Challenges of Uniform Interpretation in the CISG

Proper Interpretation

“Rectae interpretationis mensura est

collectio mentis ex signis maxime

probabilibus. Ea signa sunt duum generum,

verba et coniecturae aliae: quae aut eorsim

considerantur, aut coniunctim.”

•

.” Benchmark of proper interpretation is to

mention purpose from the most probably

indications. These indications are of two kinds,

words and consequences: and these are

considered either separately or jointly.”

CISG

•

CISG is broadly accepted among the states and

nowadays the most important trading nations

(around 84) are party to it. In a fact they

represent more than two-thirds of

international trade. The only UK, India and

couple of other important trading nations are

not parties to the Convention.

CISG and its applicability

•

The CISG is directly applicable to international

sales of goods in those States, unless the

parties to the contract exclude its application.

CISG and its Interpretation

•

 Direct applicability of CISG brings one quite a

crucial problem. Do courts in the states that

are parties to the Convention interpret it in

the same way, or do they interpret it

differently.

CISG’s Affliction

•

CISG is international Convention and it can

possibly suffer from the same affliction as

international law in general. We can

sometimes see it in the international law. One

legal order common to all states, mostly

agreed upon by them, but possibly with 200

different interpretations when it comes to

problem.

•

We have only 84 in CISG, but still

Parole, parole, parole?

•

Have the spiritual fathers of the Convention

really succeeded in unification and

harmonization international sales of goods or

not?

How does the CISG deal with uniform

interpretation?

•

It is quite clear that drafters were aware of the

issue and that is why they have provided

possible solution in Article 7

Article 7(1) CISG

•

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.

Article 7(2) CISG

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(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.

Is such a wording sufficient?

•

Does the reference to the “international

character” mean, that the courts and

arbitrators have to resort to the Vienna

Convention on the Law of Treaties

interpretative provisions anchored in Articles

31-33?

•

It is an international treaty, at the end,

referring to the good faith as well, state courts

are organs of the State, the VCLT is binding on

them…

Certainly not.

Do we all agree with the statement

below?

•

“Upon adoption of the CISG by a State, Article 7

becomes part of the law of that State and constitutes a

direction to the courts as to how to interpret the

Convention. Nevertheless, it is understandable that the

judges, trained in the law of their own domestic legal

system, will have a home-State bias when faced with

the need to interpret and apply the Convention.

Furthermore, to promote uniformity in its application

the judge must know how the Convention has been

interpreted in the other States that have adopted it.

That is not easy for obvious reasons.”

Yes, but.

•

We generally agree, but I am not quite sure,

whether and to what extent can Article 7

constitute a direction to the courts as to how

to interpret the Convention, since it is rather

vague.

Proper Interpretation is the crucial

issue

•

Uniform law, by definition, calls for its common

interpretation in different legal systems that have

adopted it. The CISG is an important legal document,

because it establishes a uniform code of legal rules

governing the formation of contracts for the

international sale of goods, the obligations of the buyer

and seller, remedies for breach of contract, and other

aspects of the contract. As stated in its Preamble, the

CISG was created “to remove legal barriers in

international trade and promote the development of

international trade.” For the Convention to accomplish

its objectives, it is essential that its provisions are

interpreted properly.

Agreed

•

The CISG is uniform law binding buyers and

sellers from different legal cultures to its set of

rules and principles. Uniformity in the

Convention’s application, however, is not

guaranteed by the mere adoption or ratification

of the CISG. The political act of adoption of the

Convention by different sovereign States is

merely the necessary preliminary step toward the

ultimate goal of unification of the law governing

contracts for the international sale of goods.

Agreed

•

The long process of unification of international

sales law can be completed only in practice –

if the CISG is interpreted in a consistent

manner in all legal systems that have adopted

it. In contrast, if domestic courts and tribunals

introduce divergent textual interpretations of

the CISG, this uniform law will be short-lived.

Built-In Interpretative Rules and

Standards?

