The Exclusion of Validity and Property Issues Research Paper

Introduction

The United Nations’ Contracts for the International Sale of Goods (CISG), otherwise known as the Vienna Convention, was meant to provide an answer about how best different countries could create uniformity in international trade. The increased trade volumes between different countries and states, made the uniform set of rules necessary especially considering the different social, cultural and legal differences among participant countries. The United Nations Commission on International Trade Law (UNCITRAL) begun the work to draft the CISG in 1968, and was commissioned specifically to come up with a framework document that would “facilitate acceptance by countries of different legal, social and economic systems.” UNCITRAL finished drafting CISG by 1978, and 62 states met two years later in 1980 in Vienna to discuss the contents of the draft. By 2007, 71 countries had already ratified the convention.

In the CISG preamble, the drafters of the convention express the objectives they wished to attain through it. Specifically, they state that by setting uniform rules to govern contracts, the CISG would remove or lessen the legal barriers that would otherwise hinder international trade. Such a position was informed by the different social, political, legal and economic systems that existed in the different countries that engaged in international trade. The drafters went into great lengths to identify the requirements that entities in different countries would need to meet when forming contracts. They also identified the different rights and obligations that the selling and buying entities would have.

The CISG was meant for use by parties whose ‘placed of businesses are located in different states, and hence cannot be used by parties within the same country.

Despite their efforts to come up with a uniform set of rules, there is some agreement among international legal commentators that the CISG drafters left a loophole in the convention in Article 4.

The Validity Exclusion

In article 4(a) of the CISG, it is stated that:

This convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, except as otherwise expressly provided in this Convention, it is not concerned with:

The validity of the contractor any of its provisions or of any usage

Considering the different state interests that the drafters may have considered when coming up with the CISG, it is probable that the validity exception was meant to safeguard individual state interests from being overwhelmed by the Convention. Specifically, the drafters may have intended the validity exception to provide flexibility to states as a way of accommodating their differences as observed by Bar and Har-Sinay.

Notably however, the validity exception has not succeeded in creating flexibility; if anything, international trade is more ambiguous as a result since the determination of validity or lack thereof, has been left to individual legal systems.

Exclusion of Property Rights Issues

Article 4(b) of the CISG states that ‘…except as otherwise expressly provided in this convention, it is not concerned with… the effect which the contract may have on the property in the goods sold.’ In other words, the exclusion of property rights issues was intended to keep the CISG away from third party property claims. Following the exclusion, Mather posses the following question, ‘Is the buyer a good-faith purchaser whose purchase cuts off the property interest of a third party who has claim to the goods?’ Mather’s question is informed by the fact that property rights exclusions as indicated in article 4(b) means that third party claims and other property rights issues are left under the jurisdiction of applicable domestic laws, which should be ideally selected in adherence to choice-of-law rules. The convention explicitly states that the CISG is not concerned ‘with the effect with which the contract may have on the property in the goods sold’. In other words, the Convention does not regulate how ownership of property is passed; instead, it leaves the property issues to the jurisdiction of domestic laws. A major problem in the property rights exclusion is that different local laws may have different restrictions protecting the rights of buyers and sellers. When international parties are concerned, it then becomes difficult to determine, which of the varying laws will be used to resolve property issues.

Another issues that comes up in relation to the exclusions and hence the use of domestic laws, is the fact that in some cases, the remedies offered by domestic laws tend to ‘overlap the Convention damages regime’. When such incidences happen, analysts often contend on whether domestic rules should compete or serve concurrently with the CISG remedial rules, or whether the latter should always trump domestic remedies.

Are the Exclusions a Major Defect?

The answer to whether the exclusions contained in article 4 of the CISG are a major defect to the convention is not as straightforward as some trade legal analysts would like to indicate. Opinion is divided between those who believe that the exclusions have weakened the Convention considerably (Reiz and others), and those who believe that the exclusions were necessary if only to enable contracting states some autonomy in contract law (Hartnell, Kilian, Jansen and Meyer and others). The latter group of analysts argue that contract law cannot exist outside states. Specifically, they argue that there cannot be a “state-free-contract”, since all contracts or the resolution of disputes arising from their implementation need to take place within a specific jurisdiction. Through their arguments, they justify the exclusion of validity by the CISG drafters, stating that States whose contract laws conflict can use arbitrators to apply whichever of the two conflicting laws they see as fit in the specific situation.

To argue that the exclusions are a major defect would be to suggest that the convention is greatly incapacitated by them. On the other hand, arguing that the exclusions are not a major defect would be tantamount to trivialising their impact on the applicability of the CISG on international trade.

