The UK and The CISG

Why has the UK not ratified the Vienna Convention on Contracts for the International Sale of Goods?

For anyone who is unsure, the Vienna convention on the contracts of the international sale of goods (CISG) was first adopted on the 11th of April 1980, and came into force on January 1st 1988. As a whole the convention aimed to take away the barriers in international trade and to promote the use of international trade. The CISG applies to contracts whose places of business are in different states. The convention has currently been ratified by 79 counties, 76 give it legislative force; including Turkey and France.

General Concerns

Some of the general issues with the convention that were raised were that it took eight years for the convention to come into force. The convention was adopted in 1980 but it did not come into force until 1988. Does this raise questions to the authority of the act if it took so long to pass?

Furthermore when the convention was first drafted it was argued to be too Euro-centric. It was argued by many that the CISG did not take into consideration the problems it was going to face with trying to combine different legal systems and different trade traditions in to one uniform platform.

Legal Difficulties

Before looking at specific reasons it would be ideal to look at legal reasons as to why the convention has been criticised and see if these reasons run parallel with UK issues.

Most of the disputes from the convention are held within Article 7. Article7 explains what the court should do if there is ever any issue with application; Art 7 (2) CISG, ‘Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based on, or in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law’.

Some arguments have been that Article 7 shows gaps within the convention, the reference to domestic law would go against ensuring a uniform application. This could also create a lack of legal certainty. However there is the argument that having this article would increase issues with uniformity. It is allowing judges to make decision which may fall short of the scope of the convention. There is further reason for this article to be seen as positive; it could be a way of showing that the convention addressed the issues it would face due to different legal systems, further suggesting there is a certain degree of flexibility within the convention.

Another challenge with Article 7 is the use of the term ‘good faith’. The article wants the application of its provision to be applied with good faith; confusions that arise here is good faith being hard to measure and define. Additionally good faith is not something that is recognised within the UK, so how would this work for the UK if Article 7 had to be applied.

Furthermore Article 6 CISG allows countries to opt in and opt out of the convention. This means that even if two countries have ratified the convention and use it within their domestic law, there is a possibility for them to not be contractually bound by CISG and its articles. This may cause the scope of the convention to be questioned; surely allowing for the convention to not be used at all would be something which would limit its authority and use of application.

UK Fears

Some opinions surrounding the UK and the CISG include the time and will of Parliament. Firstly, could it be that Parliament is so busy passing and drafting other legislation that they do not have time to pass the CISG? Or could this be a way of showing their unwillingness towards the convention. Is it not that Parliament do not have time, it’s that they do not want to make time?

A Sally Moss Article from 2006 [1] supported the idea that there is no parliamentary time to introduce the CISG because it is not a priority. Moss found that in 1997 there was only 36 replies to 450 documents issued about the CISG; 26 of those replies being in favour. The CISG was then again addressed in 2004, Moss tried to use the route of regulatory reform order. However the response again was negative. From her findings she was able to explore more of the reasons for and against. One of the arguments was that ‘there was a danger that London would lose its edge in international arbitration and litigation’. However it was also raised that implementing the convention could have a political benefit. This would be ‘rebutting the negative perception of the U.K. as being a reluctant participant in international trade law initiatives’. The issue for Parliament here would be to decide what they are more concerned with. Arguably ratifying the convention and showing willingness may be a way to bring in more trade from different states.

One of the most recent articles on the topic can be seen from a piece from 2012 [2]. The arguments and supporting evidence from this suggests that it would only be a positive thing from the convention to be adopted. It was found that on average there are 2.45 adoptions a year, making it the CISG the second most adopted treaty in the field of international commercial law after The New York Arbitration Convention of 1958. If the convention is showing to be that successful with regards to adoptions why have the UK not acted sooner?

To conclude, of course it comes down to the political will of Parliament. However the underlying issue and question seems to be if the UK wants to extend their international sales contracts, they are going to have to start using international sale conventions and law.

[1] Sally Moss, “Why the United Kingdom Has Not Ratified the CISG”, 2006
[2]Silvia E. Nikolova “UK’s Ratification of the CISG”, 2012