the personal and territorial scope of the vienna

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NILR1999 137 THE PERSONAL AND TERRITORIAL SCOPE OF THE VIENNA CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (ARTICLE 1) Christophe Bernasconi ' 1. Introduction: a glance back 2. The international character of the transaction 2.1 The basic criterion: the parties' places of business 2.1.1 A sufficient criterion? 2.1.2 What is meant by place of business? 2.1.3 Multiple places of business 2.2 The necessity of awareness 3. The transaction's relation to a contracting state 3.1 Preliminary remarks 3.2 The autonomous requirements of the Convention's applicability: Article 1(1 Xa 3.2.1 The nature of Article 1 (1 Xa) 3.2.1.1 The pursued goal 3.2.1.2 Article l(lXa) and the Hague PIL Conventions 3.2.2 Contracting state 3.2.2.1 The case of the former German Democratic Republic 3.2.2.2 The former USSR 3.2.2.3 The former Yugoslavia 3.2.3 Which courts are addressed by Article 1 (1 Xa)? 3.3 The conflictual method of defining the Convention's scope: Article 3.3.1 The scheme of Article l(lXb): an easy example 3.3.2 The history of Article l(l)(b) 3.3.2.1 The deliberations of the First Committee 3.3.2.2 A last-minute decision taken at the Plenary Conference: Article 95 3.3.3 The expediency of Article l(lXb) 3.3.3.1 An enlargement of the Convention's scope 1. Dr. iur. ulr. (Fribourg), LLM. (McGill), Secretary at the Permanent Bureau of the Hague Conference on Private International Law. The opinions expressed are personal to the author and are not to be attributed to the Hague Conference on Private International Law or to its Permanent Bureau. Netherlands International Law Review, XLYl: 137-170,1999 © 1999 T.M.C. Asser Instituut and Contributors

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The Personal and Territorial Scope of the Vienna Convention

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Page 1: The Personal and Territorial Scope of the Vienna

NILR1999 137

THE PERSONAL AND TERRITORIAL SCOPE OF THE VIENNACONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALEOF GOODS (ARTICLE 1)

Christophe Bernasconi'

1. Introduction: a glance back

2. The international character of the transaction2.1 The basic criterion: the parties' places of business2.1.1 A sufficient criterion?2.1.2 What is meant by place of business?2.1.3 Multiple places of business2.2 The necessity of awareness

3. The transaction's relation to a contracting state3.1 Preliminary remarks3.2 The autonomous requirements of the Convention's applicability: Article 1(1 Xa3.2.1 The nature of Article 1 (1 Xa)3.2.1.1 The pursued goal3.2.1.2 Article l(lXa) and the Hague PIL Conventions3.2.2 Contracting state3.2.2.1 The case of the former German Democratic Republic3.2.2.2 The former USSR3.2.2.3 The former Yugoslavia3.2.3 Which courts are addressed by Article 1 (1 Xa)?3.3 The conflictual method of defining the Convention's scope: Article3.3.1 The scheme of Article l(lXb): an easy example3.3.2 The history of Article l(l)(b)3.3.2.1 The deliberations of the First Committee3.3.2.2 A last-minute decision taken at the Plenary Conference: Article 953.3.3 The expediency of Article l(lXb)3.3.3.1 An enlargement of the Convention's scope

1. Dr. iur. ulr. (Fribourg), LLM. (McGill), Secretary at the Permanent Bureau of the HagueConference on Private International Law. The opinions expressed are personal to the author and arenot to be attributed to the Hague Conference on Private International Law or to its Permanent Bureau.

Netherlands International Law Review, XLYl: 137-170,1999© 1999 T.M.C. Asser Instituut and Contributors

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3.3.3.2 Internationally harmonized judgments?3.3.3.3 The CISG as an unwelcome surprise?3.3.3.4 The position of the United States3.3.3.5 The possibility of making a reservation under Article 95: a general critique3.3.4 Article 1(1 Kb) and Article 95: how do the different choices interfere? An

analysis of some intricate permutations3.3.4.1 The judge sitting in a reservation state3.3.4.2 The judge sitting in a contracting state whose conflicts rules point to the law

of a country that has filed a reservation under Article 953.3.4.3 The judge sitting in a non-contracting state

4. Conclusion

1. INTRODUCTION: A GLANCE BACK

On April 1999, the United Nations Convention on Contracts for the InternationalSale of Goods (hereinafter: the Vienna Convention, CISG or the Convention)2

celebrated its 19th anniversary. The Convention has been praised throughout theworld as a skillful and effective tool for governing international sales transactions.Hence, after more than fifty years of arduous work, the efforts undertaken to unifythe law for international sales at a global scale seem, at last, to have reachedsuccess. As frequent referrals to former efforts undertaken will be made, it seemsappropriate to set forth, at least summarily, the history of the Vienna Convention.

The effort to achieve a uniform law on the international sale of goods hasspanned nearly 70 years.3 The adoption of the Vienna Convention was the culmina-tion of a long process which began in April 1930. Under the auspices of the Leagueof Nations, the International Institute for the Unification of Private Law (UNI-

2. 'Final Act of the UN Conference on Contracts for the International Sale of Goods',A/CONF.97/18, in 34 Yearbook of the United Nations (1980) Part 3, ch. I., section A. An unofficialversion of the text of the Convention is reproduced in 19 /LA/(1980) pp. 668-699.

3. See, e.g., R. Loewe, 'Anwendungsgebiet, Auslegung, Lucken, Handelsbrauche', in The 1980Vienna Convention on the International Sale of Goods, Lausanne Colloquium of November 19-20,1984 (Zurich, Schulthess 1985) p. 11 at pp. 12-13; M. Ndulo, 'The Vienna Sales Convention 1980and the Hague Uniform Laws on International Sale of Goods 1964: A Comparative Analysis',38 ICLQ (1989) p. 1 at pp. 2 et seq.; K. Sono, 'The Vienna Convention: History and Perspective',in P. Sarcevic and P. Volken, eds., International Sale of Goods, Dubrovnik Lectures (New York,Oceana Publications 1986) pp. 1 et seq.; P. Winship, 'The Scope of the Vienna Convention onInternational Sales of Contracts', in N. Galston and H. Smit, eds., International Sales: The UnitedNations Convention on Contracts for the International Sale of Goods (New York, Matthew Bender1984) p. 1-1 at pp. 1-3 et seq., with further references.

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DROIT) decided to proceed with the preparation of a uniform law in this area.4

The work of UNIDROIT had largely been facilitated by the comprehensivepreliminary works of Ernst Rabel, the first to suggest both the desirability andfeasibility of a unification of substantive sales law.5 A first draft was completedin 1935 and submitted for comments to the member states of the League ofNations. Based on their comments, a second UNIDROIT draft was presented in1939 (the Rome draft). However, these initial efforts were interrupted in 1939 dueto the outbreak of the Second World War. The efforts were resumed in 1951, whenthe government of the Netherlands organized a diplomatic conference to considermeans by which the UNIDROIT draft could be brought to a successful conclusion.The direct outcome of the reopening of discussion was the 1964 adoption of twoUniform Laws: one on the International Sale of Goods (ULIS), and one on theFormation of Contracts of Sale (ULF).6

These two Conventions, however, entered into force among few states andtherefore never have achieved the expected success.7 Essentially, they are consid-ered complex Western European civil laws that do not sufficiently take intoconsideration common law principles or the interests of developing and socialistcountries that had not participated in the 1964 Conference. Furthermore, strongcriticism has been directed at the excessive sphere of application of the uniform

4. This decision was certainly affected by the confidence gained following the adoption of theGeneva Conventions of 1930 and 1931 on negotiable instruments, both of which had also beenelaborated under the auspices of the League of Nations.

5. Ernst Rabel, then Director of the Kaiser-Wilhelm-Institut fur auslandisches und internationalesPrivatrecht in Berlin, had submitted a report to UNIDROIT: 'Observations sur futility d'une unifica-tion du droit de la vente au point de vue des besoins du commerce international', (1929); reprintedin 22 RabelsZ( 1957) p. 117. These observations were accompanied by a comparative study that Rabelhad prepared in collaboration with the members of his institute. This latter study formed the basisof Rebel's classic comparative analysis of the law of sales: Das Recht des Warenkaufes, published in1936 (Vol. I) and in 1958 (Vol. II) (Berlin, W. de Gruyter).

6. The ULIS and the ULF are reprinted in 3 IIM (1964) p. 855 respectively p. 864. For moredetails on the history of the 1964 uniform sales law, see P. Winship, 'Private International Law andthe U.N. Sales Convention', 21 Cornell IU (1988) p. 487 at pp- 491-500; see also J.O. Honnold,'The Draft Convention on Contracts for the International Sale of Goods: An Overview', 27 AJIL(1979) p. 223 at p. 224.

7. Only Belgium, the Federal Republic of Germany, Gambia, Italy, Luxembourg, the Netherlands,San Marino, and the United Kingdom have ratified, or acceded to, both the ULIS and the ULF; Israelratified only the ULIS. The ULIS had some important practical impacts in Germany and Italy inparticular (some 180 court decisions of the five original Member States of the EEC have beenreported). There is, however, not one single reported case of English or Scottish courts involving theHague Uniform Laws, see B. Nicholas, 'The Vienna Convention on International Sales Law', 105 LQR(1989) p. 201 at p. 202. Overall, it seems fair to state that the 1964 Conventions did not have theexpected impact on the practical conduct of international trade.

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laws.8 As a result, at the end of the 1960s, the newly established United NationsCommission on International Trade Law (UNCITRAL) revisited the issue. Followingextensive preliminary works,9 the Commission presented the results of its undertak-ing at a Diplomatic Conference held at the Neue Hofburg in Vienna from 10 Marchto 11 April 1980. This Conference was attended by more than 200 delegates fromsixty-two nations, representing all sectors of the world community.10 After fiveweeks of intensive work, the Conference unanimously approved the currentuniform rules."

The CISG came into force on 1 January 1988 for an initial group of elevencontracting states. Today more than 50 countries, accounting for over two-thirdsof all world trade, are party to the Convention.12

8. The uniform laws are intended to be applied by a court of a contracting state to internationalsales transactions even when the parties involved are from non-contracting states and the transactionhad little or no connection either with the forum or another contracting state. Despite the possibilityfor a state to make one or more reservations (and in particular limit the Convention's applicationto parties whose places of business are in different contracting states), it soon became apparent thatthe ULIS and the ULF would not be widely adopted; for more details, see Winship, loc. cit. n. 6,at pp. 491-503, and, idem, op. cit. n. 3, at p. 1-11, ft. 20 and accompanying text.

9. In fact, the UNCITRAL Working Group submitted two draft Conventions. The first was the1976 Draft Convention on Sales; a second Draft Convention on Formation of the Sales Contract wascompleted in 1977. Later on, the Commission decided to consolidate these two texts into a singleConvention, the 1978 Draft Convention on Contracts for the International Sale of Goods (referredto as the 1978 Draft). For more details, see, e.g., J.O. Honnold, 'The Draft Convention on Contractsfor the International Sale of Goods: An Overview', 27 AJCL (1979) p. 223 at p. 226.