Among the pointers that could help in determining whether the article 4 exclusions constitute major defects in the CISG are the problems or issues that arise during implementation. First it is worth noting that there is no clear definition of the word ‘validity’ in the international trade context. Trying to demystify its meaning, Corbin defines validity as “a term with shifting content… a contract is ‘valid’ insofar as it has legal operation and ‘invalid’ insofar as it has not’. If Corbin’s definition was indeed true, the issue of legal difference between countries would then arise. For example, the legal grounds for validity of contracts in the United States could be totally different from what is considered legal in China. If business entities from the two countries were to be engaged in trade practices that would bring up the question of validity of contracts, it would be hard to tell, which of the two validity measures would be applied.

Mutual mistakes that are common to contracting parties include non-performance by the seller, unreasonable disclaimers, or penalty clauses among others. If a seller in Country A for example includes a disclaimer that pass all liability to a buyer in Country B, the rules governing validity of contracts in the seller’s Country A would most likely be used in resolving the conflict which would ensue if the goods do not confirm to the terms and conditions agreed by both parties in the contract. If the disclaimer would be rendered unreasonable in the seller’s country A, then CISG’s requirement for ‘full compensation for breach’ of contract would be applicable.

Commentators who suggest that the exclusions made in article 4 constitute a major defect, either directly or indirectly, refer to the fact that the Convention has gone into great detail to address ‘whether the quality of goods conform to the contract’ and even goes to the extent of affording appropriate remedies to the buying entity, whose terms of contract in relation to the quality of goods were not met. They thus argue that the omission to define validity of contracts and to state their scope was a major oversight on the drafter’s part since it takes away the unifying factor that the same rules were supposed to bring to international trade.

Matters pertaining to the ‘good faith’ clause in the Convention are also cited as being among the major issues that makes the exclusions in Article 4 even more taxing for international legal minds. For example, domestic laws may argue that a contract is invalid because one of the negotiating parties did not act in good faith. Notably however, the ‘good faith’ concept is in itself ambiguous. Hence, it makes it even harder for judges and arbitrators to achieve uniformity in their decisions when dealing with matters pertaining to the validity of contracts and property issues under different domestic laws.

It has been argued that courts determining CISG issues are likely to ‘succumb’ to the ‘homeward trend’ or a preference to interpret the provisions of the convention based on their domestic laws. However, most analysts also observe that several court decisions have indicated that the legal systems in different countries recognise the international nature of the CISG. Among cases where the international character of the Convention was apparently considered is St. Paul Guardian Insurance co. Et al. V. Neuromed Medical Systems & Support GmbH, Et al, where it was argued that the simple and non-specific language used in the CISG was meant to enhance uniformity in international trade. The decision by the US court was thus incompatible with the notion that courts seem to refer to domestic laws when adjudicating cases of international nature.

The need to refrain from the domestic trend was also reaffirmed in MCC-Marble Ceramic Center Inc. v. Ceramica Nuova D’Agostino, S.P.A. where it was argued that familiar principles in the domestic law should not be used as a substitute to the CISG, especially where results of an international scope are expected.

The above cases indicate that the CISG is, and should be regarded as an autonomous law, and should therefore be disassociated with domestic laws. However, the exclusions contained in articles 4(a) and (b), are indicative of the fact that just as much as legal systems would like to treat the CISG as an autonomous set of international laws, they still would have to refer to domestic laws in matters of contract validity and property rights. Whether these exclusions make up a major defect however is still a debatable issue.

Arguments to suggest that the exclusions are a major defect in the convention often cite the non-uniform state laws regarding the validity or lack thereof in contracts, and property issues. Since CISG was meant to provide the international community with a uniform set of laws to govern trade, the inconsistencies presented by the exclusions are therefore deemed as a defect by some analysts.

In relation to article 4(b), those who argue that the exclusion of property issues is a major defect cite the confusion created by different domestic laws that govern how property is transferred. Specifically, they argue that the Convention should have issued rules regarding the transfer of property, since it has addressed the passage of risk under articles 36, 67(b), and 69.

To overcome the conflict created by the article 4 exclusions, some international traders chose to use the choice-of-law clause as stipulated in the CISG. By choice-of law, the international buyer and seller agree to use the laws of a particular country as their point of reference in ‘reaffirmation of the applicability of the CISG’ rules which allows the contracting parties to choose a law they would like to use in their case.

