upon a rule on the interest rates was due, among others, to political reasons.

841. As previously stated in the text, the differing economic views of Western countries and Socialist ones led to contrasting opinions revolving

"around the question of whether the interest level in the creditor's country or the one in the debtor's country should be decisive. At the time of the diplomatic conference there were serious differences between the Western industrialized countries, where the amount of interest is formed in the market (naturally influenced by political measures) and had at that time reached considerable amounts, and most of the at-the-time-so-called socialist countries where the interest was fixed by law and relatively low. It was against this background that the Western industrialized countries aimed towards interest to be set according to the level of the creditor's country. This would have meant that debtors from those countries would have had to pay low interest to creditors from Eastern countries, but by contrast, debtors from the latter countries would pay high interest." Enderlein & Maskow, supra note 58, at 310.

For a reference to the discussion of this issue by the different delegations during the Vienna Conference, see OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 388-393.

842. See Schlechtriem, supra note 92, at 99, stating that the problems relating to interest payments arose partially out of religious beliefs. For similar statements, see also Rolf Herber, WIENER UNCITRAL-ÜBEREINKOMMEN ÜBER INTERNATIONALE WARENKAUFVERTRÄGE VOM 11. APRIL 1980 46 (2d ed., Cologne 1983); Nicholas, supra note 836, at 569; OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE, supra note 27, at 416.

843. For this affirmation, see also Reinhart, supra note 139, at 177-178.

See also Peter Schlechtriem, Recent Developments in International Sales Law, 18 ISRAEL L. REV. 323 (1983), stating that during the 1980 Vienna Conference "[t]here were . . . irreconcilable, ideologically as well as economically motivated convictions on the issue of payment of interest for outstanding debts, in particular the purchase price: some Islamic countries, for instance, rejected an obligation to pay interest for religious reasons."

844. For this evaluation, see Schlechtriem, supra note 843, at 324.

845. See Article 78 CISG: "If 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."

846. Enderlein & Maskow, supra note 58, at 311.

This statement had often been repeated in judicial applications of Article 78; see, among others, OLG München, March 2, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 595, 596 (1994); OLG Frankfurt, January 18, 1994, reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 240, 241 (1994); OLG Koblenz, September 17, 1993, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 934, 938 (1993); OLG Frankfurt a.M., June 13, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 591, 591 (1991).

847. Note, that in order for a payment to be in arrears no formal notice of default is necessary, as it is, on the contrary, in some national legal systems. See Denis Tallon, The Buyer's Obligation Under the Convention on Contracts for the International Sale of Goods, in INTERNATIONAL SALES, THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS, supra note 79, 7.1, 7.14, stating that "payment is due without any request or compliance with any formality on the part of the [creditor]." For a similar affirmation, see also Hans Herrmann Eherstein, Art. 78, in KOMMENTAR ZUM EINHEITLICHEN UN-KAUFRECHT 644, 646 (Peter Schlechtriem ed., Munich 1990).

848. Note that, since the obligation to pay interest is conceived as a general rule, "a debtor still remains liable for interest payments even if his default is due to an impediment beyond his control and he is, therefore, not liable for damages." Schlechtriem, supra note 92, at 100. "If, for example, the price is payable in the seller's currency and the buyer is prevented from paying by a temporary ban imposed by his government on the export of currency, and if under Article 79 the seller is able to claim the price when the ban ends, Article 78 seems to entitle him to interest." Nicholas, supra note 836, at 571.

Contra, in the sense that he assumes that interest is part of the damages and therefore wants to permit an exemption on the ground of impediments, see F.J.A. van der Velden, HET WEENSE KOOPVERDRAG 1980 EN ZIJN RECHTSMIDDELEN 405 (Deventer, 1988).

849. For this solution, see also Enderlein & Maskow, supra note 43, at 311, stating that the amount of interest "is fixed a priori and irrespective of the damage which is caused by the arrears in payment." Therefore, "the creditor should not have to show he actually incurred such a cost." Nicholas, supra note 836, at 570. For a similar statement, see also Herber & Czerwenka, supra note 43, at 348.

850. See, e.g., OLG Frankfurt a.M., January 18, 1994, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 240, 241 (1994); LG Hamburg, September 26, 1990, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 1015, 1019 (1990); AG Oldenburg i.H., April 24, 1990, reprinted in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 336, 338 (1991).

851. See Leif Sevón, Obligations of the Buyer under the Vienna Convention on the International Sale of Goods, JURIDISK TIDSKRIFT 327, 341 (1990), stating that "[t]he Convention established only the right to interest but deals neither with the rate of interest nor with the time for which interest may be calculated."

852. Ziegel, supra note 777, at 149. For a similar statement, see also Sevon, supra note 326, at 229.

853. For the distinction of gaps intra legem and gaps praeter legem when discussing the issue of the rate of interests on sums in arrears, see, most recently, Franco Ferrari, Uniform Application and Interest Rates under the 1980 Uniform Sales Law, 24 GA. J. INT'L & COMP. L. 467 (1995).