•

It is natural that disputes will arise as to the

meaning and application of the CISG’s provisions.

The CISG, however, comes with its own, in-built

interpretation rules, which are set forth in Article

7. Article 7 is the provision that sets forth the

Convention’s interpretative standards. The

provision in Art. 7(1) expressly prescribes the

international 

character of the Convention and

uniform 

direction that should be adopted in the

interpretation and application of its provisions.

Unique Nature, Autonomous, Self-

Contained

•

Owing to its unique nature as an autonomous

and self-contained body of law, it is necessary

that CISG exist on top of a legal order that can

provide doctrinal support and solutions to

practical problems – such as resolving issues that

are 

governed but not expressly settled by 

the

Convention, as per the gap-filling pro- visions in

Art. 7(2). This doctrinal support guarantees CISG’s

functional continuity and development without

offending its values of internationality and

uniformity mandated in Art. 7(1).

If the above statements applied, why would we

need UNIDROIT principles, PECL, etc.?

•

An interpretive approach that has been

suggested as suitable to the proper

application of the CISG as truly global uniform

sales law is based on the concept of

internationality and on generally

acknowledged principles of commercial law,

such as the UNIDROIT Principles and the

Principles of European Contract Law (PECL).

Even More Confusion

•

Are UNIDROIT Principles and PECL identical?

How about Article 7(2)

•

Is the textual reference in Article 7(2) CISG to

private international law a positive step

toward substantive legal uniformity?

Once again

•

Paragraph (1) of Article 7 mandates that in the

interpretation of the Convention one must pay

close attention to three points: (a) the

“international character” of the CISG, (b) “the

need to promote uniformity in its application,”

and (c) “the observance of good faith in

international trade.”

Everybody understands?

•

It is the opinion of many scholars that the first

two of these points are not independent of

each other, but that, in fact, the second “is a

logical consequence of the first.” The third

point is of a rather special nature, and its

placement in the main interpretation

provision of the CISG has caused a lot of

argument as to its precise meaning and scope.

True

•

Every legislative instrument raises issues of

interpretation as to the precise meaning of its

provisions, even within the confines of a

national legal system. Such problems are more

prevalent when the subject has been drafted

at an international level.

Interpretation of domestic legislation

•

In the interpretation of domestic legislation,

reliance can be placed on methods of

interpretation and established principles

within a particular legal system – the legal

culture or infrastructure upon which the

particular legislation is seated.

And how about CISG?

•

…

interpretation becomes far more uncertain

and problematic because there is no

equivalent international legal infrastructure.

Bit messy, isn’t it?

•

Principles of interpretation could be borrowed

from the law of the forum or the law that

according to the rules of private international

law would have been applicable in the

absence of the uniform law. Either approach

would result in a diverse construction and

implementation of the same piece of

legislation by different Contracting States.

No Doubt

•

Such a result would undermine the purpose of

the uniform legislation and defeat the reasons

for its existence.

Is the situation that bad?

•

What follows is short insight into the Czech

Civil Code Interpretative Provisions.

Interpretation under the Czech Civil

Code (Act No. 89/2012 CoL)

•

Section 2

•

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(1) Each provision of private law may be

interpreted only (a) in accordance with the

Charter of Fundamental Rights and Freedoms and

the constitutional order in general, (b) the

principles underlying this Act, and (c) considering

at all times the values that it protects. Should the

interpretation of a provision diverge from this

imperative solely on the basis of its wording, the

imperative prevails.

Constitutionally Conforming

Interpretation

•

While provision of Section 2(1) tells us that the

interpretation has to respect overall constitutional

framework and has to be done in in conformity with

constitutional acts.

•

•

In the Czech Republic it also means that because of

relevant provisions of Czech Constitution, namely of

provisions of Article 10 of the Constitution that deal with

international law, namely international treaties, the treaties

that are approved, by the Parliament, ratified by the

President, promulgated in official gazette, that are binding

on the Czech Republic and are directly applicable, Are part

of the Czech legal order and have priority in application

over municipal legal acts.