Notably, some interpretations confuse the validity exclusions under article 4(a), with contract formation, something that the CISG has addressed fairly well. A case in point was the US court in Geneva Pharmaceuticals v. Barr Laboratories, where it is argued that the ‘the court confused validity of contractual provisions, a subject not covered under the CISG…, with contract formation, which is covered under the CISG’. In other words, the cited US court is perceived to have treated the contract formation and contract variation rules as expressed in CISG articles 14 and 11 as issues of validity. It is worth noting that although the contract drafters drew the line between contract validity and contract formation, the distinction between the two ‘seems difficult to maintain, ‘since both these (seemingly separable) subjects deal with the overall ‘process’ by which a contract comes to be’.

It is often assumed that during contract formation, the contracting parties address issues pertaining to the quality, price, cost, insurance and freight of the goods comprehensively. Their agreement is therefore documented in a contract, which should ideally spell out the terms and conditions of the transaction. By relegating the determination about whether Contracts drawn by international parties is valid, CISG gave the contracting parties the flexibility to seek redress under domestic laws should they feel that the validity of the contract is in question. The exclusions no doubt make CISG a complex law, which is not surprising if one was to consider the different interests that the drafters had to consider and balance when coming up with the Convention.

The United Kingdom

The United Kingdom was among the countries represented in the drafting and negotiation phases of the CISG.³⁶ Despite its involvement, the UK has remained steadfast in its refusal to ratify the CISG. Initially, the country adopted a ‘wait and see’ attitude as it closely watched how its main trading partners would react to the convention.³⁷ Most of its trading partners such as Australia, Germany, the US and others in Europe ratified the convention, but UK still remained aloof. In 1989, 1997, and 1999 however, the Department of Trade and Industry gave promising indications that it would eventually lead the UK into ratifying the Convention. To date however, the UK is yet to ratify the convention. Among the reasons cited for the country’s non-adoption stance is the exclusion of contractual validity and property issues. Other more convincing reasons include the lack of legislative goodwill to ratify the convention; the perception among the English that their Sales of Goods Act is superior to the provisions in the CISG, and its popularity among the Englishmen ‘Self-interest and paranoia’ of the English legal system; and the vagueness of the CISG especially in the provisions of good faith and statutory interpretation.

The CISG is not the first uniform law that the UK has come across; previously, the UK was party to the ‘Uniform Law on International Sale of Goods’ (ULIS) and the ‘Uniform Law on Formation of Contracts for the International Sale of Goods’ (ULFC). Notably however, none of the provisions in ULIS and ULFC have ever been utilised in cases involving the UK and other international trading partners. ULIS is cited as a more comprehensive set of rules, especially in relation to its interpretation of trade terms, hence making its implementation less ambiguous. Unlike CISG however, ULIS was not as widely accepted. Of note is the fact that the US refused to ratify ULIS claiming that it was conceived for use among nations that shared borders. The US also argued that ULIS did not provide solutions to problems ‘involving overseas shipments’ and that it failed to ‘balance reciprocal rights and obligations of sellers and buyers. Overall, ULIS had a wider field of application compared to CISG, and it was argued that such a scope created major variations between it and what countries were used to on the domestic front.

Article 4 and legal uncertainty

Although the exclusions in Article 4 are not directly cited by authors as being among the major reasons why the UK has failed to ratify the Convention, there is extensive literature that argues that the legal uncertainty created by the very features that drafters intended to create adaptability and flexibility have kept the UK aloof. As indicated elsewhere in this paper, the exclusions in article 4 were meant to introduce some flexibility into the issue of contract validity and property issues, where contracting parties could utilise the choice-of-law provision. It is however worth noting that the drafters did not define the meaning of the term ‘contract validity’ as used in the Convention, and this exception, among others seems to be cited as a major source of legal uncertainty. Consequently, parties have to decide the definitions of some of the terms used in the Convention on their own, and based on their own interpretation of the law. The legal uncertainty caused by the exclusions and the lack of definitions are by themselves not an issue that could make the UK to adopt a non-ratification stance; rather, it is the extent to which the ‘uncertainty negates the positive goal of flexibility’ that is cited as an issue that could have contributed to UK’s stance.

With the English legal system hailed among one of the most effective, one could therefore hypothesise that the Englishmen are not too sure about the ability of the CISG to function effectively. Their uncertainty is further compounded by views which portray the CISG as a ‘cut and paste job’, which has loose ends that makes the Convention ineffective. Whether the legal uncertainty is a strong enough reason to make the UK refrain from ratifying the convention is debatable. There are those commentators who observe that the legal uncertainty posed by the Convention is “within acceptable limits and does not create an impassable obstacle to the ratification of the convention’.