854. For papers on gap-filling under the CISG, see, among others, Stephen Rosenberg, The Vienna Convention: Uniformity in Interpretation for Gap-Filling -- An Analysis and Application, 20 AUSTRALIAN BUS. L. REV. 442 (1992); Hans Stoll, Regelungslücken im Einheitlichen Kaufrecht und IPR, PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 75 (1993).

855. See Article 7(2) CISG:

"Questions concerning matters governed by the Convention which are not expressly settled in it are to be 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."

856. For examples of issues falling outside the scope of application of the 1980 Sales Convention, see Articles 4(a), 4(b) and 5 CISG.

857. For a recent application of the rule mentioned in the text, see, e.g., OLG Koblenz, January 16, 1992, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 1019 (1992).

858. For a detailed discussion of the external gaps to be found in the CISG and their treatment, see, most recently, Bettina Frigge, EXTERNE LÜCKEN UND INTERNATIONALES PRIVATRECHT IM UN-KAUFRECHT (ART. 7 ABS. 2) (Bern, 1994).

859. For this statement, see also Ferrari, supra note 828, at 285.

860. See also Bonell, Art. 7, supra note 33, at 75-76, stressing the importance of the distinction between gaps in the sense of Article 7(2) and issues which are not within the scope of the Convention.

861. See Ferrari, supra note 828, at 282.

862. See supra text accompanying note 854.

863. For this question, see also Reinhart, supra note 828, at 377.

864. See, for this statement, Witz, supra note 68, at 146.

865. For this conclusion, see Guido Alpa & Mario Bessone, Inadempimento, rimedi, effetti della risoluzione nella vendita internazionale di cose mobili, in LA VENDITA INTERNAZIONALE, supra note 32, 165 at 207; Fritz Enderlein et al., supra note 48, at 245 (stating that "where the parties have not agreed the amount of interest will have to be calculated on the basis of the applicable domestic law"); Loewe, supra note 346, at 95; Schlechtriem, supra note 92, at 100 (stating the same); Denis Tallon, Art. 84, in COMMENTARY ON THE INTERNATIONAL SALES LAW, supra note 12, 611 at 612 (stating the question of what "interests are to be paid . . . is governed by the applicable domestic law").

866. For this conclusion, see also Herber & Czerwenka, supra note 43, at 347 (stating the rate of interest is to be determined by resorting to the law chosen by the rules of private international law); Ulrich Magnus, Währungsfragen im Einheitlichen Kaufrecht. Zugleich ein Beitrag zu seiner Lückenfüllung und Auslegung, RABELS ZEITSCHRIFT FÜR AUSLÄNDISCHES UND INTERNATIONALES PRIVATRECHT 116, 140-141 (1989) (according to which the law applicable to the rate of interest should be domestic law referred to by the rules of private international law); Piltz, supra note 21, at 280 (stating the rate of interest is governed by the domestic law chosen by the rules of private international law); Peter Schlechtriem, Recent Developments in International Sales Law, ISRAEL L. REV. 309, 324 (stating "there is an obligation to pay interest, but the details of this obligation are left up to the domestic law called upon by the rules of private international law. This is especially true for the chargeable amount of interest").

See also Herbert Asam & Peter Kindler, Ersatz des Zins- und Geldentwertungsschadens nach dem Wiener Kaufrechtsübereinkommen vom 11.4.1980 bei deutsch-italienischen Kaufverträgen, RECHT DER INTERNATIONALEN WIRTSCHAFT 841, 841 (1989); Peter Kindler, Einige Haupttragen des CISG im Spiegel der neueren deutschen Kommentarliteratur, JAHRBUCH FÜR ITALENISCHES RECHT 201, 216 (1992); Magnus, supra note 156, at 615; Peter Rummel, Schadenersatz, höhere Gewalt und Fortfall der Geschäftsgrundlage, in DAS EINHEITLICHE WIENER KAUFRECHT, supra note 199, 177 at 184-185; Schlechtriem, supra note 92, at 100.

867. Enderlein & Maskow, supra note 58, at 312.

868. For this view, see Hans Stoll, Inhalt und Grenzen der Schadensersatzpflicht sowie Befreiung von der Haftung im UN-Kaufrecht im Vergleich zu EKG und BGB, in EINHEITLICHES KAUFRECHT UND NATIONALES OBLIGATIONENRECHT, supra note 16, 257 at 279-280.

869. See, e.g., Hans Stoll, Internationalprivatrechtliche Fragen bei der landesrechtlichen Ergänzung des Einheitlichen Kaufrechts, in FESTSCHRIFT FÜR FERID 495, 510 (Andreas Heldrich ed., Frankfurt a.M. 1988).

