Brazil & CISG 2015 Contractual Exclusion or Derogation Dr Edgardo Muñoz Professor of Law

Art. 6 CISG. The parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions. It embodies a general principle on which the CISG is based (Art. 7(2)) = Freedom of Contract

Derogation or variation This includes modification or adding concepts, rights, duties and standards. Parties’ Agreement under the CISG provisions on interpretation and formation in Articles 8, 14-24, 29.

Clause in a CISG contract “Price: USD 45 kg CIF Vancouver INCOTERMS 2010”. Effective derogation of individual provisions in CISG Articles 31 (place of delivery), 67 (time of risk transfer) 32 (transportation & insurance, delivery of documents).

Clause in a CISG contract “Any non-conformity in the goods shall be notified to the seller within 2 weeks after it was discovered or ought to be discovered by the buyer”. Effective derogation of reasonable period of time for notice of non-conformity under Art. 39 CISG.

Clause in a CISG contract “Any non-intentional damages arising out of the performance of the contract will be limited to the total value of the goods under the contract”. Most likely an effective derogation of articles CISG.

Exclusion If Art. 1(a) or (b) – ( ) = CISG unless Opt-out under Art. 6.

For effective Opt-out = Parties’ Agreement to exclude the CISG in whole or in part. How does a Court determine the substantive and formal existence of the parties’ agreement to exclude the CISG in a CISG Contract? Answer: If the Court is in a Contracting State, by means of the CISG provisions on interpretation and formation in Articles 8,

How does a Court in a non-Contracting State or an Arbitral Tribunal determine the substantive existence of the parties’ agreement to exclude the CISG? Answer: In accordance with the lex contractus determined under the Court’s or the Arbitral Tribunal’s Conflict of Laws rules. (English Court - Rome I or Contracts Act 1990) (Arbitration - in Brazil under the Act 1996)

I. Exclusion by Positive choice of law Clause in a CISG contract “This contract is governed by English law” No dispute as to existence of agreement over that clause.

Whether a State Law can be successfully chosen is left to the conflict of laws rules of the forum. In Brazil the Civil Code Introductory Law does not allow the parties to freely choose the applicable law to their contracts (Article 9 Introductory Law designates the law at place of conclusion or Brazilian law if performance in BR).

Appeal Tribunal of São Paulo, Registry , 18 December 2003: the Judge recognized the agreement of the parties to submit their contract to the laws of the United Kingdom (however, the contract was signed there). 1° TACivSP, AgIn , 12ª Câmara, relator Artur César Beretta da Silveira. Data do julgamento: 18 de dezembro de 2003.

“ This contract is governed by Swiss law ” “This contract is governed by the State of New York Laws” With out further specifications.

“This contract is governed by [CISG Contracting State] law ” In CISG Contracting State Courts. Where both parties (Art. 1(a)) are in Contracting States and the law designated in a Contracting State Law = No Exclusion See OGH, 26 January 2005, CISG-online 1045; OGH, 21 April 2004, CISG-online 1048; OGH, 17 December 2003, CISG-online 828; OGH, 22 October 2001, CISG-online 614; BGH, 25 November 1998, CISG-online 353; BGH, 23 July 1997, CISG-online 276; OLG Stuttgart, 31 March 2008, CISG online 1658, note 37.; Hof van Beroep Antwerp, 24 April 2006, CISG-online 1258; OLG Linz, 23 January 2006, CISG-online 1377; CA Lyon, 18 December 2003, CISG-online 871; KG Zug, 11 December 2003, CISG-online 958; CA Paris, 6 November 2001, CISG-online 677; RB Middelburg, 2 April 2008, CISG online 1737; Easom Automation Systems, Inc v Thyssenkrupp Fabco, Corp, US Dist Ct (ED Mich), 28 September 2007, CISG-online 1601; RB Arnhem, 28 June 2006, CISG-online 1265; RB Hasselt, 15 February 2006, CISG-online 1257.

“ This contract is governed by [CISG Contracting State] law ” In CISG Contracting State Courts, where one or none of the parties (Art. 1(b)) are in Contracting States and the law designated is a Contracting State Law. BGer, 17 July 2007, CISG-online 1515, note 4.; Cass com, 17 December 1996, CISG-online 220; HGer St Gallen, 3 December 2002, CISG-online 727. Brazilian Courts in this case will make resort to Art. 9 of the Introductory Law and get to the application of CISG if the contract was entered into in a Contracting State or if it is to be performed in Brazil.

“This contract is governed by [CISG Contracting State] law ” Arbitral Tribunals, where the law designated is a Contracting State Law with further specification. No CISG exclusion. ICC Ct Arb, 11333/2002, CISG-online 1420; ICC Ct Arb, 10329/2000, CISG- online 1173; ICC Ct Arb, 9781/2000, CISG-online 1202; ICC Ct Arb, 9187/1999, CISG-online 705; ICC Ct Arb, 7645/1995, CISG-online 844; ICC Ct Arb, 7844/1994, CISG-online 567. Same result for Arbitral Tribunals with seat in Brazil under Art. 2 (1) Brazilian Arbitration Act.

“ This contract is governed by French law with the exclusion of… ‘the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG’ or ‘the CISG’ or ‘the Vienna Sales Convention’ or ‘the 1980 International Sales Convention’” Clear exclusion of the CISG by the Parties.

Clause in a CISG contract “This contract is governed by the provisions of the Brazilian Civil Code”. Most likely enough to effect an entire derogation of the CISG under Art. 6. OLG Oldenburg, 20 December 2007, CISG-online 1644; CIETAC, 24 March 1998, CISG-online 930: the parties from China (seller) and the UK (buyer) chose the Law of the People’s Republic of China on Economic Contracts Involving Foreign Interest.

II. Exclusion by Implicit choice of law As scholars and Courts agree that the CISG may be excluded implicitly, i.e. by implicit agreement.

US seller v Brazil buyer “Any dispute arising under this agreement shall be solved by English Courts”. Not enough to exclude application alone. Same approach under Mexico City’s (OAS) Convention 1994 which Brazil signed but has not been ratified.

III. Exclusion by subsequent choice of law Parties under a CISG contract basing their arguments on domestic law provisions during litigation. Wrong to assume CISG exclusion without assessing the Parties’ intention or ignorance.

Courts bound by the principle of iure novit curia have to enquire whether parties intent to exclude the CISG. See OLG Köln, 28 May 2001, CISG-online 681: during proceedings before the court of first instance the parties had based their arguments on domestic German law. The court advised the parties that it would regard this conduct as implicit choice of German domestic law. The parties did not object. The OLG Köln affirmed the application of domestic German law. See also Int Ct Russian CCI, 11 October 2002, CISG-online 893: the choice of law clause designated Russian law. The Tribunal asked whether the parties had intended to exclude the CISG. As the parties objected to the CISG being applied, Russian domestic law was applied.

23 Universidad Panamericana Guadalajara Edgardo Muñoz. END Muito Obrigado!