ARTICLE 1 

•

(1) The Czech Republic is a sovereign, unitary,

and democratic state governed by the rule of

law, founded on respect for the rights and

freedoms of man and of citizens.

•

(2) The Czech Republic shall observe its

obligations resulting from international law.

ARTICLE 10 

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Promulgated treaties, to the ratification of

which Parliament has given its consent and by

which the Czech Republic is bound, form a

part of the legal order; if a treaty provides

something other than that which a statute

provides, the treaty shall apply.

ARTICLE 95 

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(1) In making their decisions, judges are bound by

statutes and treaties which form a part of the

legal order; they are authorized to judge whether

enactments other than statutes are in conformity

with statutes or with such treaties.

•

(2) Should a court come to the conclusion that a

statute which should be applied in the resolution

of a matter is in conflict with the constitutional

order, it shall submit the matter to the

Constitutional Court.

•

Priority is given To CISG and also to its Article 7

under the Czech Law

•

CISG is this kind of treaty and given it meets

all other conditions, it is directly applicable

with the priority over the Czech legal acts.

Civil Code Section 2(2)

•

Section 2(2) states, what is a logical way of

interpreting Civil Code and in fact, it attempts

to give priority to the so teleological

interpretation (considering object and

purpose.)

Global Interpretative Standards

adopted by Czech Civil Code

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(2) Statutory provisions may not be given a meaning other than that which

follows from 

•

•

the actual sense of the words 

•

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grammatical interpretation

•

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in their mutual context

•

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contextual interpretation

•

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and from the evident intention of the legislature; 

•

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teleological interpretation (subjective and historical)

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however, no one may invoke the wording of a

legal regulation contrary to its sense. 

•

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I am not sure how to understand the last

sentence of Section 2(2). In a fact, the best

way, how to understand telos (object and

purpose) is to read clear and understandable

legal text.

Good Faith is also present

•

(3) The interpretation and application of a

legal regulation must not be contrary to 

good

morals

 and must not lead to cruelty or

inconsiderate behaviour offensive to ordinary

human feelings.

What is good faith?

•

Legal principle?

•

Meta-legal element and not the principle?

•

Who knows?

•

How about CISG?

Even more

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Acting bad faith (mala fide) is not necessarily

reason of the invalidity of an act.

What else we have in Civil Code?

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Interpretation of juridical acts 

•

•

Section 555

•

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(1) A juridical act is assessed according to its

content.

•

•

(2) If a certain juridical act is intended to obscure

another juridical act, the former is assessed

according to its true nature.

Intention of the parties and venire

contra factum proprium

•

Section 556

•

•

(1) What is expressed by words or otherwise is interpreted

according to the intention of the acting person if the other party

was aware or must have known of such an intention. If the

intention of the acting person cannot be ascertained, the

expression of will is attributed the same meaning which would be

typically attributed by a person in the position of the person against

whom the will was expressed.

•

•

(2) When interpreting the expression of will, account is taken of

the regular dealings of parties in legal transactions, what preceded

the juridical act, as well as the manner in which the parties

subsequently demonstrated what content and relevance they

attach to the juridical act.

contra proferentem

•

Section 557

•

•

If a term is used which allows various

interpretations, in the case of doubt it is to be

interpreted to the detriment of the person

who used the term first.

Meaning customarily used and

business usages

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Section 558

•

•

(1) In legal transactions with an entrepreneur, a term allowing different

interpretations is attributed the meaning customarily used in such

transactions. However, if the other party is not an entrepreneur, the

person who invokes the meaning must demonstrate that the other party

must have been aware of it.

•

•

(2) In legal transactions among entrepreneurs, account is taken of

business usages maintained in general or in a given industry, unless

excluded by an agreement between the parties or by a statute. Unless

otherwise agreed, a business usage is conclusively presumed to take

precedence over non-compelling  provisions of a statute; otherwise, an

entrepreneur may invoke a usage if he proves that the other party must

have known a given usage and was aware that it would be followed.

