SR! "O!
O"T4"T
PA4 "O!
Zaman Ali
B-1/602, Sea Breeze Towers, Towers, Sector-16, Off Palm Beach R!, "er#l, "a$i %#m&ai %aharashtra, 'nia ( )00*06
zaman!ali+#!e#!in zamanali1602+mail!com
.aw Term Term 201 ( Transnational ommercial .aw
Prof! r! %atthias eller
0*/12/201
%O3.4 5 .4A. 4SSA7 R'T'" 8 4TS9
Examining the importance of CISG: Is CISG: Is it viable for Indian Sales Law?
TABLE OF CONTENTS
A! 'ntro#ction::::::::::::::::::::! B! ;ow &eneficial is 'S:::::::::::::!) ''! 3niformit>:::::::::::::::::::!!!) '''! onflict of .aw:::::::::::::::::!!? '@! @aliit> of ontract:::::::::::::::!!!6 @! Part> A#tonom>:::::::::::::::::!!6 @'! .an#ae:::::::::::::::::::!!!!* ! Sale of oos5 'nian Scenario::::::::::::!!!!* ! oncl#sion::::::::::::::::::::!!10 B'B.'ORAP;7:::::::::::::::::::12
A. INTRODUCTION
After restorin =eace in the =ost-war era, the nee for a #nification of s=ecific areas of law arose an one s#ch area has &een the sales law! 't is to &e e=t in min that eno#h
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concentration on sales law is neee &eca#se it forms the sinle most im=ortant t>=e of contract in trae relationshi=s!
Toa>, as =er the on$ention ao=te &> 3"'TRA. in @ienna in 1CC, international sales law is harmonize to a $er> sinificant eDtent thro#h the 3nite "ations on$ention on ontracts for 'nternational Sale of oos 8'S9!1 This has &een initiate to &rin into foc#s the eDistence of i$erent national laws that ma> ca#se material =ro&lems for &#sinesses! 'n this =a=er, the #sef#lness of this on$ention will &e ealt with &eca#se other factors lie lin#istic an c#lt#ral ifferences, taD re#lations an other loistical concerns also ca#se =ro&lems for &#sinesses! Therefore, the E#estion of whether 'S has sim=lifie or com=licate cross-&orer trae &#sinesses an if it is &enefittin an>&o> hols a reat im=ortance!
'nia is one the larest rowin economies #e to its =ri$ate sector &ein flo#rishe with risin cross-&orer &#sinesses! This enhances the nee for the &est leal s>stem when it comes to s#ch trae! 'nian sales law is o$erne #ner The Sale of oos Act, 10! The rihts of &#>ers an sellers, when train omesticall> or internationall>, are taen care #ner this Act! This Act is moele on the 4nlish Sale of oos Act of 1C, which is contin#e to &e rele$ant! The E#estion mar stans on whether the 'S co#l &e a com=rehensi$e treat> for 'nia in ealin with these cross-&orer sales &eca#se the ratification of 'S wo#l mean 'nia to let o its own Act an transfer 'S in its omestic reime of =ri$ate international law! To consier s#ch an o=tion, the im=ortance of 'S is to &e assesse with an 'nian =ers=ecti$e an this =a=er tries to eDactl> eDamine the same!
B. HO BENE!ITIA" IS CISG#
The =ream&le of the 'S =ro$ies that the on$ention wants to F contribute to the removal of legal barriers in international trade and promote the development of international trade!G2 .eal scholars an leislators ha$e wore on #nifie trae 1
Schlechtriem, 'S, =! 1C!
2 TeDt, 3nite "ations on$ention on ontracts for 'nternational Sale of oos, =! 1!
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leislation on international sales law to re#ce as man> =ro&lems as =ossi&le! ith ra=il> chanin economic sit#ations of nations an f#rtherance of lo&alization, it has &een a =ositi$e ecision to &rin in 'S &#t its effects are #stif>in or not m#st &e assesse! Se$eral researchers ha$e taen #e care on this to=ic an ' shall intri#e their tho#hts an &ase m> o=inions/contraictions on the same!