The legal uncertainty, even without factoring in the exclusion in article 4 is compounded by other areas in the Convention, which include the allegation that it offers ‘formal uniformity without substantive uniformity.’ Consequently, some critics argue that the CISG does not in any way facilitate or ease international trade; instead, the critics argue that the Convention has become an obstacle to the possibility of attaining a uniform international trade law. Notably, and like everything else that is drafted for use in different societies, regions and cultures, the CISG cannot satisfy everybody. Whether the level of dissatisfaction is great enough among the English to warrant their non-ratification stance is a matter that needs one to consider other factors.

Lack of political and legislative goodwill

Asked why the UK has not yet ratified the CISG, a British Minister cited the lack of adequate legislative time to deliberate and consequently ratify the Convention as the main reason. As one would tell however, the reason given by the Minister was just a lame excuse especially considering the number of years that has passed ever since CISG was recognised as a valid set of rules. In reality, the UK lacks the political good will to ratify the law, or simply does not regard the Convention as vital to its interests. Of notable interest is the fact that the UK still has strong domestic laws that it uses to govern trade disputes that occur from international transactions. Ratifying CISG is therefore viewed by some legal stakeholders in the United Kingdom as a second set of rules, which would govern the same problems that the domestic laws does. It is however worth noting that though the CISG may be perceived as a set of rules that dictate how a sovereign country should handle its trade-related issues with other trading partners, it has a principle that grants contracting parties autonomy. As such, the contracting parties still have the freedom to negotiate the terms of their trade contracts. Of special mention are the provisions in Article 6, which allow contracting parties to exclude applying the Convention whenever they deem necessary, or varying it as far as both parties obtain consensus on the issue.

The lack of political goodwill is perhaps founded on the fact that the English Lawmakers do not view the CISG ratification as a legislative priority. The closest the UK ever came to ratification was in 1997 when ministers approved it accession. Consequently, a draft bill, which was scheduled to be introduced in parliament as a private member bill instead of a government bill was drafted. Unfortunately, the Member of Parliament who was scheduled to sponsor the bill was taken ill, and with his illness, the bill stalled. Since the 1997 attempt, no noticeable legislative actions have been taken by any other MP.

The importance of political goodwill cannot be understated especially since the success of many policy agendas depend on the same. In the UK, the political class argue that while ratifying the CISG would be good for the lawyers, it would not favour the businessmen especially since they would find the new set of rules unfamiliar.

Another set of arguments state that ratifying the CISG would expose English businesspeople to an even greater number of trade disputes. To appease the masses, it would then be expected that the political class would refrain from ratifying the Convention. The political class especially in Britain is also portrayed as being concerned about the possibility that ‘London would lose its edge in international arbitration and litigation’ following UK’s ratification of the CISG. Such fears are however dismissed by some commentators who argue that UK lawyers would excel in CISG matters just as they have in their domestic laws. It is however worth noting that the political class may be worried that late ratification would portray the UK lawyers as less competent compared to their counterparts in other countries that have already ratified the Convention. In Europe, Germany is rated as the country whose courts have adjudicated the highest number of CISG cases, and the Englishmen seem to consider such progress in other countries.

Self-interest and Paranoia

The apathy by UK towards ratifying the CISG is to some degree caused by the relative comfort of the English lawyers in using the same legal system and rules that they are accustomed to. To an observer, it could seem that the UK lawyers advocate for non-ratification due to their fear of the CISG, and the rules therein. Arguments from views collected by the Department of Trade and Industry in the 1980 support the observation that the UK lawyers are afraid of adopting other rules rather than what they are accustomed to. To start with, the responses indicated that UK lawyers perceived the CISG as a ‘threat to domestic law on sales and goods’. Additionally, it is argued that the UK lawyers perceive English law as a ‘World brand name’, which should not be jeopardised through the ratification of other laws, rules or regulations.

Further evidence of the paranoia that the English lawyers had towards CISG was their insistence that even if the UK was to ratify the convention, the government should make the necessary declarations in article 94, and article 95. In regard to Article 94 of the CISG, it was proposed that the UK should declare that it would use its domestic laws especially in cases where the contracting state and the UK had similar or close laws with what is contained under the Convention. In regard to article 95 on the other hand, those who expressed their views to the Law Reform Committee stated that the UK should not apply the CISG as ‘the proper law of contract of sale under Article 1(a) (b).

Article 1(a) (b) states that ‘the UN Convention may come into play by virtue of the rules of private international law,’ and although it may look like a straightforward declaration, the Englishmen cannot fully trust it. It has been argued that unsuspecting Englishmen will be subject to the convention should the UK ratify the convention. Such an argument is further evidence of the paranoia and the self-interest nature of the English lawyers, since even in English law, it is their role to scrutinise legal contracts for purposes of identifying loopholes that may exist. To argue that the ratification of CISG may expose UK businessmen to legal loopholes is therefore tantamount to declaring their fear or inability to detect contractual loopholes that may exist in the CISG. It has been observed that ‘the UK is unfamiliar with the right to cure after the time fixed for performance, the right to reduce the purchase price when non-conforming goods are delivered, and the concept of a fundamental breach.’ The unfamiliarity aside, it does not mean that the UK lawyers and their respective legal systems cannot learn the cited concepts; rather, it is an indication that they are comfortable with the Sale of Goods Act 1979, which is the prevailing law that governs domestic and international trade. It could also be an indication that the UK legal and political system does not see the need for CISG accession.

The perceived superiority of the Sales of Goods Act

It has been observed that the Englishmen perceive their Sales of Goods Act as a better law compared to CISG. To them, the latter is at best uncertain and incomplete. In an explicit statement advancing the notion the English sales law is more superior, the law society in England and Wales objected to the ratification of CISG stating that ‘The convention will result in a diminished role for the English Law within the International Trade arena.’ They also argued that the Convention was not stringent enough, and as such, it was exposed to the shrewdness of commercial traders, who would find ways of avoiding its provisions. The opt-out clause was further cited by the Law Society of England and Wales as another factor that weakened the convention, since some parties who are ignorant to the clause would not use it, and hence the Convention would by default become applicable.

But why do the English think their law is superior? One would ask. Well, for starters, the use of the law even by non-UK parties seems to have provided the English with the notion that the law was superior and effective especially in the international arena. Notably, since the Sales Act was enacted in 1979, it has been observed that 50 percent of the cases appearing before the English Commercial courts involve one non-British party, while an additional 30 percent of the cases are purely of international nature. Translated, this means that only 20 percent of cases appearing before the English commercial courts originate from within the UK.

The lack of contradictions could just be one of the reasons, especially when compared to the CISG, which is considered as contradictory especially in reference to Article 14 and Article 55. Article 14 imply that price indication is an essential element in contracts, however Article 55 seem to undermine the necessity of price indication in contracts by offering a price-regulating formula, where the contract does not explicitly address the same. Such contradictions create room for conflict in international trade especially considering that the reasonable price concept, which article 55 relies on may not be perceived similarly by the contracting parties. In other words, what the buyer may perceive as a reasonable price for the delivered goods may be quite different from what the seller had in mind when supplying the products.

In Contrast, English Law is very specific regarding the pricing of goods, and the inclusion of the same in contracts. Specifically, the Common Law has very specific terms in which a contract is rendered void especially under the Frustration Act, which is touted as having been formed to prevent unjust enrichment. In common law, frustration is recognised as a valid reason for receding a contract if it has been caused by an impossibility (e.g. death or incapacity of one of the contracting parties; unavailability; government intervention; ‘destruction of the subject matter); supervening illegality (i.e. contracts that are legal during formation, but become illegal due to a prohibition by the government enacted after the contract formation); ‘frustration of purpose^‘ (i.e. where events that occurred after the signing of the contract made it too expensive or difficult to execute, hence frustration the initial purpose that the contracting parties had in mind). In the English law, the frustration of a contract leads to automatic full or partial discharge of the same. This however is not the case in the CISG, especially considering that issues relating to validity of the contract have been left to the domestic laws to interpret.

Another problematic area in the Convention and which is clearly addressed in English law is disclaimer provisions embedded therein. An example is Article 35, which is hailed as being among the significant provisions in the CISG. In the Article, it is stated that the seller must abide by the terms of the contract, and hence provide the buyer with goods that meet the quantity, quality and descriptions (both in packaging and containment) defined in the sales contract. Notably however, the drafters did not elaborate the extent to which the disclaimer provisions can be invoked in relation to the warranties granted in article 35.

Another notable difference between the English Law and the CISG is that the latter distinguishes events that make contracts more onerous, and events that frustrate the execution of the contract. Under the CISG, contracting parties can renegotiate frustrated contracts, and end those faced with hardships. Such differentiation is however foreign in the English law, which makes negotiation between contracting parties mandatory. Even in cases where negotiations break off, English law ‘under the Principles of European Contract Law’ can award damages in line with the principles of fair dealing and good faith.

The above cited reasons therefore make the Englishmen perceive their domestic laws as more superior than the CISG. Whether their perception is valid, or just a product of self-interest or paranoia as earlier discussed is an imprecise matter. It is however worth noting that just like the CISG, the English law has its own weaknesses.