10. The Diplomatic Conference in Vienna was attended by 22 European and other developedWestern states, 11 Socialist, 11 South American, 7 African, and 11 Asian countries, see G. Eorsi,'A propos the 1980 Vienna Convention on Contracts for the International Sale of Goods', 31 AJCL(1983) p. 333 at p. 335 (ft. 5). Furthermore, several international organizations took part as ob-servers, among them the World Bank, the European Community, the Hague Conference on PrivateInternational Law, and the International Chamber of Commerce.

11. See generally J.O. Honnold, Documentary History of the Uniform Law for International Sales:The Studies, Deliberations and Decisions that Led to the 1980 United Nations Convention withIntroductions and Explanations (Deventer, Kluwer 1989) pp. 1 et seq., 381 et seq. (Part C).

12. As of January 1999, the following 54 states were party to the CISG: Argentina (one of theeleven initial contracting states (i)), Australia, Austria, Belarus, Belgium, Bosnia-Herzegovina, Bulgaria,Burundi (effective as of 1 October 1999), Canada, Chile, China (PRC; (i)), Croatia, Cuba, CzechRepublic, Denmark, Ecuador, Egypt (i), Estonia, Finland, France (i), Georgia, Germany, Greece, Guinea,Hungary (i), Iraq, Italy (i), Latvia, Lesotho (i), Lithuania, Luxembourg, Mexico, Moldova, Mongolia,Netherlands, New Zealand, Norway, Poland, Romania, Russian Federation, Singapore, Slovakia, Slo-venia, Spain, Sweden, Switzerland, Syria (i), Uganda, Ukraine, United States of America (i), Uruguay(1 February 2000), Uzbekistan, Yugoslavia (i), and Zambia (i).

It is worthy to note that Norm America is the only major trade block whose member states haveall subscribed to die CISG. As far as the European Union is concerned, the countries not parties arePortugal and die United Kingdom. Regarding the Middle and South American continent, countriessuch as Brazil, Columbia, Peru, and Venezuela have not joined the CISG. Concerning the APEC-region,it should be emphasized that neither Japan, Indonesia, nor Taiwan has yet become a party to the CISG.Finally, with some notable exceptions (principally Egypt), the very large majority of the African

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No treaty has likely been discussed by legal scholars as extensively as the CISGsubsequent to the end of the Second World War.13 Similar to most internationaltreaties, the scope provisions have been of particular interest to the commentatorsin the first years following the adoption of the Vienna Convention.14 Many of thesequestions continue to be debated today, more than nineteen years later.15 Asindicated in its title, the Vienna Convention deals with contracts for the internationalsale of goods. The CISG does not, however, apply to all international sales ofgoods. As it is the case for all international treaties, its sphere of application mustbe examined with regard to four different aspects: the Vienna Convention appliesonly to contracts concluded between a given group of persons; within a particularterritorial sphere; and within a given period of time. Furthermore, the Conventioncovers only a specific category of sales.16 As a result, a contract of sale will begoverned by the Convention only if it falls within the CISG's personal, territorial,temporal, and material sphere of application. The principal rules delimiting theConvention's scope are contained in Articles 1 to 6.17

Among the scope provisions of the CISG, Article 1 is certainly one of the mostimportant. This provision fixes the personal and territorial scope of the ViennaConvention. Its complex structure has produced a tremendous volume of writingsand commentaries, making this Article one of the most discussed provisions of theConvention. This essay presents a synthesis of different problems caused by

states has also still not ratified die Vienna Convention.Finally, one should note that the ULIS and ULF have not been totally abandoned. They may still

be applied between contracting states if the CISG does not apply. For an example, see the decisionof the Oberlandesgericht Munchen dated 9 August 1995 [7 U 7143/92]: as the CISG did not applyby virtue of Art 100 (the contract was drawn up before the entry into force of the Convention inItaly or Germany), the Court applied the ULIS to a contract between an Italian buyer and a Germanseller. According to Art 99(3) CISG, a state which is party to either or both the ULIS and the ULFand which wants to ratify, accept, approve or accede to the Vienna Convention shall at the same timedenounce either or both the ULIS and the ULF.

13. K. Randall and J. Norris, 'A New Paradigm for International Business Transactions', 71 Wash.ULQ (1993) p. 599 at p. 613.

14. Both ULIS and ULF raised the same questions in die first years of their applicability.15. In this context, an analogy may be made with the Brussels Convention of 1968 on Jurisdiction

and the Enforcement of Judgments in Civil and Commercial Matters and, consequently, with theLugano Convention which was adopted in 1988 and which extends the rules and principles embodiedin the Brussels Convention to the Member States of the European Free Trade Association: more thanthirty years after the adoption of the Brussels Convention, European scholars and judges are stilldebating the personal and territorial scope of application of the treaty. See, e.g., C. Bernasconi andA. Gerber, 'Der raumlich-personliche Anwendungsbereich des Lugano-Ubereinkommens', 3 SZIER/RSDIE (1993) pp. 39 et seq., with many references.

16. See, e.g., P. Volken, 'The Vienna Convention: Scope, Interpretation, and Gap-Filling', inP. Sarcevic and P. Volken, eds., International Sale of Goods. Dubrovnik Lectures (New York, OceanaPublications 1986) p. 19 at p. 23.

17. The temporal scope of the Convention is regulated in the Arts. 99-101. The basic principleis that the Convention does not apply retroactively (Art 100); see also n. 12 in fine.

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Article 1 and sketches the - occasionally divergent - solutions the abundant writinghas brought out. Analysis of the Convention's personal and territorial scope followsthe two central questions that are embodied in Article 1: when is a transactioninternational, and when does the transaction bear a prescribed relation to one ormore contracting states?18 These two questions are examined separately in thefollowing comments.

2. THE INTERNATIONAL CHARACTER OF THE TRANSACTION

2.1 The basic criterion: the parties' places of business

The Vienna Convention applies only to international contracts. Hence, the Conven-tion has to provide a basic criterion that distinguishes international contracts frommerely domestic ones. The latter continue to be regulated by domestic laws. Thedraftsmen of the Vienna Convention utilized the same criterion already rooted inthe ULIS: the parties' places of business. According to Article 1(1), the CISGapplies to contracts of sale of goods between parties whose places of business arein different states.

Contrary to the ULIS, the Vienna Convention does not ask for additionalcharacteristics.19 Therefore, in order for the Vienna Convention to apply, it is notnecessary that borders be crossed, that the goods be carried from the territory ofone state to the territory of another state, that offer and acceptance be accomplishedin different states or that the goods be delivered in a state other than that withinwhose territory offer and acceptance have been effected.20 The application of the

18. See especially J.O. Honnold, Uniform Law for the International Sales under the 1980 UnitedNations Convention, 2nd edn. (Deventer, KJuwer 1991) para. 39.

19. See F. Ferrari, 'CISG Article 1(1XB) and Related Matters: Brief Remarks on the Occasion ofa Recent Dutch Court Decision', 13 Nederlands Internationaal Privaatrecht (1995) p. 317 at pp. 319-20, with further references.

20. See, e.g., E. Jayme, 'Article 1', in CM. Bianca and MJ. Bonell, eds., Commentary on theInternational Sales Law: The 1980 Vienna Sales Convention (Milan, Giuflre 1987) p. 27 at p. 28;P. Schlechtriem,' Anwendungsvoraussetzungen und Anwendungsbereich des UN-Ubereinkommens fiberVertrage fiber den intematkmalen Warenkauf (CISG)', 1 Aktuelle Juristische Praxis /Pratique JuridiqueActuelle (1992) p. 339 at p. 342; L. V6kas, 'Zum personlkhen und raumlichen Anwendungsbereichdes UN-Einheitskaufrechts', 7 IPRax (1987) p. 342; Volken, op. ciL n. 16, at pp. 26-28; Winship,op. cit n. 3, at pp. 1-20 et seq.

According to its Art 1, the ULIS is applicable to contracts of sale of goods entered into by partieswhose places of business are in the territories of different states, in each of die following cases:'(a) where the contract involves the sale of goods which are at the time of conclusion of the contractin the course of carriage or will be carried from the territory of one State to the territory of another;(b) where the acts of constituting the offer and the acceptance haven been effected in the territoriesof different States; (c) where delivery of goods is to be made in the territory of a State other thanthat within whose territory the acts constituting the offer and the acceptance have been effected.'

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Vienna Convention requires only that the parties' places of business be located indifferent states; formation and execution may occur within a single state, even ifthat state is not a contracting state.21

2.1.1 A sufficient criterion?

According to the Secretariat Commentary on Article 1 of the 1978 Draft, the basiccriterion adopted by the CISG serves three major purposes:

(1) to reduce the search for a forum with the most favourable law;(2) to reduce the necessity of resorting the rules of private international law;(3) to provide a modern law of sales appropriate for transactions of an internationalcharacter.22

However, the lack of additional characteristics (e.g., an international carriage ofgoods) may lead to results which, at first glance, may seam inappropriate. Considerthe following example: Bombardier (Canada) owns prefabricated mass-transportcomponents stored in Germany. Bombardier sells these elements to a Frenchcompany which builds a new mass-transport system in Hamburg. The parties havetheir places in different states (Canada and France), thus the Convention applies.In other words, the Convention's applicability must be examined without takinginto consideration the place where the contract has been concluded (e.g., Hamburg)or where the goods were located at the time the parties agreed on the terms of theircontract (remember that in our example the components have never left Germany).Would it not be appropriate to apply the German BGB (Biirgerliches Gesetzbuch)in this case? On the other hand, when the Bombardier plant in Valcour (Canada)sells goods located in its factory near New York to another Canadian corporationwhich needs that type of goods in Mexico, the CISG does not apply. Given theobvious international implications of this transaction, would it not be a sustainablesolution to apply the CISG?

In defining the international character of sales transactions, the Vienna Conven-tion refers only to the contracting parties. The Convention does not make anyreference to the purchased goods or to their location at the time of the contract's

21. P. Schlechtriem, Uniform Sales Law: The UN-Convention on Contracts for the InternationalSale of Goods (Vienna, Manzsche Verlags- und Universitatsbuchhandlung 1986) p. 27.

22. 'Commentary on the Draft Convention on Contracts for the International Sale of Goods,prepared by the Secretariat', UN Doc. A/CONF.97/5, reprinted in J.O. Honnold, Documentary History,op. cit n. 11, at p. 405, para. 4 (hereinafter Secretariat Commentary). CISG Art 1 and 1978 DraftArt 1 are identical except for the phrase 'in determining the application of this Convention' mathas been added to para. (3) of CISG Art. 1. Consequently, the Secretariat Commentary on 1978 DraftArt 1 can legitimately be regarded as relevant to the interpretation of CISG Art. 1. In fact, the Secre-tariat Commentary is the closest available equivalent of an Official Commentary on the Convention.

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conclusion. The solution adopted by the draftsmen of the Vienna Convention mustbe regarded as a response to the irritating problems associated with Article 1 ofULIS.23 Although the Vienna Convention's definition of the international characterof a sales transaction may be narrower than that adopted in the ULIS, it adeptlyavoids complicated interpretation problems.