•

What is the Difference?

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Are the Czech Interpretative Standards, as

anchored in Civil Code that distinct from CISG

Standards?

Where is the Problem

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“[E]ven when outward uniformity is achieved,

. . . , uniform application of the agreed rules is

by no means guaranteed, as in practice

different countries almost inevitably come to

put different interpretations upon the same

enacted words.”

Different autonomous interpretations

•

“[H]ow [does one] determine which

interpretation should be preferred when the

CISG itself gives rise to different autonomous

interpretations [?]”

Recommendations

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Answer to the question how to achieve uniform interpretation of CISG can

be relatively simple

•

study thoroughly “CISG Bible” - Commentary on the UN Convention on

International Sale of Goods edited by Peter Schlechtriem and Ingeborg

Schwenzer,

•

study UNIDROIT Principles, Principles of European Contract Law (PECL),

•

study UNCITRAL Digest of Case Law available through its CLOUT abstracts

(Case Law On Uncitral Texts) and UNCITRAL Digest of Case Law on the

United Nations Convention on the International Sale of Goods,

•

and if possible, to go to the CISG Website maintained at Pace Law School

with its unsurpassed collection of court decisions and bibliography of

books and articles on the CISG.

•

 Not to be forgotten are the other Web sites that collect and publish

decisions in non-English languages.

Straits

•

Problem is that though the Commentary is

authoritative, it in a sense shares private views

and some judges can have different views.

Some can feel they are the most clever of all

and they do not need to spoil their minds with

such an alien rubbish.

Language as Barrier

•

Moreover, one can doubt that most of our

judges are able to read in other languages

then Czech.

•

Random Allocation of Cases

•

Disputing parties cannot chose particular

judge in the Czech Republic. Cases are given to

judges randomly, the reason is fairness of the

proceedings and preservation of impartiality

and independence.

How about Specialized Tribunals

•

The problem is, as I know it from my practice

as counsel or arbitrator, that parties are quite

often even not aware of the fact, that the

governing law in their case is CISG.

What is Left

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Education, publication of those materials

mentioned above in the mother tongues of all

member states, qualified submissions of the

parties‘ attorneys attempting to assist judges

in explaining them, what the proper

interpretation of the CISG is.

Can it Work in the Czech Republic?

•

This can definitely work in jurisdictions with

Anglo-American legal tradition in which the

counsel proves not only the facts but also the

law. It can be a bit difficult in continental legal

tradition in which we claim that court/judge

knows the law – 

iura novit curia

.

•

Unfortunately, the principle is usually

misinterpreted.

Should we just forget about CISG and

its uniform application?

•

W

here there is no complainant, there is no

judge

.

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So who cares?

Go to arbitration

•

CISG is better dealt with in arbitration

proceedings, supposing, parties chose

arbitral panel able to communicate in other

languages than in its own.

Still the Same Story

•

But as I know from my practice as arbitrator

and as counsel, parties are quite often even

unaware of the fact that the governing law of

their sales contract is CISG.

Long way Ahead

•

It is a lot of work ahead and unification and

harmonization is not an easy task.

I won’t be praised by CISG’ fathers,

•

On the other hand, if we look at the

interpretative provisions of Czech Civil Code,

they are not necessarily too distant from

what is required by the CISG.

but

•

This narrows the gap and lessens the

problem, but I would not dare to claim, it

makes it marginal.

Recommendation

•

Set up understandable interpretative principles

and made them part of the domestic legal

system. The best way is to adopt the CISG as

part of domestic legislation applicable not only

to the international sales of goods, but to sales

of goods generally. Provide judges and attorneys

with commentaries in their respective languages

that are clear, understandable and are based on

CISG acquis. To me, this is the best way how to

harmonize and unify decision making globally.

Last but not least

•

Encourage law students to participate in Vis

Moot Competition.