An Analysis for Gap-Filling Role of UNIDROIT Principles
in the Vienna Convention
It is widely accepted by legal scholars that to create legal uniformity there is needed a uniform law instrument. In order to do that, The United Nations Convention on Contracts for the Sale of Goods (hereinafter CISG) was adopted to provide uniformity of international commercial transactions. The Convention has significant provisions governing substantive rights and obligations arising from a sales contract. It was adopted by seventy countries which can be considered as a remarkable progress in the filed of commerce. Having investigated to introduce a uniform international law purpose explicitly stated in Article 7(1) of CISG which illustrates “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.” In order to create uniformity, Rosenberg suggests that “there must be uniform interpretation of the provisions of the Convention and a uniform approach to filling "gaps" concerning matters which, while governed by the Convention, are not expressly settled in it.”[1] Nonetheless, there is lacking of the uniform rules of the Convention. As a result of this, inadequacy of these uniform rules has created different results in same disputes. Having achieved uniformity, there can be mentioned about uniform law conventions to the extent that UNIDROIT Principles of International Commercial Contracts. This paper will focus on if there is an opportunity to use the Principles for gap-filling, if so how to use these Principles to fill the gaps in the Convention.
At first, the differences and similarities between the UNIDROIT Principles and the CISG should be mentioned. Garro suggests that the Principles provide helpful points of departure for lawyers, judges, and arbitrators over the world who are seeking a comparative solution to a practical problem.[2] The UNIDROIT Principles are capable of applying different types of contexts. To the extend it, it may be used for interpretation and supplementation of CISG. On the contrary to CISG, the Principles have been drafted and discussed by a group of legal scholars who have knowledge about different legal systems. According to the Article 1.1 of CISG, this Convention applies only contracts for the sale of goods. However, UNIDROIT Principles also can be applied to all kinds of disputes originating from international commercial contracts. UNIDROIT Principles cannot be considered as an international convention which has binding power over the parties on the contrary of CISG. UNIDROIT Principles cover all kinds of transactions which derives from international commercial contracts. To sum up, they are not in conflict with each other such as the Principles have supplementary provisions of CISG under certain circumstances. The Principles have been used to make connection with the CISG in these ways: First, the parties had opportunity to use the Principles that it has been respected by the tribunals. Second, the relation between the Principles and CISG have been achieved by authority with the help of other sources. Third, the Principles have been undertook the role of gap-filling over the CISG. Article 7(2) of CISG provides that “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.” Article 7(2) is a significant, albeit elusive rule which provides a tool for plugging some(though not all) of the “gaps” we find in the CISG text.[3] This Article is a guidance for the national courts and international arbitrators for ambiguous provisions.
According to this Article of the Convention, these questions should be answered:
Is the matter included by the Convention?
1. If not, there shouldn’t be mentioned about gap because of the matter excluded from the Convention on purpose.
2. If the matter included by Convention, we need to look for the settlement in the Convention. If there is a settlement, a gap cannot exist here though. If there is no settlement in the Convention, it should 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.’
Although there are certain matters are not covered by the Convention on purpose. According to the Article 4, the validity of the contract or of any of its provisions or of any usage and the effect which the contract may have on the property in the goods sold are expressly excluded from the Convention. Hence, these areas are out the scope of gap-filling under the Article 7(2). If there is an expressly excluded provision in the Convention which cannot be considered as a gap, should be examine looking at its legislative history, similar cases with that matter and the preamble of the relevant provisions. Article 7(2) presents a delicate balance between (1) developing the Convention’s general principles and (2) recourse to domestic law - a choice that inevitably will be influenced by the traditions and mindset of the tribunal.[4] General principles and civil law notions are different than each other. Although the civil law takes its source from legislation while the common law depends on the cases. Common law interpretation have been made very strictly and there is no principle which governs that common law rules ought to be used to fill the gaps. At this point, while there is a gap, it should be settled by analogical application of certain rules under the Convention.
In this part, I will briefly explain the gap-filling procedure which has been settled under Article 7
(2) and related provisions. CISG represents an obligatory point of reference for the UNIDROIT Principles. Generally, two international commercial law instruments address the same point while the UNIDROIT Principles have taken its existence from the correlating provisions of CISG. Bonell suggests that “since the UNIDROIT Principles were not intended to become a binding instrument aimed at unifying national laws relating to international contracts, they were much less conditioned by the differences existing between the various legal systems”[5]. As a result of this, the Principles are capable of addressing issues which are excluded or deficient in the CISG text. Justifying the Principles how to fill the gaps in the Convention, there should be mentioned more than one approach such as: First, the UNIDROIT Principles ought to be used to fill gaps if they have considered as a source of general principles of international contract law same as the CISG. Second, the UNIDROIT Principles ought to be used to fill gaps if both the Principles and the Convention have the same content of one provision in the same matter. Third, the UNIDROIT Principles ought to be used to fill gaps if the general principles of the Principles deriving directly from the Convention. From my point of view, the gap-filling role of UNIDROIT Principles seems to be the most effective implement because of the lack of provisions in the international conventions. Supplementing an international instrument with the UNIDROIT Principles has the advantage of enhancing consistency and fairness in the adjudication of international commercial disputes.[6] The UNIDROIT Principles as a gap-filler in accordance with the principles of international conventions.