'! S'%P.'H'AT'O" A" 4RTA'"T7 To start with, it has &een &elie$e &> leal scholars that an instr#ment s#ch as the 'S increases leal certaint>, as the> &elie$e that the a==lica&ilit> of ifferent national laws has the o&$io#s conseE#ence of im=airin this certaint>! 'f there wo#l not ha$e &een s#ch a case, it wo#l &e iffic#lt to etermine which law o$erns the contract! Aree, &#t there co#l also &e instances where the =arties o not wish to &e concerne a&o#t the iss#e of a==lica&le law to mae the choice of this leislation an therefore, not $er> concerne with leal certaint>! The =ro&lem co#l &e that the> ha to com=l> with this leislation if the> are contractin =arties at some stae when the> ne$er act#all> reache the cla#se of a==lica&le law at the time of concl#sion of the contract! B#t at the same time, the 'S has &een tho#ht to &e sim=ler &eca#se the con$ention has &orrowe n#mero#s =ro$isions from the eDistin laws of $ario#s leal traitions!)
''! 3"'HOR%'T7 The s#ccess of 'S has &een relie on its #niformit>! 3niform law e=ens on how that law is to &e inter=rete an the consistenc> of s#ch inter=retation an a==lication &> the co#rts an tri&#nals in ifferent co#ntries! Hor 'S, the rowin n#m&er of re=orte cases has &orne o#t this o=timism! %ost of the cases ecie in the commonlaw co#ntries =ro$e that the tas of inter=retin eneral r#les, inter=retin &> analo>, an rel>in on eneral =rinci=les an a==l>in them to s=ecific facts is certainl> not &e>on the ca=a&ilities of the co#rts! "or has the fact that ci$il-law co#ntries o not ahere to the stare decisis =rinci=le =re$ente them from i$in aeE#ate
3 Pa#l B! Ste=han, The Futility of Unification and Harmonization in International Commercial Law , =! *)6! 4 illes #ni&erti, Is the CIS benefitting anybody! P! 1?1C!
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consieration to cases that ha$e alrea> &een ecie!? B#t in certain as=ects, there eDists a lac of #niformit>! Hor eDam=le5
1! Article * 8on oo faith9 - This article mentions that the co#rts m#st rear the case to ha$e an international character an E#estions not settle m#st &e in conformit> with eneral =rinci=les! 6 This Article &ein too wie an $a#e, there co#l &e n#mero#s inter=retations on the same &> ifferent national co#rts leain to a non-#niform an a fleDi&le a==lication of similar =rinci=les &eca#se of lac of hihest co#rt to reconcile s#ch ifferent inter=retations! 2! Article 1) I ?? ( The lac of clarit> on =rice fiDation eDists! On the inter=retation of these articles, Article ?? a==lies when =rice is not fiDe &#t the contract is $alil> maeJ an Article 1) maes the contract in$ali if the =rice is not fiDe!* This maes Article 1? an em=t> set!
'''! O"H.'T OH .A The 'S eals with the =ro&lem of conflict of law &> =ro$iin necessar> #ielines for inter=retin international sales transactions! B#t in toa>Ks worl, it is easier to not istin#ish &etween local an international transactions &eca#se too man> cross &orer initiati$es are tain =lace! The on$ention #ses the =laces of &#siness of the =arties as a eciin factor, which sho#l &e of no =ro&lem! This creates an artificial i$ision &etween national an international transactions!C B#t not to foret, if =arties aree to the a==lication of omestic law, it shall a==l>L This i$ision co#l eDist for a m#ch loner time &eca#se 'S is an international coe with no =ro$isions for its moification an hence, ratification &> a co#ntr> co#l &e a a#ntin tas for that co#ntr>! '@! @A.''T7 OH O"TRAT The 'S eals with matters concernin contract formation, contract inter=retation, the rihts an o&liations of the &#>er an seller, an the remeies for non =erformance! Article ) of 'S, howe$er, eDcl#es iss#es concernin the $aliit> of the contractJ an> of its =ro$isions or an> #sae, an the effect the contract ma> ha$e 5 Sieg "iselen, #doption of CIS in South #frica, = )-))! 6 Supra at 2, =! 7 Ibid$ =! ?, 1*% 8 Supra at ?, =! ?!
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on the =ro=ert> in the oos sol from the sco=e of the con$ention! The 'S conseE#entl> oes not eal with, for instance, efects in consent, information #ties, an the fairness an $aliit> of stanar terms! These iss#es nee to &e aresse &> the a==lica&le law, ca#sin framentation an com=leDit>! An instr#ment that co$ers Mthe whole lifec>cle of the contractK an a$ois framentation of a==lica&le laws is =referre to sim=lif> the leal en$ironment for &#sinesses! The $aliit> of contract faile to et m#ch attention from the rafters as the r#les rearin fra#, consieration, =ro=ert> or tort are non-eDistent! Hra#, =ro=ert> an tortio#s lia&ilities ha$e &een the s#&ect of &ein treate #ner the omestic reimeJ are not incl#e as $aliit> #ner 'S an also, consieration is so#ht to &e not necessar> #ner 'S!