The comprehensible solution adopted by the Vienna Convention has beencriticized by some authors.24 Critics assert that the system adopted by the CISGcreates two categories of international sales transactions: so-called 'first-class'transactions regulated by the Vienna Convention, and 'second-class' transactionsthat continue to be governed by domestic private international law principles.Compared to the punctilious solution that the ULIS had adopted for its definitionof the international character of sales transactions, the CISG indeed looks 'simplis-tic'.25 Nevertheless, the uncomplicated solution embodied in the Vienna Conventionis of inestimable practical advantage and largely preferable to the uncertaintiescaused by the approach chosen in the ULIS. Furthermore, it must be underscoredthat according to Article 6 of the CISG (the so-called 'opting-out provision'), theparties have the possibility to exclude the applicability of the uniform rules.Therefore, if Bombardier and its French partner did not want their contract to begoverned by the Vienna Convention, they could, for example, refer to Germandomestic law. For individuals and corporations that have attained a certain experi-ence in international sales transactions, the CISG has become an invaluable tool sothat they are generally aware of its conditions and consequences of applicability.With respect to the second example, it must be emphasized that the parties arelocated in the same country; the application of their common domestic law to thetransaction would therefore be a sustainable solution - at least preferable to theintricate interpretation difficulties that inevitably would arise if the CISG were toadopt a similar provision to Article 1(1) of the ULIS.

In addition to the positive criterion of place of business, the Convention alsorefers to two negative criteria designed to settle its personal sphere of applicability.26

First, paragraph 3 of Article 1 states that the nationality of the parties to the contracthas no relevance to the application of the Convention. Therefore, the Conventionalso applies, for example, to nationals of non-contracting states who have their

23. See die references in Winship, op. cit n. 3, at p. 1-11, fh. 19.24. Volken, op. cit n. 16, at p. 28; idem, 'Champ d'application, interpretation, lacunes, usages',

in The 1980 Vienna Convention on the International Sale of Goods, Lausanne Colloquium ofNovember 19-20, 1984, Vol. 3 (Zurich, Schulthess 1985) p. 21 at pp. 29-30; see also Nicholas, be.citn. 7, at p. 205.

25. Volken (1985), op. cit n. 24, at p 30, where he proposes that the applicability of the CISGshould at least request an international carriage; see also P. Jen-Huong Wang, 'Das Wiener Uberein-kommen fiber Internationale Warenkaufvertrage vom 11. April 1980', 87 Zeitschrift fur vergleichendeRechtswissenschqft (198%) p. 184 at p. 187.

26. Volken, op. cit n. 16, at pp. 23-24.

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places of business within two different contracting states.27 Second, the sameprovision states that the Convention applies regardless of the 'civil or commercialcharacter of the parties or of the contract'.28 Hence, it does not matter whether aparty is a merchant in the eyes of the law of a particular country in which commer-cial contracts are governed by specific rules that are different from the general ruleson sales. This provision allows the Convention to avoid conflicts that could arisebetween dualistic systems (e.g., France and Germany) and monistic systems (e.g.,Italy and Switzerland) in which the distinction between the civil and commercialcharacter of the parties is unknown.29

2.1.2 What is meant by place of business?

Even though the Convention refers several times to the concept of 'place ofbusiness',30 it does not provide a definition of what is meant by that term. Accord-ing to a widely accepted opinion, place of business means a permanent and regular(stable) place for the transacting of general business. There has to be a realconnection of the party with the place in question; a fictitious registration is notsufficient. The term place of business does not include, however, a temporary placeof sojourn during, for example, ad hoc negotiations, or the place where onlypreparations for the conclusion of the single contract have been made.31

Professor Honnold accurately notes that the meaning of place of business as asite of stable business activity is supported by the references to this concept in other

27. See, e.g., Jayme, op. cit n. 20, at p. 32; see also Secretariat Commentary, supra n. 22, atp. 405, para. 11. In fact, the question whether nationality should be introduced as an (additional)prerequisite for the application of the Convention was raised during the negotiations. However, theidea was not pursued given the difficulties in determining the 'nationality' of legal persons. SeeSchlechtriem, op. cit n. 21, at p. 27 (with further references in fh. 59); this seems to be overlookedby Randall and Norris, loc. cit. n. 13, at p. 614 (fh. 56). See also infra n. 36 and accompanying text.

28. Both negative criteria were already rooted in ULIS, see its Arts. 1(3) and 7.29. See, e.g., E. Jayme, op. cit n. 20, at p. 32; Schlechtriem, op. cit n. 21, at p. 27. However,

Art 2 excludes from the Convention's scope certain contracts which are likely to be classified as civilcontracts by some legal system, such as sales 'of goods bought for personal, family or household use.'This step enormously simplified drafting by avoiding fears of collision between the Convention andvarious domestic legislations designed to protect consumers, see Honnold, loc, cit. n. 9, at p. 227.Furthermore, the civil or commercial character of the transaction can be taken into considerationfor the purposes of determining matters such as the reasonable period of time provided for inArts. 39(1), 43(1) or 63(1), see Secretariat Commentary, supra n. 22, at p. 405, para. 14.

30. Arts. 1(1), 10, 12, 24, 31(c), 42(l)(b), 57(lXa), 57(2), 69(2), 90, 93(3), 94(1), 94(2) and96.

31. See, e.g., Neumayer and Ming, Convention de Vienne sur les controls de vente internationalede merchandises: Commentaire (Lausanne, CEDIDAC 1993) pp. 41 and 42.

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parts of the Convention, such as in Articles 24,3 l(c), 42(b) and 69(2).32 Article 31seems particularly pertinent in this context. This provision states that if the contractdoes not involve a carriage of the goods (para, a), and the goods are not locatedat a place known by the parties (para, b), the seller must place the goods 'at thebuyer's disposal at the place where the seller had his place of business at the timeof the conclusion of the contract' (para. c). Obviously, this kind of delivery is onlyappropriate if the seller's place of business is, at least, of a continuing character.

On the other hand, it must be emphasized that the Convention's concept of theplace of business is not to be considered as equivalent to the head place of business;the CISG also embraces subsidiary places such as a branch, an agency or anotherestablishment of a party.33 Hence, the head establishment is not of primary impor-tance but rather the place from which the obligation is to be performed. Finally,the idea that the term place of business implies a certain permanency is additionallysupported by the fact that the French text of the Convention uses the expressionetablissement, which suggests an even stronger connotation of a branch office.34

2.1.3 Multiple places of business

If a party has more than one place of business, the location which has 'the closestrelationship to the contract and its performance' prevails, 'having regard to thecircumstances known to or contemplated by the parties at any time before or atthe conclusion of the contract' (Art. 10(a)).35 Let us suppose, for example, thata seller has places of business in both Canada and the United States and that thebuyer has his only place of business in Canada. Which of the following conclusionsprevails in this case: the fact that the parties have places of business in differentstates (Canada, USA), or the fact that they have their places of business in one andthe same country (Canada)? Article 10(a) establishes the principle that the selectionof the decisive place of business must be based upon an analysis of its individualrelationship to the sales contract. It is important to note that the Vienna Conventiondoes not refer to any of the different theories developed by private international law

32. Honnold, op. cit. n. 18, at para. 43. See also, e.g., Jayme, op. cit n. 20, at p. 30; K. Siehr,'Der intemationale Anwendungsbereich des UN-Kaufrechts', 52 RabelsZ (1988) p. 587 at p. 590,fe. 10.

33. See, e.g., Ferrari, loc. cit n. 19, at pp. 323-324; W. Stoffel, 'Le droit applicable aux contentsde vente intemationale de marchandises', in F. Dessemontet, ed., Les controls de vente intemationalede marchandises (Lausanne, CEDIDAC 1991) p. 15 at p. 26.

34. Winship, op. cit n. 3, at p. 1-22. The same observation can be made with regard to the(unofficial) German text which uses the term Niederlassung.

35. For the following, see, e.g., Honnold, op. cit n. 18, at para. 42. A German court had alreadyadopted this position under the ULIS, although the latter had no provision like Art 10(a) of the CISG,ibid., &. 3. See also Secretariat Commentary, supra note 22 at p. 409, paras. 6 et seq.

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doctrine for determining a corporation's location or 'nationality'.36 If, in ourexample, the making of the contract and its performance are more closely linkedto Canada, the Convention would not apply since Canada would be considered asthe seller's relevant place of business; consequently, the parties' places of businesswould not be located in different states as required by Article 1(1). The sameconclusion would have to be reached if a company is incorporated in Canada butfully owned by an American parent and the sales contract is executed between theCanadian corporation and a Canadian seller. If the Canadian representative is merelyentitled to prepare the conclusion of the contract, while the final contract itself isaccepted and signed by a member of the American headquarters, the Conventiononly applies when the Canadian seller knows (or should know) of the real partnerto the contract.37

The balancing test that is often necessary in order to ascertain the determinantplace of business can involve difficulties and uncertainties - not really whatinternational business is looking for. Therefore, the parties would be well advisedto settle the point in their contract and to include an express provision on whetherthe CISG or a specified domestic law applies. This is particularly true with regardto international consortia whose determinant place ofbusiness is often very difficultto ascertain.

For the cases where one party has no business place at all, the Convention refersto the habitual residence of that party (Art. 10(b)).38

2.2 The necessity of awareness

According to Article 1(2), the fact that the parties have their places ofbusiness indifferent states holds no relevance if this fact does not appear either from thecontract or from any dealings between, or from information disclosed by, the partiesat any time before or at the conclusion of the contract.

In other words, the parties must have entered into an international contractconsciously; if there is a lack of awareness with regard to the international characterof the contract, the Convention does not apply and the contract is governed by

36. There are two different concepts applied in PIL in order to determine the corporation's'nationality': the Place of Incorporation Theory and the Seat Theory, see, e.g., P. Reymond, 'Lespersonnes morales et les societes dans le nouveau droit international priv6 suisse', in F. Dessemontet,ed., Le nouveau droit international prive suisse (Lausanne, CEDIDAC 1988) p. 143; D. Tzouganatos,'Private International Law as a Means to Control the Multinational Enterprise', 19 Vand. JTransnatlL(m6)p.471.

37. See the subsequent comments under 2.2.38. See also Secretariat Commentary, supra n. 22, at pp. 409-410, para. 9.

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domestic rules.39 The criterion that has to be applied in order to determine whetherthe international character of the transaction has been dissimulated or not is anobjective one: one must refer to what a party knew or ought to have known byobserving the required attention in the concrete circumstances (i.e., if a paymenthas to be effected abroad or if authorizations for foreign exchange are necessary).40

The fact that the other party's place of business is in a different state must berecognizable no later than at the time of the formation of the contract.41

Article 1 (2) addresses in particular the case of an undisclosed foreign principal.If, for example, a Swiss agent does not inform a buyer, whose place of businessis also in Switzerland, that he represents a seller having its place of business inCanada, the sale will not be governed by the Convention but rather by the SwissCode of Obligations.42

3. THE TRANSACTION'S RELATION TO A CONTRACTING STATE

3.1 Preliminary remarks

Thus far, we have seen that the CISG applies to sales contracts if the parties havetheir places of business in different states. However, the Vienna Convention addstwo alternative restrictions to this basic criterion. These restrictions are aimed atrendering the Vienna Convention applicable only if there is a substantial relationbetween a sales transaction and a state that has ratified or acceded to the Con-vention. These restrictions constitute another substantial difference to the 1964Hague Conventions' territorial applicability; since neither the ULIS nor the ULF haveasked for a substantial link with a member state, they have been almost universallyapplicable. Article 1 ofboth the ULIS and the ULF simply provides that the uniformlaw 'shall apply' to transactions between parties whose places of business are intwo 'different states', regardless whether these states have ratified (or adhered to)the Convention. Therefore, for example, the ULIS directed Germany as a ratifyingstate, to apply ULIS to a sale between parties who had their places of business inCanada and the US, despite the fact that neither of these two countries had ratifiedthe 1964 Hague Conventions and the transaction had no contact with Germany or

39. See, e.g., B. Audit, La vente Internationale de marchandise: Convention des Nations-Uniesdu 11 avril 1980 (Paris, LGDJ 1990) pp. 19-20; Schlechtriem, loc. cit. n. 20, at p. 342; Volken, op.cit. n. 16, at p. 24.

40. Neumayer and Ming, op. cit. n. 31, at pp. 49-50 (with further references).41. Schlechtriem, op. cit. n. 21, at p. 27.42. Honnold, op. cit n. 18, at para. 41; Jayme, op. cit. n. 20, at p. 31; Schlechtriem, op. cit. n. 21,

at p. 27 (fn. 57); see also Secretariat Commentary, supra n. 22, at p. 405, para. 9.

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any other contracting state.43 The underlying principle of avoiding any referenceto private international law was designed to give the world the greatest possiblebenefits of the new international regime. This overly optimistic view, however,failed to satisfy the conflict of laws experts and the representatives of many states.44

The Vienna Convention follows therefore a more conservative path. The firstqualification embodied in the CISG requires that the parties' business places arelocated in contracting states (Art. l(l)(a)); this is the so-called 'substantive orautonomous' definition of the Convention's territorial applicability. The secondqualification expressly refers to private international law. The Convention'sapplicability may be directed by conflict of law rules when - although the partieshave their places of business in different states - the requirement that these arecontracting states is not fulfilled; it is then sufficient that the forum's privateinternational law rules lead to the application of the law of a contracting state. Thissecond conception is known as the conflictual method of defining the Convention'sterritorial scope (Art. l(l)(b)).45 These two concepts are examined below.

3.2 The autonomous requirements of the Convention's applicability:Article l(l)(a)

According to Article 1(1 )(a), the Convention applies when the places of businessof the seller and the buyer are located in different contracting states. At first glance,this principle does not appear to engender any serious difficulties. This observationseems to be confirmed by the fact that the Conference in Vienna reached promptagreement on this particular provision.46 Nevertheless, three major questions ofsignificant practical impact are to be heeded under the title of the Convention'sautonomous applicability. The notion of contracting state, and of the courts thatare addressed by this provision must be examined. However, before turning to theanalysis of these two particular issues, an explanation of the basic nature of Arti-cle 1(1 )(a) is required.

43. For the content of Art. 1 of the ULIS, see supra n. 20. During the Conference at The Hague,this 'universalist' approach had been criticized by many delegations, who characterized this techniqueas legal imperialism. However, a motion to reject this approach failed on a closely-divided vote.Finally, the Conference adopted a compromise that allowed the contracting states to amend, byreservation, the universalist definition. According to this more restrictive approach, the Conventionis applicable to transactions between parties 'whose places of business are in different ContractingStates'. See, e.g., Honnold, loc. cit. n. 9, at p. 227; idem, op. cit n. 18, at para. 45.1 (with additionalreferences). See also Winship, op. cit n. 3, at p. 1-17 (with additional references in fn. 33).

44. See, e.g., Honnold, loc. cit n. 9, at p. 227, who refers to 'similar justifications for a slightlyless greedy rule' in the 1952 draft of the UCC.

45. Volken, op. cit n. 16, at p. 24.46. Honnold, op. cit. n. 18, at para. 45.1.

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3.2.1 The nature of Article l(l)(a)

3.2.1.1 The pursued goal

Article l(l)(a) embraces the Convention's central objective which is to smoothout legal uncertainty.47 The goals of certainty and predictability as to which set ofrules governs an international sale transaction may not always be best served bythe traditional conflicts of law approach. According to this latter approach, theapplicable law is determined by a specific nexus that the transaction has with a par-ticular legal order. The contract's final attachment to a specific legal order maybe grounded either on the parties' choice (subjective allocation) or, for example,on the concept of the so-called specific performance (objective allocation).48

However, in the latter case, the final outcome is often unpredictable.49 Moreover,the applicable domestic law may be unknown to at least one of the parties.

In Article l(l)(a), the Vienna Convention responds to this primary concern ofcertainty and predictability. The basic purpose of this provision is to by-pass thedifficulties inherent to conflict of laws principles. Applicability based on Arti-cle 1(1 )(a) directly results from the fact that the countries, in which the parties tothe contract have their business places, have ratified (or acceded to) the ViennaConvention. The Convention dictates this result even if the forum's privateinternational law (PIL) would normally designate the law of a non-contractingstate.so Again, under Article 1(1 )(a) there is no need to perform a conflicts analysisto determine whether the Convention applies; the forum's PIL is eluded.

At this point, one could easily imagine that further explanations on Article 1 (1 )(a)are unnecessary. The ghosts of private international law, however, continue tohaunt this provision for all countries that have also ratified the Hague Conventionof 15 June 1955 on the Law Applicable to the International Sale of Goods (HaguePIL Convention).

47. See, e.g., Honnold, op. cit. n. 18, at para. 45.1.48. These principles have been enacted, for example, in the Arts. 3111-3113 of the Civil Code

of Quebec and in the Arts. 116 and 117 of the Swiss Statute on Private International Law. They arealso embodied in the European Convention on the law applicable to contracts (the 1980 RomeConvention).

49. Which is, in general, the characteristic performance in a barter-deal, in a joint-venture's basiccontractual agreement or in a foreign exchange deal that two banking computers have concludedautomatically without the intervention of any human being? For the latter example, see B. Kleiner,'Ein vernachlassigtes "Detail"', 60 Schweizerische Aktiengesellschafl (1988) p. 70 at p. 71.

50. Winship, loc. cit. n. 6, at pp. 518-520.

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3.2.1.2 Article 1 (1 )(a) and the Hague PIL Conventions

With an increased number of adopted conventions, comes an increased overlappingof their respective fields of application. Such a collision of conventions seems toexist, at first sight, between the Vienna Convention and the Hague Convention of1955 on the Law Applicable to the International Sale of Goods.51 Formally, thesetwo Conventions clash each time the forum is located in a state that has ratifiedboth of them.52 Which rules should the forum apply in these cases: the uniform lawof the Vienna Convention or the conflict of laws principles embodied in the HagueConvention?53

In analyzing this problem, one must remember that both uniform law treatiesof 1964 (ULIS and ULF) allow a state that is also party to the 1955 PIL Conventionto ratify (or to accede to) the uniform law treaties with a reservation.54 Thisreservation renders ULIS and ULF applicable only when the conflict of laws rulesof the 1955 Convention lead to a state that has adopted the uniform laws. Interest-ingly enough, both countries that had ratified the 1955 Convention as well as theuniform laws (Belgium and Italy) made this particular reservation. However,contrary to the uniform laws of 1964, the Vienna Convention neither provides foran analogous reservation nor calls for an explicit denouncement of the PIL Conven-tion.

Professor Winship attempts to resolve this dilemma through Article 90 of theVienna Convention.55 This provision, indeed, addresses the problem of collision ofconventions. Article 90, which was not contested at the Conference in Vienna,states that the Convention

'does not prevail over any international agreement which has already been or maybe entered into and which contains provisions concerning the matters governed bythis Convention, provided that the parties have their places of business in Statesparties to such agreement.'56

However, such open-handed formulated provisions do not resolve the intricateproblem of collision of conventions. According to Article 90, ifboth states involvedhave ratified the Vienna Convention as well as the Hague PIL Convention, the latter

51. Belgium, Denmark, Finland, France, Italy, Niger, Norway, Sweden and Switzerland have ratified(or have acceded to) this Convention.

52. All states that have ratified the 1955 Hague Convention (see supra n. 51) have also ratifiedthe Vienna Convention, with the exception of Niger.

53. For the following, see the developments in Honnold, op. cit. n. 18, at para. 45.2; Velcas, loc.cit n. 20, at p. 343; Winship, op. cit n. 3, at pp. 1-42 and 1-43.

54. In both cases Art. IV of the Convention.55. Winship, op. cit. n. 3, at p. 1-43; idem, loc. cit. n. 6, at pp. 515-517 and 530-532.56. Art. 90 does not cover the case of the relationship between the Vienna Convention and the

1964 uniform law treaties; that specific relationship is covered by Art. 99, see also supra n. 17.

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prevails. This, however, leads to an unnecessary and confusing application of thepuzzling conflict of laws' principles, although the autonomous requirements of theVienna Convention's applicability are fulfilled. There is a simpler and more appropri-ate way of looking at this problem. At the very core of this alternative lies the beliefthat the Vienna Convention has established a uniformed legal entity among partiesto an international sales contract who have their places of business in differentcontracting states. However, where different legal orders have - at least partially -unified their substantive law (as is the case for two contracting states of the ViennaConvention), any conflict of laws has become impossible. In other words, as faras their 'bilateral' relationship is concerned, these countries have rendered privateinternational law superfluous. This, of course, is true only with respect to thequestions falling within scope of the Vienna Convention. As a result, the allegedcollision between the Vienna Convention and the 1955 Hague Convention isunfounded; the opposite assertion does not sufficiently consider the purpose andthe effects of Article l(l)(a) of the CISC5758

This opinion is confirmed by the Hague Convention of 22 December 1986 onthe Law Applicable to Contracts for the International Sale of Goods (the new Hague

57. See especially Vekas, loc. cit. n. 20, at p. 343, and M. Pelichet, 'La vente Internationale demarchandises et le conflit de lois', 201 Recueil des Cours (1987) p. 9 at p. 37: 'A la lettre a) [de1'Article premier], la Convention de Vienne fixe directement son champ d'application, rendantsuperflu le recours a la regie de conflit' Pelichet accurately criticizes a statement in the first editionof Honnold's Uniform Law, according to which Art. l( lXa) lays down a unified and authoritative ruleof private international law on the applicability of the Convention (see ibid., at pp. 34 et seq.). This,in fact, would make no sense. Firstly, it would be quite a strange legislative technique to set down, inletter (a), the autonomous conditions of the Convention's applicability by adopting a rule on conflictof laws and then, in letter (b), to expressly refer to the rules on conflict of laws: which rules wouldletter (b) refer to? The ones that are contained in letter (a)? This would be a circulus vitiosus.Secondly, when a provision dealing with conflict of laws designates the applicable law, it refers to thelegal order in general, not to a specific rule of substantive law (the determination of the applicablesubstantive rule within the lex causae is generally known as the secondary characterization). This,however, is not the effect of Art. 1(1 Xa) of the Convention. Pelichet, ibid., at p. 36, rightly states:'lorsque les conditions de la lettre a) sont remplies, les dispositions de la Convention de Vienne vonts' appliquer independamment d'un ordre juridique national donne. (...) Ainsi, nous sommes de 1 'opinionque la lettre a) (. . .) ne saurait etre regardee comme une regie de conflit, mais se presente commeune simple norme, objective et autolimitative, d'application de la convention.' In the second editionof his book, Honnold has taken this critique into consideration and has corrected the relevant passage,which now makes clear that para. (lXa) does not state a general rule on PIL, see op. cit. n. 18, atpara. 45.2, text accompanying fn. 9.

