LUMSA – International Commercial Law 17 October 2014 Prof. Avv. Roberto Pirozzi

LUMSA – International Commercial Law THE OBSERVANCE OF GOOD FAITH IN INTERNATIONAL TRADE According to the third element of Art. 7(1), in interpreting the CISG one must have regard to the need of promoting the "observance of good faith in international trade." The inclusion of the good faith principle represented a compromise between those who supported its inclusion stating that, at least in the formation of the contract, the parties should observe the principles of fair dealing and act in "good faith"; and those who were opposed to any explicit reference to the principle on the ground that it had no fixed meaning and would lead to uncertainty and non-conformity.

LUMSA – International Commercial Law GOOD FAITH AS AN INSTRUMENT OF INTERPRETATION The placement of the good faith principle in the context of an operative provision dealing with the interpretation of the CISG creates uncertainties as to the principle's exact nature, scope, and function within the CISG. Some commentators conclude that the principle of good faith is just an additional criterion to be used by judges and arbitrators in the interpretation of the CISG. Thus, good faith is merely a tool of interpretation at the disposal of the judges to neutralize the danger of reaching inequitable results.

LUMSA – International Commercial Law GOOD FAITH AS AN INSTRUMENT OF INTERPRETATION Even if included in the CISG as a mere instrument of interpretation, good faith can pose problems in achieving the ultimate goal of the CISG, i.e. uniformity in its application, because the concept of good faith has not only different meanings between different legal systems but also multiple connotations within legal systems

LUMSA – International Commercial Law REMEDIES AGAINST DIVERGENT INTERPRETATIONS For example, in case of ambiguities or obscurities in language, the existence of several equally authentic language versions of the Convention permits the interpreter to consult another official version of the CISG for assistance. What follows is an examination of different means that can be utilized in the battle against divergent interpretations of the CISG.

LUMSA – International Commercial Law REMEDIES AGAINST DIVERGENT INTERPRETATIONS - CASE LAW The most effective means of achieving uniformity in the application of the CISG consists in having regard to the way it is interpreted in other countries. The development of a body of case law based on the provisions of the CISG and the careful consideration of this jurisprudence by later courts are very important steps in the process of interpretation of the CISG.

LUMSA – International Commercial Law REMEDIES AGAINST DIVERGENT INTERPRETATIONS – CASE LAW As a matter of principle and common sense, courts should, at least, consider the jurisprudence developed by foreign courts applying the CISG. The difficulty lies in the importance (e.g., binding force, or merely persuasive value) that a court should place on a decision of a foreign court and the reasoning behind that decision, and the degree to which any such "precedent" may be followed and adopted by other foreign courts.

LUMSA – International Commercial Law REMEDIES AGAINST DIVERGENT INTERPRETATIONS – CASE LAW A judge, or arbitrator, faced with a particular question of interpretation of the CISG's provisions, which may have already been brought to the attention of a court in another Contracting State, should take into consideration the solutions so far elaborated in the foreign courts.

LUMSA – International Commercial Law REMEDIES AGAINST DIVERGENT INTERPRETATIONS - DOCTRINE Another "antidote" to the danger of divergent interpretations of the CISG is the use of doctrine, i.e., academic writings. The bibliography concerning the literature on the CISG is voluminous and still growing. The value of scholarly writings and international commentaries in the promotion of an autonomous, international interpretation of the CISG and its uniform application cannot be overlooked.

LUMSA – International Commercial Law REMEDIES AGAINST DIVERGENT INTERPRETATIONS - DOCTRINE In civil law countries, recourse to doctrine as an instrument of interpretation for domestic and foreign law has never been doubted. On the other hand, common law jurisdictions have traditionally given little effect to scholarly writings. But even in common law countries, such as England, where judges traditionally have been reluctant to have recourse to scholarly writing, the need for uniformity in interpreting international Conventions has led to the use of doctrine.