870. Honnold, supra note 25, at 526; for a similar reasoning in legal writing, see also Heuzé, supra note 177, at 341.

871. Honnold, supra note 25, at 525 n.5.

872. Giulio Ponzanelli, Art. 78, NUOVE LEGGI CIVILI COMMENTATE 308, 309.

873. Indeed, "the text speaks of interest as something distinct from damages" (Nicholas, supra note 836, at 570). The formula mentioned in the text, however, would result in "the fact that the interest claim would . . . move very near a claim of damages." Enderlein et al., supra note 48, at 245.

874. For court decisions dealing with the issue of the calculation of the rate of interest by applying domestic law, see, e.g., OLG München, March 3, 1994, reprinted in NEUE JURISTISCHE WOCHENSCHRIFT RECHTSPRECHUNGS-REPORT 1075 (1994); LG Frankfurt, September 16, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 552 (1991); OLG Frankfurt, June 13, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 591 (1991); LG Hamburg, September 26, 1990, reprinted in EUROPÄISCHE ZEITSCHRIFT FÜR WIRTSCHAFTSRECHT 188 (1991); AG Oldenburg i.H., April 24, 1990, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFARHRENSRECHTS 336 (1990); LG Stuttgart, September 6, 1989, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 984 (1990) [note: appears to be same case as LG Stuttgart, August 31, 1989 cited below]; LG Stuttgart, August 31, 1989, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 317 (1990).

For an arbitral award applying the domestic law as the law applicable to interest rates, see, e.g., Arbitral Tribunal ICC, No. 7153, published in JOURNAL DU DROIT INTERNATIONAL 1002 (1992).

875. See Juzgado Nacional de Primera Instancia en lo comercial No. 10 Buenos Aires, quoted in Piltz, supra note 68, at 1005 n.79; Juzgado Nacional de Primera Instancia en lo comercial No. 7 Buenos Aires, reported in CASE LAW ON UNCITRAL TEXTS (case 21).

876. See Article 9 CISG:

"(1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.

"(2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned."

877. For a reference to this practice, see Piltz, supra note 68, at 1005.

878. Eva Diederichsen, Commentary to Journal of Law and Commerce Case I: Oberlandesgericht Frankfurt am Main, 14 J.L. & COM. 177, 181 (1995).

879. Id.

880. See Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft in Österreich, Nos. 4366 and 4318, partially reprinted in RECHT DER INTERNATIONALEN WIRTSCHAFT 590 (1995).

881. Id. at 591.

882. Id.

883. Id.

884. See supra text accompanying note 839.

885. See Peter Schlechtriem, Anmerkung, RECHT DER INTERNATIONALEN WIRTSCHAFT 592, 593 (1995).

886. See text accompanying note 839.

887. See, e.g., OLG Frankfurt a.M., June 13, 1991, published in NEUE JURISTISCHE WOCHENSCHRIFT 3102 (1991); LG Hamburg, September 26, 1990, published in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFARHRENSRECHTS 400 (1991); AG Oldenburg i.H., reprinted in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 336 (1991).

888. Two early German court decisions referred to the domestic law of the creditor as the law applicable; see LG Stuttgart, August 31, 1989, reprinted in PRAXIS DES INTERNATIONALEN PRIVAT- UND VERFAHRENSRECHTS 317 (1991); LG Frankfurt, September 16, 1991, published in RECHT DER INTERNATIONALEN WIRTSCHAFT 952 (1991).

889. For this affirmation, see Ferrari, supra note 828, at 288; Magnus, supra note 68, at 90.

890. See for a similar conclusion, Piltz, supra note 21, at 281; Reinhart, supra note 828, at 378.

891. See supra note 244.

892. See supra text accompanying notes 253-64.

893. See supra text accompanying notes 256-60.

894. See supra the text of Article 4(2) of the EEC Convention, reproduced in note 257.

895. See supra text accompanying notes 259-60.

896. See Joseph Lookofsky, The 1980 United Nations Convention on Contracts for the International Sale of Goods, in INTERNATIONAL ENCYCLOPEDIA OF LAWS 1, 129 (Blanpain ed., Deventer 1993) (stating that "the validity of a contractual claim to interest . . . remains a national concern. . . . In those countries where interest is forbidden, the mere mention of interest in the agreement will render it invalid"): Schlechtriem, supra note 103, 132 n.21 (stating "[i]nsofar as a national law does not allow interest -- for religious reasons, for example -- [Article 78] has no effect"); Schlechtriem, supra note 92, at 100 n.414 (stating that "[t]o the extent applicable domestic law prohibits interest payments, Article 78 would of course, be unenforceable").

897. The view expressed by Nicholas, supra note 836, at 570, who states that if the domestic law "provides no relevant formula for calculating interest, it would seem that the court should look to the cost of credit at the creditor's place of business," has been criticized. It has been said that this solution "does not seem practicable because the solution aspired to by the Western industrialized countries, which was not adopted at the diplomatic conference, would in part be introduced by way of interpretation. Other countries would then be inclined to interpret into the Convention their own rejected proposals." Enderlein et al., supra note 48, at 245.

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