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Convention on Contracts for International Sale of Goods
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Is the CISG benefiting anybody?
ABSTRACT
The Convention on Contracts for International Sale of Goods (CISG) was supposed to increase legal certainty and reduce the transaction costs of international buyers and sellers. This Article argues that none of these goals has been met. A survey of 181 court decisions and arbitral awards applying the CISG shows that the vast majority of international buyers and sellers do not address the issue of the law governing their contracts, irrespective of the value at stake. Although the data is not easy to interpret, it follows that international buyers and sellers are simply not concerned with the legal regime governing their contracts and may be more generally legally unsophisticated. As a consequence, increasing legal certainty does not benefit them ex ante, and they do not incur the transaction costs that a harmonization of the law of sales could save. It is true that a few of these parties do provide for the applicable law and seem to be more sophisticated. But this Article further argues that even these parties do not clearly benefit from the international harmonization of the applicable law because of its limited scope. TABLE OF CONTENTS I. INTRODUCTION II. THE ARGUMENTS IN FAVOR OF THE HARMONIZATION OF INTERNATIONAL SALE LAW A. Legal Certainty B. Law Reform C. Reduction of Transaction Costs 1. Unsophisticated Parties 2. Sophisticated Parties III. THE STUDY OF 181 CASES WHERE THE CISG WAS APPLIED IV. WHO CAN BENEFIT FROM THE CISG? A. Scope of the Harmonization B. Quality of the Harmonization V. CONCLUSION I. INTRODUCTION Governments have conducted a process of harmonization of international sale law for more than forty years. (1) Legal scholars had advocated the idea since the 1920s. (2) Today, international sales law is harmonized to a very significant extent through the United Nations (U.N.) Convention on Contracts for International Sale of Goods (CISG). (3) This uniform law is applicable in sixty-six states, which include most of the major trading nations. (4) It governs many areas of sale law, particularly the performance of the contract. (5) Because the process of harmonization has been supported for almost a century, and because so many countries have adopted the CISG, it has become increasingly hard to challenge the usefulness of the whole enterprise. Indeed, most modern treatises on international sale law either state that the benefits of harmonization are obvious (6) or do not even find the issue worth addressing. (7) Yet, some scholars have recently challenged the usefulness of the CISG. (8) They have argued that the poor quality of harmonization that it has achieved makes it doubtful that it has been beneficial to commercial parties. However, none of these scholars have challenged the usefulness of the process itself. (9) This Article will address that issue. For a century, the supporters of international sale law have argued that an instrument such as the CISG would have significant benefits for international sellers and buyers. (10) The CISG has governed international sales for more than fifteen years. (11) It is now possible to review cases in which the CISG was applied and to use these cases to test the century-old hypothesis of the usefulness of harmonizing sales law. This Article examines whether harmonizing international sale law has been a useful enterprise from two perspectives. Part II lists the arguments put forward by the supporters of international sale law, explores whether they are convincing, and concludes that most of them are not. Part III examines 181 cases where the CISG was applied by U.S., German, and French courts and by arbitral tribunals to determine whether international buyers and sellers have actually benefited from the CISG. This analysis finds that the vast majority of those buyers and sellers have not benefited, due to a lack of sophistication. Part IV considers whether the CISG could be beneficial to a few sophisticated parties but finds the benefits difficult to assess and possibly nonexistent. Part V concludes the Article. II. THE ARGUMENTS IN FAVOR OF THE HARMONIZATION OF INTERNATIONAL SALE LAW The negotiators of the CISG thought that engaging in a process of unification of international sale law would increase international trade. The preamble of the CISG provides that the Convention set out to "contribute to the removal of legal barriers in international trade and promote the development of international trade." (12) In his address on the Convention to the U.S. Senate Committee on Foreign Relations in April 1984, Peter Pfund, who was acting as Assistant Legal Adviser for Private International Law for the Department of State, also supported the adoption of the CISG by the United States on the grounds that it would allow U.S. corporations to engage in trade with foreign nations and conclude sales that they would not have concluded otherwise. (13) He argued that without the CISG, U.S. corporations would be discouraged by the uncertainti...See the full content of this document
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