@! PART7 A3TO"O%7 An im=ortant feat#re of the 'S is that it is &ase on the =rinci=le of =art> a#tonom>, where most of its =ro$isions ma> &e moifie or eDcl#e to s#it the nees of the =arties! This =ro$ies a reat eal of fleDi&ilit> to the =arties, who can acce=t, chane or reect the =ro$isions of the on$ention to s#it their nees! 10 The terms of contract, rather than the 'S, &ear an #==er han #e to 'SKs fleDi&le inter=retation an therefore, lea$e =arties with the freeom to sha=e the contract as =er its reE#irements! 'f there eDists am&i#it> in certain terms, the 'S fills these a=s! This a#tonom> miht =#ll a wea =oint on this as well &eca#se &#siness =arties miht #st en #= eDcl#in the con$ention leain to a slower acce=tance of the on$ention!
@'! .A"3A4 The on$ention is a$aila&le in siD maor official lan#aes, all with eE#al a#thorit>, &> =ro$iin a common #nerstanin of rihts an #ties of &#>ers an sellers an transaction itself! B#t i$en the ifferences of lan#ae an the lielihoo that co#rts will inter=ret the con$ention =ro$isions thro#h their omestic lens, an altho#h 9 "icole Nornet, FThe C"SL and the CIS& Complicating or simplifying the legal environment!' , =! 11! 10 A Barton The 3nite "ations on$ention on ontracts for the 'nternational Sale of oos 81C?9 1C CILS#, =! 2!
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Article * of the on$ention calls for an inter=retation tain into acco#nt the international character of the instr#ment, the chances are hih that i$erin inter=retations will arise!11 S#ch inter=retations lea #= to ifferent #icial techniE#es of looin at s#&stanti$e law! The &iest fear is not reall> the ifference in st>le of inter=retation &#t rather whether co#rts will &e a&le to rise a&o$e their national laws an resist the tem=tation to refer to the familiar conce=ts an octrines of their national law in cases of #ncertaint>!12
So, we o&ser$e that there are =ros an cons in$ol$e in this on$ention! "e$ertheless, the iea to foc#s on a #nifie treat> has &een i$en its #e center of attraction &> the =arties an the #icial s>stems are tr>in eno#h to mae s#re the inter=retations are not i$erse! The maor sinle aim has &een to sim=lif> the leal en$ironment for &#sinesses in relation to their cross-&orer transactions! 't is a first ste= towars harmonization an se$eral flaws that eDist ma> isa==ear slowl> if i$en #e enco#raement! A co#ntr> lie 'nia can s#stain this con$ention &eca#se of its economic =roress &#t its a==lica&ilit> e=ens #=on eDistence of isfa$ore r#les that 'niaKs leislat#re, eDec#ti$e an #iciar> ma> etermine!
C. SA"E O! GOODS: INDIAN SCENARIO
'nian sales law is o$erne #ner the 'nian ontract Act, 1C*2 an the Sale of oos Act, 10! This law relatin to sale of oos has to &e rea as a =art of the 'nian ontract Act, 1C*2! 1 This Act co$ers all as=ects of sale of oos! 'S can &e consiere as one the most s#ccessf#l treaties in =ri$ate international law #e to its reach an #se in international commercial transactions! 't is #no#&tel> a fact that 'nia has seen a ro&#st rowth since its li&eralization in 11 as most of the trae &arriers ha$e fallen awa> since then! 'S hols C0 mem&ers c#rrentl> an all sinatories a==l> this con$ention in a #niform fashion! 1) 'nia hols lon-term trae relations with these mem&ers, as the> are maor trae =arties to her! So what eDactl> is 11 Supra at ?, =! *! 12 Supra at ?, =! 62! 13 Section of The 'nian ontract Act, 1C*2! 14 Stat#s, 3nite "ations on$ention on ontracts for the 'nternational Sale of oos 8@ienna, 1C0 ($ available at htt=5//www!#ncitral!or/#ncitral/en/#ncitralteDts/saleoos/1C0'Sstat#s!html!