The vagueness of the CISG especially in the provisions of good faith and statutory interpretation

‘Good faith’ is introduced in the Convention in article 7(1), where it is implied that it should be the guiding principle when parties are interpreting and applying the convention. Considering that the drafters did not specify what the ‘good faith’ means in the Convention’s context, the concept is left for autonomous parties to attach meaning to. It is also argued that while the ‘good faith’ concept would not be too hard to interpret, the Conventions provision that it ‘will depend upon uniformity of application’ gives too much discretion to the concept hence creating room for potential problem areas in its usage.

Uncertainty in law is apparently undesirable in the UK and could be among the major reasons why the Englishmen are yet to ratify the CISG. For starters, it is noted that the drafters of the Convention did not meet ‘the English standards of precision and drafting.’ In this regard, it is worth noting that while English Law addresses specific problems through the provision of concrete solutions, the CISG has more general rules that are easily flexible in order to meet the needs of the contracting parties. In the English Contract law for example, different aspects of a contract (i.e. offers made in a contract, acceptance and consideration of the same and the intention) are well defined. Contract law under the UK laws also encompass issues such as terms, exclusions, illegality, misrepresentation, breach, and performance among others. The CISG on the other hand lacks specific definitions and hence has been accused of giving contracting parties too much flexibility, something that could be problematic when disputes come up. UK legal observers have therefore commented about the laid-back manner that CISG address matters pertaining to contracts.

Other areas in the CISG, which the UK is unfamiliar with include ‘the right to cure after the time fixed for performance, the right to reduce the purchase price when non-conforming goods are delivered, and the concept of a fundamental breach.’ To analysts however, the unfamiliarity of the CISG to the Englishmen is not a sufficient reason for non-ratification. If anything, the UK judiciary has encountered similar problem in interpretation their domestic laws in the past, and discovered solutions to the same. Additionally, it is worth noting that CISG contracting states are faced with similar problems. Hence, it has been suggested that the UK should work towards finding solutions to the interpretation difficulties in the CISG rather than assuming a non-ratification stance, since only then can ‘the expertise of English lawyers and the English Commercial Court have any influence over the manner in which the CISG is interpreted and implemented.’

Another probable reason UK has not yet felt the need to ratify the convention is the fact that the US, which is one of its major trading partners, has explicitly stated that it will only use the CISG when its trading partner state is a party to the Convention. This is allowed in Article 95. The fact that the US has upheld such a policy when dealing with its CISG trading partners who have not ratified the CISG, means that countries who would otherwise find it fitting to ratify the Convention, if only to maintain favourable trading relationships with it, do not see the need. Notably however, the UK has no guarantee that the US will not reconsider its position regarding Article 95 as suggested by Markel.

Implications for the UK’s Decision

Whatever decision the UK makes regarding ratification of the CISG will have some implications on it part. To date, the non-ratification has not had any major impact on the UK’s ability to trade with international partner. Consequently, some analysts believe that the UK has adopted the ‘don’t fix it if it isn’t broke’ approach when handling the CISG ratification issue because it has not suffered any trade imbalances as a result of its position. Supposing the UK overcame its current reservations and excuses and ratified the Convention in future, several scenarios would most likely occur

First, the UK would be expected to harmonise its domestic laws with the provisions of the CISG. Such an occurrence would not only affect the lawyers who would need to study the CISG with renewed interest, but also courts, which would then start adjudicating issues according to the provisions of the Convention. As Forte observes, ‘harmonisation of international trade law is always a fraught process’, which English lawyers would rather not deal with. By refraining from ratifying the CISG, the UK is perhaps saving itself from the confusion likened to ‘an orchestra without a conductor,’ the discord and the strain that comes with trying to interpret the different provision and often vague provisions in the Convention. The UK may for example be sparing its legal fraternity from deliberations on whether to take an expansionist or a narrow interpretation to the Convention. This protectionist attitude however may not be healthy because it might disadvantage the UK especially in the eyes of international trading partners who may perceive it as a reluctant signatory to an internationally agreed convention.

Second, if legislative and political will eventually lead to the ratification of the CISG, members of the UK legal fraternity will have no choice but to familiarize themselves with the provisions of the Convention. With such familiarisation, it is possible that there will be barrage of academic and legal input from the UK and this will no doubt ‘promote the certainty and consistency in interpretation’ hence enhancing international trade law and globalisation.

Third, UK’s ratification would probably lead to the perception among other states that it (the UK) has finally willed itself to agree by rules set by others non-partisan parties in international trade-related matters. Such perceptions will boost UK’s position especially in the European Union, where most states have ratified the Convention. It has been hypothesised that a good number of English courts will apply the convention even through with or without UK’s ratification, and as such, the paranoia cited elsewhere in this paper is baseless.