According to Article 7(1) of CISG, conventions should be interpreted as regards to their ‘international character’ and ‘the need to promote uniformity in their application.’ Pursuant to this article, meaning of the international conventions should be explained by virtue of their international content rather than domestic legal system to ensure uniformity. The UNIDROIT Principles can be considered as a general principles instructive of the CISG. As long as the UNIDROIT Principles provide a solution to issues that may conceivably fall under the scope of application of the CISG, they should be used to supplement all questions regarding the formation, interpretation, content, performance, and termination of contracts for the international sale of goods.[7] The question arising from determining general principles relation with the matter depend upon the judges and arbitrators decision. To answer this question the UNIDROIT Principles can be used to facilitate. Bonell suggests that “the only condition which needs to be satisfied is to show that the relevant provisions of the UNIDROIT Principles are the expression of a general principle underlying CISG.”[8] One of the general principle of CISG is reasonableness, a rule of co-operating parties and a rule of communicate of the Principles lying down in the same matter. Assisting of general principles as a tool of gap-filling by analogy ought to be considered as an interference finding a solution for the specific case. However, these general principles and rules of law should be applied more broadly perspective to find a solution as a whole. These principles can be useful, for instance, to corroborate a solution reached through the application of the CISG's rules, as evidenced not only by several arbitral awards, but also by one state court decision; on these occasions, the UNIDROIT Principles of International Commercial Contracts were used to find corroboration of the results reached by applying the rules of the CISG.[9] Although, by means of the UNIDROIT Principles, it can be decided on the significance of the general principle that CISG is based upon. In the light of these information, the UNIDROIT Principles and CISG are complement each other however the Principles has much broader content than the Convention which can be a guide of contracts in order to draft under CISG provisions.
In this the last part of the essay, there is needed to be mentioned the provisions and articles which are complement themselves in practice and case law. The CISG which governs international sales contract should have been validly concluded pursuant to Article 55. The Article states that in order to determine the price the contract should have validly concluded. Garro suggests that “this determination, according to CISG article 7(2), is subject to domestic law, an issue which must in turn be determined according to the conflict of law rules of the tribunal with jurisdiction to settle the dispute.”[10] This Article is insufficient for the dispute arising between the parties and there should be mentioned about the UNIDROIT Principles in Chapter 3 which are governing validity to fill the gap in the CISG. In order to do that there is needed to be considered Article 4 of CISG which regulates the validity of the contract or of any of its provisions or of any usage is not concerned with the Contract expressly. While making such a broad exclusion, the Convention creates barriers over the uniformity of international trade law. Nonetheless, the Principles clarifies concept of validity by saying that impossibility of performance, including the transferor’s lack of little to the property, does not affect the validity of contract. The areas which are expressly excluded from the contract to the extent it mistake, fraud and threat have been regulated in the UNIDROIT Principles giving practical answers which are insufficient for the matter in the CISG. For international commercial contracts, Chapter 3 can be considered as a guideline about validity of contract. Another illustration of gap-filling role of the UNIDROIT Principles is the Article 74 of CISG which regulates damages. Article 7.4.2 of the UNIDROIT Principles governs full compensation accordingly the CISG provisions. The Article 7.4.2 in conformity with the CISG while limiting recovery amount pursuant to harm forseeability whether failure of the contract was damaged grossly. Thus, Article 7.4.3 is based on the same principle underlying the CISG: full compensation is subject to limits, including this limit: one can recover only for harm that is actually suffered or is likely to occur.[11] The UNIDROIT Principles Article 7.4.9 illustrates rate of interest which should be fixed at the average bank short-term lending while the Article 78 CISG has no provisions about that matter. In order to apply the Principle it should be widely known by the parties to become a trade usage. For this problematic situation Goode et al suggests that “cases can be found which support recourse to (i) the domestic law of the creditor’s state (ii) the average bank lending rate of interest (iii) the rate determined by the domestic law of the debtor’s State (iv) the rate determined by the domestic law governing the contract in the absence of CISG and (v) the rate determined by the domestic law of the place of payment.[12] In my point of view, the UNIDROIT Principles have more advantageous position than these situations mentioned above because of giving more useful solutions when the CISG is insufficient. Another illustration of gap is the Article 79 of CISG which has regulated force majeure one of the most controversial provision of the CISG. Force majeure is a situation which the performance of the party becomes unable to achieve. Article 79 states that ‘due to an impediment beyond his control’ which is difficult to interpret. However, at this point there should addressed to the hardship provisions of the UNIDROIT Principles Article 6.2.2 which contains a duty of a party adapting and ending the contract as a result of hardship. This Article will lead to the courts and arbitrators to follow this Principle as a solution when the matter comes before them. As far as it can be seen from the illustrations that the UNIDROIT Principles ought to be used various ways while the CISG involves a gap.