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&eholin this nationKs stance to not to ratif> this on$ention<
To hol a rational a==roach on this, it is also im=ortant to loo into wh> man> common law co#ntries ha$e not acce=te the ratification! 3ner common law #risictions, the =receence is i$en a lot of im=ortance! The #nwillinness of common law #es to a==l> 'S is #e to the lac of =receence amon common law #risictions a==l>in 'S, sim=l> &eca#se common law #es want to et their =receents in first! There is =lent> of case law in non-common law #risictions, &#t it oes not seem to carr> m#ch a#thorit> in common law co#rts! 1? 3no#&tel>, there are cases that o not coorinate with one another, which is isheartenin &eca#se the harmonizin intention of 'S has &een to =romote #niformit> when a==lie! As a reference to se$eral 3S cases, the co#rtsK rel#ctance to loo &e>on the 3!S! &orer for 'S case law oes little to accelerate the #nification of international trae law! orse, co#rts o not seize the o==ort#nit> to eD=an at lenth a&o#t 'S #e to its com=arison with 3 in rears to non-a$aila&ilit> of maor =ro$isions for $aliit> of a contract lie stat#te of fra#s, consieration, =arol e$ience r#le as eDam=les!16 Tho#h it is too earl> to #e where 'S is heae, the a#thorit> of =receents shall remain a focal =oint of eterminin this con$entionKs irection!
The $aliit> of contract forms one of the core essentials in 'nian sales law an therefore, non-eDistence of s#ch $aliit> lie fra#, consieration or misre=resentation contri&#tes to the maor factors in$ol$e with 'nia not sinin the treat>! Accorin to Arth#r Rossett, Mthe lan#ae, first of all, is forein with rears to the law of contract an therefore has no clearl> efine meanin an, seconl>, is too wie an ineDact an therefore leas to #ncertaint>K! The lan#ae #se in the teDt is so $a#e an wie that it is #neas> to ascertain what these =ro$isions are! An eDam=le of Article 2? 8f#namental &reach9 co#l &e taen in s#ch a case! The Article sa>s5 )Fundamental breach is one which results in such detriment to the other party as substantially to deprive him of what he is entitled to e*pect under the contract$ unless
15 %onica Nilian, CIS and The +roblem with Common L aw ,urisdictions , =! 2! 16 ;elen -amins.i Pt>! .t! $! %aretin A#stralian Pros!1* 3!S! ist% .4Q'S 1060, alzat#rificio la#ia s!n!c! $! Oli$ieri Hootwear .t!, 1C 3!S! ist! .4Q'S )?C6
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the party in breach did not foresee and a reasonable person of the same .ind in the same circumstances would not have foreseen such a result%' Professor Treitel here rihtl> =oints o#t that this article is o=en to criticism on the ro#n that it is liel> to lea to #ncertaint> since the o=en-teDt#re nat#re of the efinition in Article 2? maes it har to =reict #st when a &reach will &e reare as f#namental!1* As alrea> isc#sse, 'S is so h#she a&o#t inter=retation of oo faith &eca#se it fails to &rin clarit> on whether it sinifies towars fair ealins or towars how =arties &eha$e an a==ear, #nlie 3"'RO'T =rinci=les or Princi=les of 4#ro=ean ontract .aw 8P4.9! Also, 'S oes not mention a&o#t milemen in$ol$e in the transactions an if a is=#te arises, the com=lication on rantin interim relief a$ances! hen s#ch o=acit> in the con$ention eDists witho#t an> selfs#stainin #risiction, it is correct to conc#r that these are the consierin factors as to wh> 'nia hesitates to sin this con$ention!
On the other han, 'niaKs sales law is &ase on the $er> ol 4nlish Sale of oos Act an therefore, the> are not in a conition to &e a&le to assess an =artic#larl>, s#ite for the moern commercial contracts! Other loical leal a$antaes co#l &e that it is alwa>s &etter to a==l> a sinle nown law in case of is=#tes rather than an #nnown law 8Hrench law or erman law9! 'S miht hel= in =ro$iin a &oost to the 'nian econom>! .eal s>stem of a co#ntr> is one of the im=ortant factors in facilitatin its econom>! Tho#h it is not $er> tr#e to claim that a stron leal s>stem #arantees a ro&#st econom>, &#t it is iffic#lt to fin a ro&#st econom> witho#t a stron leal s>stem! 't m#st not &e forotten that the &oost in econom> ma> ha==en if the &#sinessmen are =ro$ie with a consistent international sales law for 'nia!
D. CONC"USION
The =#r=ose of 'S has &een to harmonize international trae relations an s#ch a treat> is efinitel> an asset to maintain harmonio#s relations &etween co#ntries! 'f efforts from the international comm#nit> mae towars acceleratin this =rocess, then efinitel> it will &e ieal for international trae &#t the willinness has to &e 17 A!! #est, /en0amin on Sale of oods 8)th e9, =ara 1C-116, footnote 1!