There is also the possibility that the English law would lose some of its appeal to the international community. Consequently, the UK may have to deal with losing some of the commercial gains that comes with the English law being regarded as superior and pure. Should UK ratify the CISG, it is worth noting that parties would not have any advantage choosing the English law as their choice-of-law, since even then, other provisions of the CISG would apply. In other words, the paranoia and self-interest discussed elsewhere in this paper could in deed be justified by the fact that the English are likely to lose the commercial gains that comes with the attractiveness of their law.

It is also worth noting that ratification of the CISG by UK would require the English legal fraternity to explore the provisions and the general provisions of the Convention more keenly. Additionally, the English Commercial courts will be required to pay more attention to decisions made by foreign courts. This is necessary especially if the International character of the Convention is to be considered. The need for English Courts to recognise that decisions made in foreign courts could just be as valid as those made in the UK was brought to the fore in Fothergill v. Monarch Airlines Ltd where the court indicated the need for English courts to adopt a more flexible approach to interpreting laws, especially when dealing with cases from other countries. The court noted that international matters cannot be interpreted in a similar manner to domestic issues. Similarly, the court observed that international laws cannot be interpreted in a strict English sense especially because ‘the language of an international convention has not been chosen by an English parliamentary drafts man. It has neither couched in the conventional English legislative idiom nor designed to be construed exclusively by English judges.

Whatever decision the UK makes at the end, it is obvious from the observations made herein that it will take a lot of political and legislative goodwill for the UK to ratify the CISG. Whether the UK remains a mere spectator as other states use the CISG, or makes the choice to become an active participant in the same will however not shield it from coming to terms with the Convention’s provisions. As noted above, most EU states have ratified the convention. Additionally, most of UK’s major trading partners including the US, Canada and even China have all ratified the convention. Such a scenario means that they will sooner or latter learn how to handle CISG matters especially since CISG signatory states can insist on its usage when trading with the UK.

Overall, it is worth noting that even insiders within the UK legal system are cognisant of the fact that non-ratification will probably isolate the UK from the international trading community. The Scottish Law Commission also indicated that Scotland can benefit considerably from ratifying the Convention. Notably, Scotland cannot independently ratify the Convention without England supporting it. The expression of interest by Scotland seems to be an indication that the UK is facing pressure from within and will therefore ratify the CISG in future.

With a change in attitude, the UK could use the CISG to influence how the Convention is interpreted. Notably, the UK legal system could replicate its success in commercial law in the application of the CISG. Consequently, the fears that London will lose its appeal to the international community would be dispelled, especially if the commercial courts therein prove that they can use the CISG to resolve international disputes, just as well as they did under English law.

It is also worth noting that the areas of similarities between the CISG and English Sales Law are more than the contradictions. Hence, difficulties that arise during CISG’s implementation should not be impossible to surmount. Presently, the UK is simply acting like a reluctant participant watching from afar and declaring her intention to ratify the convention. By doing so, the UK is not only denying the international community its input in the development of the CISG, but it is also disadvantaging its business community, who could use the choice-of-law provision in the CISG to enhance their bargaining powers in the international trading platform.

Through ratification, UK could finally dispel doubts that the legal institutions have regarding the CISG’s ability to attain uniformity in international trade laws. Eventually, this would lead to enhanced acceptance by commercial traders. Ratification would also be indicative of UK’s position to quit faulting the drafters of the convention, and choosing to take up a more active role to rectify the uniform law. As Carr citing Rosset observes, countries, commentators and analysts ‘should not fault the drafters of the Vienna Convention for their inability to arrive at a continental style code that concisely and clearly states universal principles of sales law’, instead, they should strive to improve the convention through their respective contributions.

In regard to the validity and property issues exclusions, it is worth noting that the UK does not explicitly identify them as reasons behind its non-ratification stance. However, one can argue that the exclusions contribute to legal uncertainty and vagueness, which are among the main reasons that commentators cite as being behind UK’s stance. The fact that the Convention does not address contract validity and property issues could also be interpreted to mean that the Convention does not satisfy its main objective of becoming a uniform law. The opinion that the Sales Act 1979 is a more authoritative law when compared to the CISG, when dealing with contract and property issues could also be one more reason why the UK has failed to ratify the Convention. Whether these reasons are sufficient to make UK avoid ratifying the convention is still debatable. After all, other countries have ratified the Convention despite its shortcomings.