LUMSA – International Commercial Law REMEDIES AGAINST DIVERGENT INTERPRETATIONS – LEGISLATIVE HISTORY Another useful guide for resolving doubts about the exact meaning, scope and effect of the CISG's provisions is the legislative history of the CISG. The study of the legislative history which include not only the acts and proceedings of the Vienna Conference, but also the summary records of the previous deliberations within UNCITRAL.

LUMSA – International Commercial Law REMEDIES AGAINST DIVERGENT INTERPRETATIONS – LEGISLATIVE HISTORY The CISG directs interpreters to have regard to the "international character" of the provisions of the CISG and requires, aside from the international experience that will be developed through jurisprudence and doctrine, that the Convention be placed in the proper international setting of its legislative history.

LUMSA – International Commercial Law GAP-FILLING IN THE CONVENTION: ARTICLE 7(2) The CISG does not constitute an exhaustive body of rules and thus does not provide solutions for all the problems that can originate from an international sale transaction. Indeed, the issues governed by the Convention are limited to the formation of the contract and the rights and obligations of the parties resulting from such a contract. This limitation gives rise to problems relating to the necessity of filling gaps that exist in any type of incomplete body of rules

LUMSA – International Commercial Law GAP-FILLING IN THE CONVENTION: ARTICLE 7(2) In the manner that Article 7(2) is drafted, the risk of diversity in the CISG's gap-filling from one jurisdiction to another is minimized, since recourse to domestic laws is to be had only when it is not possible to fill a gap by applying the general principles on which the Convention is based.

LUMSA – International Commercial Law GAP-FILLING IN THE CONVENTION: ARTICLE 7(2) The aim of this provision is not very different from that which the interpretation rules found in Article 7(1) are pursuing, i.e., uniformity in the CISG's interpretation and application. Article 7(2) and gap-filling are directly connected to Article 7(1) and interpretation, not only due to the proximity of their location in the text but, more importantly, because of their substantive relationship with each other.

LUMSA – International Commercial Law GAP-FILLING IN THE CONVENTION: ARTICLE 7(2) An approach to gap-filling, one based on the concept of internationality and on generally acknowledged principles upon which the CISG is based, would serve and promote the purpose of the new law (i.e., uniformity in its application) rather than hinder it.

LUMSA – International Commercial Law GAP-FILLING IN THE CONVENTION: ARTICLE 7(2) In accordance with the basic criteria established in Article 7(1) and discussed earlier, uniformity in the CISG's application is the ultimate goal. It follows that for the interpretation of the CISG in general, not only in the case of ambiguities or obscurities in the text, but also in the case of gaps praeter legem courts should to the largest possible extent refrain from resorting to the different domestic laws and try to find a solution within the Convention itself.

LUMSA – International Commercial Law GAP-FILLING IN THE CONVENTION: GENERAL PRINCIPLES When the solution to a gap-filling problem cannot be achieved by analogical application of a rule which might found in a specific CISG provision dealing with similar issues as those present in the gap, gap-filling can be performed by the application of the "general principles" on which the CISG is based.

LUMSA – International Commercial Law GAP-FILLING IN THE CONVENTION: GENERAL PRINCIPLES Despite the clear provision for the use of the CISG principles in gap-filling by Art. 7(2), there is no other textual reference as to the identification of such principles and the manner of their application, once identified, in order to fill a gap in the CISG. General principles that are capable of being applied to matters governed by, but not expressly regulated by the CISG, may be inferred from specific rules established by specific CISG provisions dealing with specific issues. A general principle stands at a higher level of abstraction than a rule, or might be said to underpin more than one such rule.

LUMSA – International Commercial Law ANTITRUST – GENERAL PRINCIPLES Article The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply;

LUMSA – International Commercial Law ANTITRUST – GENERAL PRINCIPLES (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

LUMSA – International Commercial Law ANTITRUST – GENERAL PRINCIPLES 2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void. 3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of - any agreement or category of agreements between undertakings, - any decision or category of decisions by associations of undertakings, - any concerted practice or category of concerted practices,

LUMSA – International Commercial Law ANTITRUST – GENERAL PRINCIPLES which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question

LUMSA – International Commercial Law ANTITRUST – GENERAL PRINCIPLES Article 102 Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.