58. These developments are applicable - mutatis mutandis - to the relationship between theVienna Convention and the European Convention of 1980 on the Law Applicable to ContractualObligations (Rome Convention).

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PIL Convention). In its Article 23, the 1986 Convention expressly states that it doesnot prejudice the application of the Vienna Convention.59

3.2.2 Contracting state

The meaning of the term 'contracting state' used in Article 1(1 )(a) seems to beobvious: a contracting state is a state that has either ratified, approved or acceptedor acceded to the Convention.60 However, the profound changes in Eastern Europeoccurring in recent years have given rise to various problems.61

3.2.2.1 The case of the former German Democratic Republic

The notion of contracting state embodied in the Vienna Convention has beenchallenged for the first time by the disappearance of the former German DemocraticRepublic (GDR). The GDR had signed the CISG on 23 February 1989; theConvention had become effective on 1 March 1990. However, nearly all the lawsand regulations of the former GDR have been annulled by the reunification treatyin effect from 3 October 1990 and have been replaced by the laws of the FederalRepublic of Germany (FRG). In the FRG, the Vienna Convention entered into forceonly on 1 January 1991. With regard to the international treaties signed and ratifiedby the GDR, the reunification treaty provided in Article 12 that the FRG would'reconsider [the treaties] together with the former partners of the GDR, in orderto endorse their continuance, their revising or their expiration.' Hereby, the 'princi-ple of good faith, the interests of all the involved parties and the internationalobligations of the FRG were to be taken into account.'62 A considerable debateamong lawyers and politicians ensued as to whether the Vienna Convention (as wellas the Convention on the limitation period) had expired or not with the disappear-ance of the GDR. The controversial debate is beyond the scope of this note.63

However, according to the dominant opinion, the Vienna Convention has ceasedto be applicable in the former GDR as of 3 October 1990. Therefore, from

59. The 1986 Hague PIL Convention also expressly refers to the Vienna Convention in itsPreamble and in Art. 8(5). Furthermore, in Art. 23, the 1986 Hague Convention also concedes priorityto the New York Convention of 1974 on the Limitation Period in the International Sale of Goodsand to the Protocol amending that Convention and which has been adopted in Vienna on 11 April1980.

60. Note, however, that according to Art. 99(2), the Convention enters into force only twelvemonths after a state has ratified, accepted, approved or acceded to the CISG. The CISG also specifiesthat a contracting state with different territorial units may declare that the Convention is to extendto all its territorial units or only to one or more of them (Art. 93 (1)).

61. The following developments are based on Schlechtriem, loc. cit. n. 20, at p. 343, and on thecountry reports on the CISG database of Pace University.

62. For the original German text of this provision, see Schlechtriem, loc. cit. n. 20, at p. 343.63. See the references in Schlechtriem, loc. cit n. 20, at p. 343 (in fh. 15 and accompanying text).

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3 October to 31 December 1990, the Hague Uniform Laws that were still applicablein the FRG at that time were also applicable in the former territory of the GDR. Itis only since 1 January 1991, that the Vienna Convention is applied to the wholeGerman territory.

3.2.2.2 The former USSR

The case of the former USSR is even more complex. The CISG was intended tobecome effective in the USSR on 1 September 1991. However, given the tremen-dous legal and political problems following the August 1991 coup attempt, it isdoubtful whether international treaties of the USSR could continue to apply to thewhole territory. The intricate public international law problem of state successionsis beyond the scope of this note.64 However, a brief discussion follows as to thepresent legal status of countries formerly part of the USSR with regard to theirsubscription to the CISG.

The newly established Russian Federation has officially succeeded the USSRas a member state of the United Nations on 24 December 1991. It took on, there-fore, all duties and rights of the former USSR ensuing from the UN Charter andall the multilateral treaties deposited with the General Secretary. Consequently, theRussian Federation is also regarded as the rightful successor to the CISG obligation.In the Belorussian and in the Ukrainian SSR, the CISG had already become effectiveon respectively 1 November 1990 and 1 February 1991. Currently, Belarus andUkraine are regarded as the legitimate successors to Byelorussian and Ukrainiantreaty obligations. On the other hand, the succession principle does not apply tothe other states of the former USSR. For each individual state, the Legal Officerin charge of the UN Depository function requires a further treaty formality priorto making the Vienna Convention applicable for the purposes of Article l(l)(a).The required notices of accession to the CISG have been filed by Estonia, Georgia,Latvia, Lithuania, Moldova and Uzbekistan.65 The remaining states (Armenia,Azerbaijan, Kazakhstan, Kyrgyzstan, Tjikistan and Turkmenistan) have not, at thistime, filed notice of accession or succession to the CISG.

64. For a discussion of this problem, see, e.g., J.P. Muller and L. Wildhaber, Praxis des Volkerrechts,2nd edn. (Bern, Stampfli 1982) pp. 173 et seq.

65. The CISG had been in force in the former Soviet Republics of Estonia, Georgia, Latvia,Lithuania, Moldova and Uzbekistan since 1 September 1991. However, when these Republics becameindependent states, they all preferred to adopt the Convention by way of accession rather than bysuccession. The CISG became effective in Estonia on 1 October 1994, in Georgia on 1 September1995, in Latvia on 1 August 1998, in Lithuania on 1 February 1996, in Moldova on 1 November 1995,and in Uzbekistan on 1 December 1997.

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3.2.2.3 The former Yugoslavia

On 1 January 1988, the CISG became effective for the Socialist Republic ofYugoslavia. The Legal Officer in charge of the UN Depositary function regardsthe Federal Republic of Yugoslavia (i.e., the states of Montenegro and Serbia) assuccessor to this treaty obligation. The former Yugoslav states Slovenia and Bosnia-Herzegovina filed their notices of succession with the UN in January 1994, CroatiainJunel998.66

With respect to the practical impact of these issues, each businessperson wantingto conclude a contract for an international sale of goods with a partner who hashis place of business in one of the newly independent Republics of both the formerUSSR and the former Yugoslavia would be well advised not to rely on the autono-mous requirements of the Convention's applicability. He or she would be betteroff by implementing into the contract a clear and unequivocal choice of law rule,either in favour of the CISG or in favour of one particular national legal order.67

A clear choice of law rule could also overcome the differences national courts mayhold on the issue of state succession.

3.2.3 Which courts are addressed by Article l(l)(a)?

It should be noted that the autonomous applicability of any international treaty isan immediate and direct result ofthe treaty's binding nature. Hence, Article l(l)(a)is only mandatory for a court sitting in a state that has ratified the CISG.68

The conditions of an autonomous applicability ofthe Convention are fulfilled evenif one (or both) ofthe contracting states has (have) made a reservation accordingto Article 95.69 Article 95 becomes, in fact, irrelevant as soon as both (all) partiesto the contract have their places of business in different contracting states. In otherwords, Article 95 has only to be regarded within the conflictual method of definingthe Convention's personal and territorial scope, that is when the parties have theirplaces of business in different states, but the requirement that these are contractingstates is not fulfilled. The fact that the forum state itself (also) made such a

66. Slovenia became a state on 25 June 1991; on 7 January 1994, Slovenia filed a declaration ofsuccession making the CISG retroactively applicable to it effective the date mentioned. Bosnia-Herzegovina became a state on 6 March 1992; on 12 January 1994, Bosnia-Herzegovina filed adeclaration making the CISG retroactively applicable to it effective the date mentioned. Croatiabecame a state in 1991; on 8 June 1998, Croatia filed a declaration of succession making the CISGretroactively applicable to it effective the date mentioned.

67. See also Schlechtriem, loc. cit. n. 20, at p. 344.68. Vek&s, loc. cit. n. 20, at p. 342. See also Ferrari, loc. cit. n. 19, at p. 321; Honnold, op. cit.

n. 18, at para. 45.69. The possibility of this reservation will be discussed at length in section 3.3.

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reservation does not constitute an obstacle to the autonomous applicability of theCISG.

What position should a court of a non-contracting state adopt, when it has tosit in judgment on a contract concluded among two parties with places of businessin different states, each having ratified the Vienna Convention? The answer, ofcourse, depends on what private international law principles the forum hasadopted.70 It has to be presumed, however, that the judge of the forum will beinclined to apply the Vienna Convention only if his private international law leadshim to the law of a country that has ratified the CISG. The circuitous route ofprivate international law is necessary because public international law does notimpose any obligation on the forum to apply the CISG in this case. That is exactlythe reason why the CISG proposes in its Article l(l)(b) a conflictual method todetermine its application.71

3.3 The conflictual method of defining the Convention's scope:Article l(l)(b)

The conditions of an autonomous applicability of the Vienna Convention are notfulfilled when the parties to the contract have their places of business in differentstates but one or both of the states have not ratified the Convention. In other words:the autonomous applicability of the CISG presupposes reciprocity.72 As a matterof fact, the reciprocity principle has the advantage of being unequivocal. On theother hand, this rule restrains the Convention's applicability. The draftsmen of theVienna Convention were aware of this dilemma, and adopted Article l(l)(b) as aremedy.

According to Article 1(1 )(b), the Convention applies to contracts between partieswhose places of business are in different states when the rules of private interna-tional law lead to the application of the law of a contracting state.

3.3.1 The scheme of Article l(l)(b): an easy example

The purpose of Article 1(1 )(b) can be illustrated with the help of the followingexample:

A company in Quebec sells goods to a buyer whose place of business is in Japan.The buyer files a suit in Quebec against the seller.

70. For the following comments, see Audit, op. cit. n. 39, at p. 22.71. See, e.g., Vekas, loc. cit. n. 20, at pp. 343-344; Volken, op. cit. n. 16, at pp. 28-29; Honnold,

op. cit. n. 18, at para. 47.3.72. Audit, op. cit. n. 39, at p. 22.

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The jurisdiction of the courts of Quebec being assumed, the judge has to determinethe law applicable to the transaction. Since Japan has not ratified the ViennaConvention, the conditions of an autonomous applicability of the CISG are notfulfilled. The judge in Quebec must therefore apply his private international lawprovisions. According to Article 3114 of the Civil Code of Quebec (CCQ),73 if nolaw is designated by the parties, the sale of a corporeal movable is governed by thelaw of the country where the seller had his residence (establishment) at the timeof formation of the contract.74 Thus, it is the law of Quebec that is designated aslex causae in our example. Since the CISG is applicable in Quebec and Quebec hasnot filed an Article 95 declaration, the provisions of the Vienna Convention governthe transaction at issue.75

At first glance, the application of Article l(l)(b) does not seem to raise verydifficult problems. However, almost twenty years after its adoption, the conflictsof law-based technique of determining the Convention's personal and territorialsphere of application continues to be debated. The uncertainty surrounding thisapproach is generated by a reservation clause - Article 95 - allowing contractingstates 'not to be bound' by subparagraph (l)(b) of Article 1 when ratifying theConvention.76 Before analyzing the different problems related to the effects of areservation filed under Article 95, it is useful to retrace the history of Arti-cle

3.3.3 The history of Article l(l)(b)

Whereas the draftsmen of the CISG reached prompt agreement on the autonomousapplicability of the CISG, the conflictual method of defining the Convention'sapplicability has been largely debated and remained controversial throughout theDiplomatic Conference in Vienna. The opposition to Article 1 (1 )(b) eventually ledto the last-minute reservation clause of Article 95.

73. Of course, the relevant conflicts rule could also be embodied in a treaty. It is presumed thatno such treaty has to be applied in Canada in this specific case.