In the light of information given above, in order to provide certainty for the parties of international commercial contracts, there is a necessity of uniform law. The Convention have been adopted to create such uniformity. While providing the uniformity, it is a requirement to fill the gaps which have been out of the scope of the Convention expressly or ambiguously. At this point, the UNIDROIT Principles is able to be used by courts and arbitrators to fill the gaps and interpret provisions. Patanjali suggests that “there are two ways to bring in the UNIDROIT Principles under a case in the CISG. First, as an interpretation aid in terms of art.7(1) CISG and secondly, in deriving the solutions of the UNIDROIT Principles regarding general principles on which the CISG is based in terms of art.7(2) CISG.”[13] In my point of view, taking into consideration of wider substance of the Principles, it can be use as a mechanism in order to fill the gaps in the CISG. The CISG and the UNIDROIT Principles are result of a codification, harmonization, and unification process. Although both of them can be considered as a guideline for international arbitrators and national courts for the international commercial transactions. In addition to that, the Convention should not expressly need to demonstrate using the UNIDROIT Principles for gap-filling, because the Principles already have the purpose of supplementing international instruments. The co-operation of the UNIDROIT Principles and the Convention will procure the uniformity in international sales transactions.
Bernstein Herbert, Lookofsky Joseph,(2003), Understanding the CISG in EUROPE, Kluwer Law International, p.36
Bonell Michael, (1996), The UNIDROIT Principles of International Commercial Contracts and
CISG - Alternatives or Complementary Instruments?, Uniform Law Review, p. 32
Ferrari,Franco, (2003), Gap-Filling and Interpretation of the CISG: Overview of International Case
Law, International Business Law Review, p. 230
Garro, Alejandro(1994-1995), The Gap-Filling Role of the UNIDROIT Principles in International
Sales Law: Some Comments on the Interplay Between The Principles and CISG, Tulane Law Review, p.1151
Goode Roy, Kronke Herbert, Mckendrick Ewan (2011), Transnational Commercial Law Tetx, Cases and Materials, Oxford University Press, p.305
Gotanda,John, (2007), Using the UNIDROIT Principles to Fill the Gaps in the CISG, Public Law and Legal Theory Working Paper Series, p.22
Honnold John, (1999), Uniform Law For International Sales, Kluwer Law International, p. 109
Patanjali, Aditi, (2012), A comparative study and analysis of the doctrine of frustration under the
CISG, UNIDROIT Principles and UCC, International Company and Commercial Law Review, p.14
Rosenberg, Mark(1992), The Vienna Convention: Uniformity in Interpretation for Gap-filling - An Analysis and Application, 20 Australian Business Law Review, available at http:// www.cisg.law.pace.edu/cisg/biblio/rosenberg.html (accessed on 4 January,2015)
[1] Rosenberg, Mark(1992), The Vienna Convention: Uniformity in Interpretation for Gap-filling - An Analysis and Application, 20 Australian Business Law Review, available at http://www.cisg.law.pace.edu/cisg/biblio/ rosenberg.html (accessed on 4 January,2015)
[2] Garro, Alejandro(1994-1995), The Gap-Filling Role of the UNIDROIT Principles in International Sales Law: Some Comments on the Interplay Between The Principles and CISG, Tulane Law Review, p.1151
[3] Bernstein Herbert, Lookofsky Joseph,(2003), Understanding the CISG in EUROPE, Kluwer Law International, p.36
[4] Honnold John, (1999), Uniform Law For International Sales, Kluwer Law International, p. 109
[5] Bonell Michael, (1996), The UNIDROIT Principles of International Commercial Contracts and CISG -
Alternatives or Complementary Instruments?, Uniform Law Review, p. 32
[6] ıbid 2, p.1153
[7] ıbid 2, p. 1156
[8] ıbid 5, p.36
[9] Ferrari,Franco, (2003), Gap-Filling and Interpretation of the CISG: Overview of International Case Law, International Business Law Review, p. 230
[10] ıbid. 2, p.1172
[11] Gotanda,John, (2007), Using the UNIDROIT Principles to Fill the Gaps in the CISG, Public Law and Legal Theory Working Paper Series, p.22
[12] Goode Roy, Kronke Herbert, Mckendrick Ewan (2011), Transnational Commercial Law Tetx, Cases and Materials, Oxford University Press, p.305
[13] Patanjali, Aditi, (2012), A comparative study and analysis of the doctrine of frustration under the CISG,
UNIDROIT Principles and UCC, International Company and Commercial Law Review, p.14