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etermine! 'nian leal fraternit> an the &#sinessmen an ealers m#st assess whether 'S is a&le to meet the 'nian stanars or there still eDists o#&tf#l elements! Preicta&ilit> is often e=icte as the cr#D of the leal =ractice for law>ers an therefore, a nowleea&le leal co#nsel is so#ht &efore enterin a leal contract for the reE#ire efficienc> an =reicta&ilit>! 't is im=ortant that =reicta&ilit> shall &e maintaine when the law is clear an 'S lacs man> of those $ali concerns!
'S &rins international law to &e a==lie locall> an when the inter=retation of this law taes =lace, it carries a local cast! This mars an im=eiment &eca#se a E#estion mar is raise o$er the #niformit> of 'S aain! 'n s=ite of the Sale of oos Act, 10 &ein ol, it oes not lac am&i#it> in rears to core =rinci=les of $aliit> of a contract 8contract#al ca=acit>, illealit>, fra#, tortio#s lia&ilit>9 an oo faith, when com=are to the 'S!
%onica Nilian has rihtl> =ointe o#t in her article that there is a $icio#s circle &etween 'S an co#rts of law5 co#rts are ner$o#s a&o#t the lac of case law, which in t#rn =rohi&its the e$elo=ment of case law! This is a little o, consierin how man> transactions wo#l &e o$erne &> 'S! 1C hen commercial is=#tes are taen o$er &> ar&itration, 'S has &een still #se where it seems to ha$e =erforme well than at co#rts of law &eca#se that eree of choice o$er &oth =roce#ral an s#&stanti$e law maes =art> a#tonom> far more im=ortant in ar&itration than litiation, the national co#rts o not face conflict of laws an conflict of iss#es with their own local laws an 3"'TRA. has also =romote the international commercial ar&itration as a esira&le =roce#ral moel for international trae thro#h settin #= of 3"'TRA. Ar&itration R#les!
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'na$ertentl>, a oo contract is the one that is not too $a#e an the o=tions o rest on how law>ers =reict the o#tcome of is=#tes that co#l arise! 't is recommene to form#late a &etter contract areement with international ealers/clients rather than &e e=enent on an international contract that is lacin efinition, is &l#rr> an leain to am&i#it> of international law! After s#ch assessment, ' o=t to sa> that with c#rrent 18 Supra at 1?! P! 2)! 19 effre> ainc>mer, 'S an 'nternational ommercial Ar&itration, =! ?C, ?C6, ??!
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sit#ation, 'S is in a nee to &e f#rther e$elo=e an acce=te so as to s#it 'niaKs emans &eca#se it will com=licate the &#siness transactions that are o$erne #ner the Sale of oos Act, 10! "onetheless, the flaws of 'S will isa==ear one a> an tho#h it ma> ha$e &een a first ste= towars harmonization, this harmonization co#l not &e achie$e there an then! The E#alit> m#st im=ro$e! Therefore, all that is reE#ire riht now are im=ro$isation an caref#l raftin an form#lation of international contracts an therefore, leain to welcomin the nations to maintain healthier international relations!
BIB"IOGRA$H%
Schlechtriem, Peter5 Uniform Sales Law 1 The U2 Convention on Contracts for the International Sale of oods, 1C6
B! Ste=han, Pa#l5 The Futility of Unification and Harmonization in International
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Commercial Law, @irinia o#rnal of 'nternational .aw, 1
#ni&erti, illes, Is the CIS benefitting anybody!, @aner&ilt o#rnal of Transnational .aw 8@ol! 51?119, 2006
4iselen, Sie, #doption of the 3ienna Convention for the International Sale of oods 4the CIS( in South #frica, So#th African .aw o#rnal 8Part ''9, 1
Nornet, "icole, The Common "uropean Sales Law and the CIS& Complicating or Simplifying the Legal "nvironment!, %aastricht o#rnal of 4#ro=ean an om=arati$e .aw 8@ol! 19, 2012
Arton, !A!, The United 2ations Convention on Contracts for the International Sale of oods, om=arati$e an 'nternational .aw o#rnal of So#th Africa 8@ol! 1C9, 1C?
Nilian, %onica, CIS and The +roblem with Common Law ,urisdictions , The o#rnal of Transnational .aw an Polic> 8@ol! 10529, 2001
#est, A!! /en0amin5s Sale of oods 8)th eition9, 12
ainc>mer, effre>, The CIS and International Commercial #rbitration& +romoting a Complimentary 6elationship /etween Substance and +rocedure, Sharin 'nternational ommercial .aw across "ational Bo#naries5 Hestschrift for Al&ert ; Nritzer, 200C
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