74. The example presumes that the negotiations have taken place in Quebec, that the contractdoes not provide expressly that delivery has to be made in Japan, and finally, that there was no callfor tenders (see Art. 3114 CCQ).

75. See, for example, Oberlandesgericht Hamburg, 1. Zivilabteilung, Decision of 28 February 1997,case no. 1 U 167/95, EWiR 1997,791, also available on the Pace Database.

76. Another issue worth to be mentioned here is the puzzling renvoi question, see Neumayer andMing, op. cit. n. 31, at pp. 44-45, with many additional references pro and contra.

77. For the following, see Winship, loc. cit. n. 6, at pp. 503-508, who also retraces the historyof the work done by the UNCITRAL Working Group established in 1969.

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3.3.3.1 The deliberations of the First Committee

At the Diplomatic Conference, the task to examine Article 1 was assigned to theFirst Committee (which in fact prepared the major part of the Convention, i.e.,Articles 1-88). The First Committee began consideration of Article 1 at its firstmeeting on 10 March 1980. The Delegation of the Federal Republic of Germanyproposed to delete paragraph l(b) altogether.78 The German representative arguedthat this provision involved serious problems of interpretation and application andthat it would, therefore, introduce an unwelcome element of complication.79 Henoted, in particular, that domestic rules of private international law might point tothe law of one state with respect to the formation of the contract and to the lawof another state with respect to the substantive rules on sales. In such cases, onlyparts of the uniform law would be applicable whereas the Convention was designedas a unified whole.80 The German representative also stressed that it was mostunusual in an instrument governed by international law to bind contracting statesto apply the instrument to nationals of states not parties thereto.81 In addition, thedelegation of the former Czechoslovakia pointed out that the introduction ofparagraph (1 )(b) would create even more difficulties in countries where internationaltrade contracts were governed by special legal rules.82

Other delegations (i.e., Bulgaria, Norway, France, Egypt, Hungary, Argentina,and Australia) expressly stated that paragraph (l)(b) should be retained.83 They

78. For the following, see Honnold, op. cit. n. 11, at pp. 457-458, paras. 9-12, and at p. 655,para. 3; Schlechtriem, loc. cit. n. 20, at p. 345.

79. The Swedish representative agreed with his German colleague, see Honnold, op. cit. n. 11, atp. 458, para. 16.

80. This argument does not seem convincing. Indeed, a partial application, limited to the rightsand obligations arising from the contract already formed, would not have introduced insurmountableobstacles as the Convention was drafted in such a way that Part HI (substantive sales provisions) isat least compatible with domestic provisions on the formation of contracts, see Schlechtriem, op.cit. n. 21, at p. 26. In an alternative motion, the FRG tried to impose that Art. 1(1 Kb) be restrictedto conflict of law norms that deal with rights and obligations arising from an already formed contract.This motion was also rejected, ibid., at p. 26 (m. 51); see also Honnold, op. cit. n. 11, at p. 655,para. 3.

81. This argument has also to be pondered. In fact, it is not unusual at all that PIL Conventionsare designed to be applied to nationals of states which are not parties to the Convention, see, e.g.,the Hague Convention of 1973 on the Law Applicable to Maintenance Obligations (Art. 3); the HagueConvention of 1955 on the Law Applicable to the International Sale of Goods; the Hague Conventionof 1961 on the Conflicts of Laws Relating to the Form of Testamentary Dispositions. All theseConventions are of so-called hi uniforme-character.

82. Honnold, op. cit n. 11, at p. 458, paras. 13-14. The representative of the German DemocraticRepublic stressed that deletion of para. l(b) would avoid the same internal problems in his country,ibid., at pp. 458-459, para. 24; one has to know, however, that the International CommercialContracts Act of the former GDR contained an express reservation in favour of internationalconventions (para. 1(2)).

83. Honnold, op. cit. n. 11, at pp. 458-459, paras. 17 et seq.

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stressed that the contracting states should regard the Vienna Convention as thegeneral law to be applied to international sales of goods and not merely as a speciallaw for sales between contracting states. From the point of view of a ratifying state,the Convention would constitute the law governing international sales and its sphereof application should therefore be as wide as possible. Furthermore, the delegationsstressed that if paragraph l(b) was deleted, it would not be possible to apply theConvention to sales involving non-contracting states. The judges would have toapply the domestic legislation on internal sales instead of the Convention draftedspecifically for international trade and hence more suitable for that purpose.Finally, the First Committee rejected the proposal to delete paragraph l(b), by avote of 25 to 7, with 10 abstentions.84 As a result, the draft of the Conventionsubmitted to the Plenary Conference on 4 April 1980 included the possibility torender the Convention applicable by the means of private international law.85

3.3.2.2 A last-minute decision taken at the Plenary Conference: Article 95

At the Plenary Conference, the Czechoslovakian delegation persisted and, again,raised the question of the appropriateness of Article l(l)(b). The representative'smotion to vote separately on each paragraph of Article 1 was rejected, and Article 1was adopted by 42 votes to none, with 1 abstention.86

Mister Kopac, from the Czechoslovakian delegation, still had a card up his sleeve,however. On 7 April 1980, he decided to put his last trump on the negotiation table;he proposed a new provision (at that time identified as Article C bis) that wouldallow any contracting state to declare that it will not be bound by Article 1(1 )(b).After an earlier rejection in the Second Committee, the undertaking finally suc-ceeded. Article 95, providing the possibility for a contracting state to exclude Arti-cle l(l)(b), was adopted on 10 April 1980.

The Article 95 reservation has been made, to date, by China, the Czech Republic,Slovakia, Singapore, and the United States. Canada had initially filed an Article 95declaration providing that the province of British Columbia would not be bound byArticle l(l)(b); this declaration was, however, withdrawn on 31 July 1992.87

84. Ibid., at p. 459, paras. 28-29.85. Ibid, at p. 714.86. Ibid., at p. 735, paras. 8-10. Note that eventually, the German delegation has voted in favour

of Art. 1, see Schlechtriem, loc. cit. n. 20, at p. 345.87. The question of the appropriateness of Art. 1 and the possibility of an Art. 95 reservation

has also been discussed extensively during the consultation procedure launched by the Swiss governmentbefore ratifying the CISC The Swiss Bar Association in particular sustained that Switzerland shouldalso make an Art 95 declaration. The government did not share this opinion and ratified the CISGwithout any reservation; basically, the government observed that an Art 95 declaration would renderthe application of the CISG much more complicated. See the official message of the Swiss government,published in the Feuille federate of 1989, but cited here according to the separate (number 89.002),'Botschaft vom 11. Januar 1989 betreffend das Wiener Obereinkommen uber Vertrage fiber den

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One only needs to modify slightly the first example in order to explain the basicpurpose of Article 95.

A company in New York sells goods to a buyer whose place of business is in Japan.The buyer files a suit in New York against the seller.

Japan has not yet ratified the CISG, thus the conditions of an autonomous applica-bility of the Convention (Art. l(l)(a)) are not fulfilled. Hence, the American judgemust begin a conflicts analysis. If this analysis designates the US law as the properlaw of the contract, the judge will apply the rules embodied in the Uniform Com-mercial Code (UCC) instead of the CISG. The effect of a reservation underArticle 95 is to preserve the applicability of the domestic law of the forum in casesin which the parties do not have their places of business in different contractingstates.88

3.3.3 The expediency of Article l(l)(b)

3.3.3.1 An enlargement of the Convention's scope

The conflictual method of determining the CISG's applicability is based on thenotion that it is not only justified and appropriate to apply the Convention when bothparties have their places of business in different contracting states, but also whenan analysis of the transaction on the grounds of private international law principlesreveals that its center of gravity is located in a state that has ratified the ViennaConvention. Article l(l)(b) considerably enlarges the Convention's sphere ofapplication.89 In order for the Convention to be applied, it will be sufficient if thetransaction is international in character (i.e., places of business in different states),and the conflicts rules of the forum lead to the law of a State Party to the Conven-tion. Since the Convention is well-suited to international transactions, the more itapplies, the more legal certainty that may be achieved. Usually, decisions based onthe modern (and 'neutral') law of the Convention are more acceptable to bothparties than one party's domestic law, often unfamiliar to the other party.90

internationalen Warenkauf, at p. 11.88. For the case, however, in which the conflicts analysis designates the law of a contracting state

which has not made the reservation, see the comments below, section 3.3.4.1.89. See, however, Randall and Norris, loc. cit n. 13, at pp. 614-615; according to these authors'

opinion, the Convention does 'of course' never apply - even not under subsection (b) of Art. 1 -if neither party has its place of business in a contracting state. This statement clearly looks too radicalto me: yes indeed, the CISG may be applicable even though no party has its place of business in acontracting state; see the comments below under section 3.3.3.3.

90. Schlechtriem, op. cit. n. 21, at p. 25.

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Furthermore, it may be argued that it is often easier for the courts of a non-contracting state to apply the Convention than to try to determine, understand andapply the rules of a foreign domestic law; as there is a wealth of largely accessibleinformation on the CISG, the judge sitting in a non-contracting state has an easieraccess to useful information on the CISG than on almost any foreign substantivelaw." On the whole, Article l(l)(b) may fairly be regarded as a logical developmentand ultimate achievement of the idea of a hi uniformed1 Indeed, as far as interna-tional sales transactions are concerned, it may be legitimately presumed that a statethat has ratified the CISG has substituted its domestic rules on (internal) sales forthe more suitable rules of the Convention. It seems, therefore, appropriate that thejudge of a foreign forum honors the contracting state's decision.93

3.3.3.2 Internationally harmonized judgments?

However, the expansion of the Convention's scope by reference to the mechanismsof private international law is still not unanimously accepted.94 Opponents ofArticle 1 (1 )(b) assert that this provision does not assist in achieving internationallyharmonized judgments and that the originated diversity may lead to forum shopping.If only one party to the contract has its place of business in a contracting state,the action is brought before a judge of that contracting state and private internationallaw leads to the application of the law of the forum (or any other contracting state),the Convention applies. If, however, the same action is brought before the courtsof the non-contracting state and private international law leads to the applicationof the law of this (or any other) non-contracting state, the Convention does notapply. As a result, the same contract could be governed by different laws dependingon where the action is launched. This critique cannot be questioned in its result.It points, however, to the wrong source of the problem. Indeed, in cases like theprevious example, the stumbling block is not Article l(l)(b), but rather the factthat the two fora apply different conflict of laws principles. Essentially, even if thecontracting state excluded Article l(l)(b), the two countries would still applydivergent substantive laws.95 The purpose of Article l(l)(b) is not to ensureharmonized decisions, but simply to enlarge the Convention's sphere of appli-cability.96

91. Ibid.92. Stoffel,op.cit.n.33,atp.27.93. Ibid.; see, however, the following developments under section 3.3.3.3.94. See the references in Schlechtriem, op. cit. n. 21, at p. 25 (fn. 46), and in Neumayer and Ming,

op. cit. n. 31, at p. 44 (fh. 26).95. Schlechtriem, loc. cit n. 20, at p. 345; Stoffel, op. cit. n. 33, at pp. 27-30.96. Siehr, loc. cit. n. 32, at p. 599; Stoffel, op. cit. n. 33, at p. 30.

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3.3.3.3 The CISG as an unwelcome surprise?

According to another argument that is quite often presented to condemnArticle l(l)(b), the enlargement of the Convention's scope through the means ofprivate international law may cause an unwelcome surprise to parties who havetheir places of business in different non-contracting states but who decide to bringtheir actions before a court sitting in a contracting state.97 The next example illus-trates the problem:

X has his place of business in London. He sells goods to a buyer Z, whose place ofbusiness is in Tokyo. According to an express choice embodied in their contract, thetransaction is governed by 'the law of Switzerland' and any action has to be broughtbefore the commercial court in Zurich.98

According to the strict wording of Article l(l)(b), the Swiss judge should applythe Vienna Convention to this transaction, although neither X nor Z have their placesof business in member states of the CISG. According to the opponents of Articlel(l)(b), it is inadequate to apply the CISG in such cases: to allow the parties'contract to be governed by the CISG would violate their prime intention.99

This apprehension is comprehensible; its practical impact, however, should notbe overemphasized.100 If the parties made an express choice in favour of the lawof a contracting state (in casu Switzerland) without having any links or previousattachments to that country, it is likely that the judge of the forum will also examinethe conditions of Article 6 of the Vienna Convention which allows the parties toopt out of the CISG's application. The judge will first look at the precise wordingof the parties' choice of law rule: does it refer, for example, to Swiss law in generalor to the Swiss Code of Obligations? In the latter case, the judge will (likely) notapply the CISG but rather the Swiss domestic law on sales.101 In the absence ofsuch indications, the judge will look at the general attitude that incited the parties

97. For the following comments, see generally Schlechtriem, loc. cit. n. 20, at p. 345; see alsosupra n. 89.

98. Such prorogation and choice-of-law clauses in favour of Swiss tribunals and Swiss law are veryoften used in commercial practice. In the example given, the validity of the prorogation of a Swisstribunal ensues from Art 17(1) of the Lugano Convention: 'If the parties, one or more of whom isdomiciled in a Contracting State, have agreed that a court or the courts of a Contracting State areto have jurisdiction to settle any disputes ( . . . ) , that court or those courts shall have exclusive juris-diction.' Both the United Kingdom and Switzerland are party to the Lugano Convention. The validityof the choice of law provision in favour of Swiss law ensues from Art. 117 of the Swiss Statute onPrivate International Law which fixes the possibility for the parties to chose the law applicable totheir contractual relation.

99. See generally Schlechtriem, loc. cit. n. 20, at p. 345.100. For the following comments, see especially Stoffel, op. cit. n. 33, at pp. 31-32.101. Schlechtriem, loc. cit. n. 20, at p. 345.

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to choose Swiss law. Even if the parties' incentive may vary, generally they decidein favour of one particular law either because of its relation with the contract (e.g.,place of delivery) or because of its neutral character (no party imposes its law tothe other). Stoffel formulates the following two presumptions when parties havedecided that their contract be governed by Swiss law: if they have chosen Swisslaw because a given link to Switzerland (of either one party or the contract ingeneral), the presumption goes in favour of the Convention; if, on the other hand,the parties have chosen Swiss law because of its neutral character, it is likely thatthey have opted for the domestic rules of the Code of Obligations.102

Despite all sympathy one may have for the uniform law, I believe that in caseswhere two parties, who have their places of business in non-contracting states,choose the law of a contracting state to govern their contractual relationship, thequestion of the applicability of the CISG should be considered very carefully. Insuch cases, the parties' presumable intention seems to point to the domestic lawrather then to the CISG, even if the latter may be better tailored to international salestransactions.103 As a matter of fact, parties wanting their contract to be governedby the Swiss Code of Obligations - or by any other domestic law - would be welladvised to make the point clear and unequivocal in their contractual choice of lawprovision.

102. Stoffel,op.cit.n.33,atp. 32.103. This is the opinion that Stoffel has presented in an article published one year previous to the

article referred to so far, see W. Stoffel, 'Ein neues Recht des internationalen Warenkaufs in derSchweiz', 86 SJZ (1990) p. 169 at p. 174. This particular question was also largely debated at theLausanne Colloquium in 1984, see supra n. 24, at pp. 35-37; Prof, von Overbeck, Prof. Farnsworth,Prof, von Hoffmann, Prof. Schlechtriem and Prof. Volken were in favour of the application of theCISG in such cases, whereas Prof. Neumayer was in favour of the application of the domestic law.Prof. Neumayer underpins his opinion by referring to the jurisprudence of the Federal Court orGermany which has adopted the same point of view.

Even if one of the parties has his place of business in a contracting state and the parties choosethe law of that particular state, it may still be possible to infer from the setting and the language ofthe contract that the parties intended the domestic law to govern the contract and not the Convention;see generally C. Witz, 'L'exclusion de la Convention des Nations Unies sur les contrats de venteinternationale de marchandises par la volonte des parties (Convention de Vienne du 11 avril 1980)',Recueil Dalloz Sirey (1990) p. 107. See also Ferrari, loc. cit n. 19, at p. 325, fh. 79, critizing adecision dated 29 March 1993 of the Tribunale Civile di Monza (retrievable on the UNILEX database,CLOUT Nr. 540), where it was said that Art. l(lXb) would only operate 'in the absence of a choiceof law of the parties.' This statement seems indeed to be erroneous and cannot be shared. Ferrari'scritic, however, seems to be excessive: as mentioned above, the mere fact that the parties have chosen'the law of [a contracting state]' does not necessarily mean that the CSIG applies.

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3.3.3.4 The position of the United States

In addition to the arguments pleading in favour of certainty and internationalharmony, the US possessed a further reason for excluding Article l(l)(b). InAppendix B to the Legal Analysis of the Convention which accompanied the Letterof Submittal to the President (Ronald Reagan), the Secretary of State (GeorgeShultz) stated that

'this provision would displace our own domestic law more frequently than foreignlaw. By its terms, subparagraph (1 Xb) would be relevant only in sales between partiesin the United States (a Contracting State) and a non-Contracting State. (.. .) Undersubparagraph (1 Xb), when private international law points to the law of a foreign non-Contracting State the Convention will not displace that foreign law, since subpara-graph (1Kb) makes the Convention applicable only when "the rules of privateinternational law lead to the application of the law of a Contracting State." Conse-quently, when those rules point to United States law, subparagraph (1Kb) wouldnormally operate to displace United States law (the Uniform Commercial Code) andwould not displace the law of foreign non-Contracting States.If the United States law were seriously unsuited to international transactions, theremight be an advantage in displacing our law in favour of the uniform internationalrules provided by the Convention. However, the sales law provided by the UniformCommercial Code is relatively modern and includes provisions that address the specialproblems that arise in international trade.'104

The US made an Article 95 reservation because it desired to preserve as much aspossible the applicability of its UCC, apparently preferring its own law to thatembodied in the CISG.105 This conviction - largely supported by the American BarAssociation - is legitimate; however, contrary to the express allegation of the US,106

such a position considerably reduces the frequency of the Convention's applicabilityto international sales transactions.107 The CISG's international rules do not supplantUS domestic law in a transaction involving, for example, an American seller anda Japanese buyer - two of the principle trading blocks in the world. This clearlyrebuts the CISG's goal of establishing an international sales code.108 The US attitude

104. Reprinted from N. Galston and H. Smit, eds., International Sales: The United Nations Con-vention on Contracts for the International Sale of Goods (New York, Matthew Bender 1984) App. 1-27and 1-28; see also Nicholas, loc. cit. n. 7, at pp. 207-208, who adds that the reason set forth by theUS would also apply to the United Kingdom.

105. Randall and Norris, loc. cit. n. 13, at p. 616, who state that the US may even view Art. 2 ofthe UCC as superior to the CISG as a sales law.

106. See the first reference in n. 104, at App. 1-28.107. See, e.g., Audit, op. cit. n. 39, at p. 24; Honnold, op. cit. n. 18, at para. 47.1; Winship, op.

cit. n. 3, at p. 1-32.108. Randall and Norris, loc. cit. n. 13, at pp. 615-616.

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also illustrates the inherent tension between sovereignty and multilateral treatiesembodying substantive rules.109 This leads to a generalized commentary on thepossibility of making a reservation under Article 95 of the CISC

3.3.3.5 The possibility of making a reservation under Article 95: a general critique

It is regrettable that the Convention allows a nation to make a reservation underArticle 95 and thus not be bound by Article 1 (1 )(b). A reservation under Article 95considerably reduces the reach of the CISG and constitutes a brake-block to theeffective spreading of a modern, well-suited tool. There is no persuasive justificationto the restriction of the Convention's sphere of application generated by Article 95.If private international law principles establish that an international sales transactionhas its closest ties with a contracting state, the application of the well-suited, largelyaccepted CISG seems generally more appropriate than the domestic rules on internalsales (for the case of an express choice of law clause in favour of 'the law' of acontracting state, refer to proceeding discussion). Additionally, the belief that theConvention should only be applicable to sales transactions concluded betweenparties who have their places of business in different contracting states cannot bejustified by referring to the principle of reciprocity rooted in public internationallaw. Indeed, the CISG is not aimed at ensuring the exchange of two equivalentperformances between contracting states; the CISG has rather been designed tomake sure that international sales transactions be governed by suitable rules. Finallyand most importantly, it must be emphasized that the interplay between Article1(1 )(b) and Article 95 raises some difficult questions in determining the lawapplicable to an international sales transaction. Intricate instances are examinedsubsequently.

3.3.4 Article l(l)(b) and Article 95: how do the different choices interfere?An analysis of some intricate permutations

Given the great number of variables one must consider (where the forum sits;where each party has his place of business; which state's laws are applicable underthe conflicts rules of the forum; which state has made a reservation underArticle 95), there are many possible cases in which the question of the Convention'ssphere of application might arise.110 Fortunately, in most of the cases, the answeris clear. There are, however, some particular situations that continue to causeconsiderable - and harmful - uncertainty.

109. Ibid., at p. 616.110. See Winship, op. cit. n. 3, at p. 1-27, who systematically examines 54 permutations in which

the Convention's applicability is at stake.

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3.3.4.1 The judge sitting in a reservation state

The considerable uncertainty caused by Article 95 is best evidenced by the factthat even the reservation's basic repercussions are still not unanimously fixed - noteven for the reservation state itself.

Article 95 eliminates the applicability of the Vienna Convention only in favourof the domestic law of the reservation state. If, for example, a New York courthas to sit on a sales contract concluded between an American buyer and a Japaneseseller, and the American conflicts rules point to the law of New York, the CISGwill not apply.1" However, if the conflicts rules of the reservation state point tothe law of a contracting state that has not made the reservation, the ViennaConvention does apply. Therefore, if in the example just presented, the Americanconflicts rules point, for instance, to Canada, the judge sitting in New York isrequired to apply the Vienna Convention regardless of the US reservation underArticle 95.112

This conception of the interplay of Article l(l)(b) and Article 95 is supportedby the legislative history of the latter. The goal of the promoters of Article 95 wasto make sure that a judge sitting in a reservation state would not have to apply theConvention if private international law would lead to the application of the law ofthe forum."3

Unfortunately, this unequivocal purpose of Article 95 is sometimes misunder-stood. According to Thieffry, for example, courts in the United States should notapply the Convention even in instances where their conflicts rules lead to theapplication of the law of a contracting state that has not filed a reservation under

111. See the proceeding example, section 3.3.1.112. See Neumayer and Ming, op. cit. n. 31, at p. 46 (with additional references to writings

supporting this view in fn. 35); are also supporting this view: I. Dore, 'Choice of Law under theInternational Sales Convention: A U.S. Perspective', 77 AJIL (1983) p. 521 at p. 535; Honnold, op.cit. n. 18, at para. 47.5 (example IF); Pelichet, loc. cit. n. 57, at pp. 40-43; H. Punder, 'DasEinheitliche UN-Kaufrecht - Anwendung kraft kollisionsrechtlicher Verweisung nach Art 1 Abs. 1lit. b UN-Kaufrecht', 36 RIW (1990) p. 869 at p. 872; Vekas, loc. cit. n. 20, at p. 345; see also'Rechtsprechung zum Wiener Kaufrecht', 3 SZIER/RSDIE (1993) p. 653 at p. 656.