Bibliography

Books

Carr I, International Trade Law (4^th Edition 2010)

Jansen A and Meyer O, CISG Methodology (Sellier European Law Publisher 2009)

Lookofosky Joseph M, Understanding the CISG in the USA: a Compact Guide to the 1980 United Nations Convention on Contracts for the International Sale of Goods (2^nd edn, Kluwer Law International 2004)

Pace International Law Review, Review of the Convention on Contracts for the International Sales of Goods (CISG): 2005-2006 (Sellier European Law Publisher 2007)

Šarčević P and Volken P, The International Sale of Goods Revisited (Kluwer Law International 2001)

Journal Articles

Anyamele U, ‘The United Nations Convention on Contracts for the International Sale of Goods: A Proposal for Nigeria’ 2012. Web.

Article 4, ‘Annotated Text of CISG’ 2012. Web.

Bar N and Har-Sinay N, ‘Contract Validity and the CISG: Closing the Loophole’ 2012. Web.

Bonell MJ and Liguori F, ‘The UN Convention on the International Sale of Goods: a Critical Analysis of Current International Case Law’ (1997) 2 Uniform L. Rev 386

Christoph R, ‘Validity of Contracts Under the United Nations Convention on Contracts for the International Sale of Goods, April 11, 1980, and Swiss Contract Law’ (1987) 20 Vanderbilt Journal of Transnational Law, 639-663.

Department of Trade and Industry, ‘Report to the House of Commons’, (1999) House of Commons Library, Great Britain.

Drobnig U, ‘Substantive Validity’ (1992) 40 Am J Comp L. Web.

Feltham J D, ‘C.I.F. and F.O.B. Contracts and the Vienna Convention on Contracts for the International Sale of Goods’ (1991) JBL 413-425

Forte A, ‘The United Nations Convention on Contracts for the International Sale of Goods: Reason or Unreason in the United Kingdom’ (1997) 26 Uni of Baltimore L Rev51-66

Gillette CP and Scott RE ‘The Political Economy of the International Sales Law’ (2005) New York University and Economics research Paper Series Working Paper No. 05-02. Web.

Harding J, ‘Frustration’ 2012. Web.

Hartnell HE, ‘Rousing the Sleeping Dog: the Validity Exception to the Convention on Contracts for the International Sale of Goods’ (1993) 18 Yale J Int Law. Web.

Hofmann N, ‘Interpretation Rules and Good Faith as Obstacles to the UK’s ratification of the CISG and to the Harmonization of Contract Law in Europe’ (2010) 22.1 Pace Intl LR 147

Kilian M, ‘CISG and the Problem with Common Law Jurisdictions’ (2001) 10.2 J Transnational Law & Policy. Web.

Lee RG, ‘The UN Convention on Contracts for the International Sale of Goods: Ok for the UK?’ (1993) JBL 131-148

Leyens Patrick C., ‘CISG and Mistake: Uniform Law vs. Domestic Law [The Interpretive Challenge of Mistake and the Validity Loophole’ (2003). Web.

Lookofsky J, ‘Not Running Wild with the CISG’ (2011) 29 J L& Comm 141-169.

Lookofsky JM, Understanding the CISG in the USA: A Compact Guide to the 1980 United Nations Convention on Contracts for the International Sale of Goods (2^nd edn, Kluwer Law International 2004) 26

Markel A, ‘Article: American, English and Japanese Warranty Law Compared: Should the U.S. Reconsider her Article 95 Declaration to the CISG?(2009) 21 pace Int’l l Rev 163. Web.

Mather H, ‘Choice of Law for International Sales Issues not Resolved by the CISG’ (2001) 20 J Law and Com. Web.

McQuillen M, ‘Patterns of Interpretation and Citation’ (2007) 61 University of Miami Law Review 509-537

Moss S, ‘Why the UK has not yet Ratified the CISG’ (2005) 25 J.L. & Com. 483-845

OOSthuizen B, ‘International sales of Goods- An Investigation into the CISG’s Compatibility with the South African law’ (Master of Law Thesis, Rhodes University 2008) 53-54

Rosett A, ‘The International Sales Convention: A Dissenting View’ (1984) 18 International Lawyer 589

Schlechtreim P, Uniform Sales Law in the Decisions of the Bundesgerichtshof, 50 Years of the Bundesgerichtshof -a Celebration Anthology from the Academic Community. Web.

Williams A, ‘Forecasting the Potential Impact of the Vienna Sales Convention on International Sales Law in the United Kingdom’ Pace Rev. of the CISG. Web.

Cases

Fothergill v. Monarch Airlines Ltd [1980] UKHL 10, [1980] 07 (APPLR) 1

MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova D’Agostino [1998] U.S. Circuit Court of Appeals (11^th Circuit), 296.1998. Web.

St. Paul Guardian Insurance Co. et al. v. Neuromed Medical Systems & Support GmbH et al., [2003] U.S. District Court for the Southern District of New York. Web.