CISG – Opportunities and risks
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You will soon also find this article in a bd-Practicereport.
The United Nations Convention on Contracts for the International Sale of Goods, also known as CISG, has been in existence since the 1980s and has been implemented by 94 countries around the world (as of 02.07.2021). The practical significance of these regulations is immense, as UN sales law applies to many cross-border sales contracts, unless the parties agree on a different legal system or a different law. In business transactions, there is still a lack of clarity and prejudice about the UN Convention on Contracts for the International Sale of Goods.
This is also shown by a survey conducted by Germany Trade & Invest (GTAI) in April 2020 (to be read in Kampf/Marenkov, Zeitschrift für das Recht des internationalen Warenkaufs und Warenvertriebs 2021, page 2).
The result of the survey confirms that many companies are not aware of the opportunities and risks of the UN Convention on Contracts for the International Sale of Goods. Instead, they rely on the „familiar“ German BGB and HGB, which, however, is not favorable for entrepreneurs in all areas.
One benefit of the CISG has always been seen as its greater acceptance in international trade. The question of which legal system a contract is subject to is often one of the most important points of contention between companies. German law differs fundamentally from, for example, English law. In particular, this law knows institutes which are completely unknown in Germany (among others, the so-called trust). The agreement of the CISG can therefore represent a compromise for the companies, since here not a national legal order is given priority, but a neutral order is taken. As a rule, the content of both legal systems is partly identical in the CISG.
This also applies to German law, which is similar to CISG in many areas. The existing differences must of course be taken into account when concluding a contract and adapted if necessary. Here, too, the CISG offers the option of stipulating certain regulations in deviation from the law. This can be done by means of general terms and conditions, among other things.
Furthermore, the prejudice of a lack of case law is no longer sustainable. The CISG has now been in existence for over 40 years and since then numerous judgments have been handed down, both in Germany and abroad. Courts as well as advising lawyers are more and more sensitized to questions of international sales law and the problems associated with it.
A problem or disadvantage, however, is still the partly different jurisdiction. The courts of different member states are free with regard to their interpretation of the law. This sometimes leads to different results. An international court, which would make an official decision in such cases and would result in a uniform jurisdiction, is missing here. Therefore, in the context of the CISG, it may also be decisive which court renders the judgment.
A final disadvantage lies in the incompleteness of the CISG. Although this law regulates large parts of the sales contract, it is silent with regard to certain topics. These are, for example, questions of legal capacity, representation and the validity of general terms and conditions. These gaps are filled via national law.
Overall, it can be stated that the CISG is in general not worse than the German BGB/HBG. However, the question of whether it makes sense for companies to choose this law can only be decided on a case-by-case basis. A blanket exclusion of the CISG is, however, the worst choice in any case, as this also means that all possible opportunities are lost unchecked.
Do you have questions about the CISG or international business law? Our law firm will be happy to advise you on questions concerning international legal relations.