113. Pelichet (a member of the committee in charge of drafting Art. 95), loc. cit. n. 57, at p. 43;see also ibid, text accompanying fh. 55 (where the author makes a parallel with the Geneva Conven-tion on agency; this Convention contains the same reservation clause as the one embodied in Art. 95of the CISG; the legislative history of the Geneva Convention also makes clear that the countrieswhich called for this provision wanted the reservation only to be effective when the conflicts rulespoint to their own domestic laws). According to Pelichet, however, the domestic law of a reservationstate may only prevail over the Convention if the forum is located in the actual reservation statewith the judge applying his own private international law. I respectfully disagree on this qualification;see the explanations below under section 3.3.4.2.

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Article 95."4 This opinion clearly contradicts both the legislative history and thebasic purpose of Article 95. It is not supported by the official US statementjustifying the reservation: US conflicts rules point to a foreign legal order, thus theproblem of displacing US law (i.e., the UCC) is not an issue at all in this case.Furthermore, Thieffiy's opinion violates the foreign contracting state's will to applythe Convention in such an event. Finally, it might also provoke forum shoppingsince courts of different countries would adopt different positions. For thesereasons, Thieffry's opinion must be rebutted. Hence, the effects of Article 95 ona court sitting in a reservation state - let us assume the US - may be summarizedas follows: a sales contract to which at least one of the parties is from a non-contracting state and which, according to the forum's conflicts rules, is subjectto the law of the forum (or the law of another reservation state) is not governedby the CISG but rather by the forum's domestic rules on sales, in this casepresumably by the UCC.

3.3.4.2 The judge sitting in a contracting state whose conflicts rules point to thelaw of a country that has filed a reservation under Article 95

There is another much debated question that reveals the uncertainty surroundinga reservation filed under Article 95. The following example sets the puzzle:

A has his place of business in New York. He contracts with B whose place of businessis in Tokyo (Japan has not yet ratified the CISG). A files a suit in Switzerland. Itsjurisdiction being assumed, the Swiss court concludes that according to Swissconflicts rules, the contract is governed by US law. Does the CISG or the UCC apply?

For both solutions, one will find eminent supporters."5 In my opinion, the Swisscourt should apply the UCC and not the Vienna Convention. Those in favour of

114. P. Thieffiy, 'Sale of Goods Between French and U.S. Merchants: Choice of Law ConsiderationsUnder the U.N. Convention on Contracts for the International Sale of Goods', 22 Int'l Lawyer (1988)p. 1017 at p. 1018 (fh. 3). For another opinion supporting this view, see the reference in Neumayerand Ming, op. cit. n. 31, at p. 46 (in fh. 35).

115. The application of the UCC in this case is supported by, for example, Neumayer and Ming,op. cit. n. 31, at p. 47 (with many additional references in fn. 37); Audit, op. cit. n. 39, at para. 23;Honnold, op. cit. n. 18, at para. 47.5 (example 1H); E. Erdem, La livraison des marchandises selonla Convention de Vienne: Convention des Nations Unies sur les controls de vente Internationale demarchandises du 11 avril 1980 (Fribourg, Editions Universitaires 1990) para. 153; Punder, loc. cit.n. 112, at pp. 871-872; Schlechtriem, op. cit. n. 21, at p. 27; idem, loc. cit. n. 20, at pp. 345-346;Vekas, loc. cit n. 20, at pp. 345-346; Volken, op. cit. 24, at p. 36; Winship, loc. cit n. 6, at pp. 524-525, and idem, op. cit n. 3, at p. 1-53.

On the other hand, the following authors would apply the CISG in this case: Siehr, loc. cit. n. 32,at pp. 601 et seq.; Stoffel, op. cit. n. 33, at pp. 28-29; idem, loc. cit. n. 103, at p. 173; additionalreferences in Neumayer and Ming, op. cit. n. 31, at p. 47 (in fh. 37).

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the application of the CISG claim that a reservation filed by one contracting statecould not have any effect whatsoever on the position to be adopted by othermember states and that the intent and the underlying purpose of the Conventionwould be to guarantee its largest possible sphere of application. These argumentsdo not appear convincing. A state's decision to file a reservation under Article 95cannot simply be ignored by other member states; such declarations must berespected within their true limits. The real effect of an Article 95 reservation iscomparable to that of a switch-signal, indicating which set of substantive ruleswithin the designated lex causae is applicable. The lex causae has not enacted theCISG for cases similar to this one, thus the Convention's rules are inapplicable.By refusing to consider the reservation filed under Article 95, the forum judgewould fail to recognize the lex causae altogether.116 The solution advocated in thisessay has also the advantage of respecting the harmony among international courtdecisions. In applying the domestic substantive rules of the lex causae rather thanthe CISG, the judge will indeed forestall forum shopping."7

The opinion that the Swiss judge should apply the UCC and not the CISG in thisparticular instance is further supported by a corresponding explanation the FederalRepublic of Germany filed in ratifying the Convention. Germany has not made areservation under Article 95 and has therefore retained Article l(l)(b). It has,however, filed general remarks on the interpretation of Article l(l)(b). Thisexplanation provides that if the conflicts rules of Germany point to the law of acountry which has filed an Article 95 reservation, the applicable law is that coun-try's domestic law and not the Vienna Convention.118

3.3.4.3 The judge sitting in a non-contracting state

We have already seen that in a non-contracting state, the CISG cannot be appliedautonomously.119 However, what about an application of the CISG through themeans of the conflicts rules of the forum? Firstly, it seems to be unequivocal thatwhen the conflicts rules of the forum point to the (domestic) rules of either a non-contracting state or a state that has filed a reservation under Article 95, the CISGdoes not apply.120 However, if the private international law of the forum points to

116. See, e.g., Neumayer and Ming, op. cit n. 31, at pp. 47-48 (with an additional supportingreference in m. 39). See also Schlechtriem, loc. cit n. 20, at pp. 345-346.

117. See, e.g., Honnold, op. cit n. 18, at para. 47.S.118. Bundesgesetzblatt (BGB1) 1989 n at p. S86; Honnold, op. cit n. 18, at para. 47.5 (fii. 14);

Punder, loc. cit n. 112, at p. 872; C. Witz, 'L'adhesion de la RFA a la Convention des Nations Uniessur les contrats de vente internationale de marchandises (Convention de Vienne du 11 avril 1980)',6 RDAI/IBLJ (1990) p. 57. The German courts have to comply with mis authentic interpretation.

119. See above section 3.2.120. See, e.g., Dore, op. cit n. 112, at p. 538; Punder, loc. cit n. 112, at p. 872 (with additional

references in m. 47).

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the law of a contracting state, it is suitable to apply the CISG, since for internationalsales transactions, the directed state has substituted its domestic rules for theuniform law of the Vienna Convention. It must be emphasized, though, that in suchinstances, public international law does not impose any obligation on the judge ofthe forum to apply the Convention.

Table 1, at the end of this article, is intended to summarize the most important anddebated permutations of the Convention's applicability through the means ofArticle l(l)(b) and to give the reader a concise illustration of the applicability ofthe CISG.

4. CONCLUSION

Undoubtedly, the Vienna Convention constitutes a very important codification andis a landmark in the evolution of the science of comparative law. It is also awelcome compensation for ceaseless efforts undertaken to harmonizetlifferent legalsystems and cultures. The Vienna Convention is a major improvement on ULIS.The CISG is at the cross-roads of different traditions and constitutes an inestimablesource of education and an effective means of rapprochement of all the 'families'characterizing the different legal systems that have participated in the elaborationof the CISG.

The achieved unity should not be jeopardized without due cause. This duty toan effective application of the uniform law has been embodied in the Conventionitself. Indeed, Article 7 of the Convention states that 'in the interpretation of thisConvention, regard is to be had to its international character and to the need topromote uniformity in its application (.. .) '

This request is particularly apropos with regard to the conditions of the Conven-tion's applicability and the determination of its scope. In applying Article 1, oneshould always keep this request in mind. Ideally, the Convention's sphere ofapplication should therefore be as wide as possible. Unfortunately, this goal of wideapplicability has partly been frustrated by the enactment of Article 95. However,now that contracting states have the possibility to file a reservation and to declarethat they will not be bound by the conflictual method of determining the Conven-tion's scope, the other member states must respect those declarations. It is hoped,however, that the already impressive list of states that have ratified the ViennaConvention, will continue to grow, for with each new ratification, uncertaintysurrounding Article l(l)(b) decreases. The issue of an increased transparency andeffectiveness in international sales transactions would definitely be well served.

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Table 1. The conflictual method of defining the CISG's personal andterritorial scope of application (Art. 1(1)

Forum:

F-CS

F-CSR

F-NCS

Contract between partieshaving their place of

business in:122

P,: CS / P2: NCSP,: CSR / P2: NCSP,: NCS / P2: NCS

P,: CS / P2: NCSP,: CStf / P2: NCSP,: NCS / P2: NCS

P,: CS / P2: NCSP,: CSR / P2: NCSP,: NCS / P2: NCS

IfPILofthe forum

leads to theapplicationof the lawof a NCS:

Conventiondoes

not apply

Conventiondoes

not apply

Conventiondoes

not apply

I,)):121

IfPILof the forum leadsto the application of the

law of a CS:

Convention does apply.However, if the partieshave chosen the law ap-plicable to their contract('the law of [CS]'), thequestion of the applica-

bility of the CISGshould be consideredcarefully, especially ifthe parties have their

places of business in twoNCS (see section

3.3.3.3).

Debated.In my opinion, the CISG

should apply(see section 3.3.4.1).

The possible applicationof the CISG is merely

optional in this case anddoes not ensue from anobligation under publicinternational law (see

section 3.3.4.3).

IfPILof theforum leads

to theapplication

of the law ofa CSR:

Very contro-versial.

In my opin-ion, the

CISG shouldnot apply

(see sectionD. 3.3.4.2).

Conventiondoes

not apply

Conventiondoes

not apply

121. The abbreviations used in the synopsis have the following meanings: F = forum; P, andP2 = party 1 and party 2 to the contract; CS = contracting state (e.g., Netherlands, Switzerland);NS = non-contracting state (e.g., Japan, United Kingdom); CSR = contracting state with reservationaccording to Art. 95 (China, the Czech Republic, Slovakia, Singapore, and the United States);PIL = private international law.

122. Note that in all the following permutations, at least one party does not have his place ofbusiness in a CS; if both parties have their places in a CS or in CSR, the CISG applies under itsArt. l(lXa).