Saturday, October 13, 2012

Does Article 2 Inform CISG Damages?

When it comes to teaching remedies, it is easy to collapse doctrines onto one another that appear consistent in underlying theory.  When it comes to the CISG (Convention on the International Sale of Goods) this conflation would be erroneous.  A large number of American courts have held that where Article 2 and the CISG are similar in theory or language, that resort to Article 2 cases and provisions is an appropriate method for interpreting the CISG.  This approach, though, would not be consistent with the Article 7 of the CISG's mandate theat “[i]n the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade."  The unifority would not seem to be enhanced by American courts referring to Article 2, even though they are more familiar with its provisions.  Quite simply, there is no expectation that courts of other countries would defer to Article 2 in any manner. 

Rather, the better reasoned approach should be to consider interpretive sources that evidence this international perspective, which might be used individually or collectively toward deducing the meaning behind various CISG provisions. For instance, courts could accept that a specific source of general principles of contracts routinely informs CISG cases worldwide, such as those of the Unidriot Principles of International Contracts.  Alternatively, the CISG Advisory Council Opinions could fulfill a stronger informative role regarding interpretation of provisions in the manner like the comments to the UCC do such that courts and commercial parties would regularly follow its interpretations in practice.  Yet another alternative available in the fulfillment of the CISG’s mandate is consultation with decisions rendered by tribunals applying the CISG where such are available.  Where such decisions are unavailable, insufficient, incomplete or unhelpful, though, UCC Article 2 might form part of the evidence of applicable private international law, as well as usages, customs and practices, but would not itself be the primary legal authority. The writings of scholars collecting opinions, examining theory and practice and providing careful analysis would also surely constitute sources expected for consultation in these cases just as in domestic ones.

This is not meant to state that Article 2 would never be part of the consideration of interpretation in CISG cases, but only that courts have overstated its usefullness.  There is only a limited role for Article 2 in such cases where it forms part of a larger indication of international perspective or a portion of an applicable usage.  This would be true even where the language in the CISG seems to track that of Article 2 or be otherwise similar in theory.  An example of this would be CISG Article 74’s general directive regarding remedies provides that: "Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach. Such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract."   While American courts have ample experience with remedy considerations involing loss profits and foreseeabilty (Hadley v. Baxendale), it would be in error to solely rely on our perspective for these doctrines that are entrenched in our own legal history and perspective.  The better view is that our perspective simply is part of a larger understanding of these doctrines where it is consistent with the international perspective.

If the CISG is to have any force as a body, we cannot consider it merely an extension of Article 2.  For more on this, see: Does Article 2 Inform CISG Damages?


No comments: