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International economic law and commercial contracts: promoting cross-border trade by uniform law conventions

International economic law and commercial contracts: promoting cross-border trade by uniform law... Abstract International conventions establishing uniform law for commercial contracts have become more and more numerous ever since the late nineteenth century. From a functional perspective these instruments are close to international trade law. The paper dwells upon the systematic relationship between uniform commercial law and international trade law, using an actor-based approach: while in international trade law States stake out the playing ground for private cross-border business, the conventions on uniform commercial law are meant to reduce legal uncertainty for private actors and to reduce their hesitations to engage in cross-border trade. Their aptitude for that purpose does not only depend on the quality of the texts and the number of States willing to adhere, but also on their future application, in particular their interpretation, the filling of gaps and their revision and adjustment to changed circumstances. The paper focuses on these issues which are common to uniform law conventions in many fields. I. Introduction The number of international conventions establishing uniform law for commercial contracts has grown ever since the late nineteenth century. They are usually drafted and adopted under the auspices of international organizations such as the International Institute for the Unification of Private Law (Unidroit), the United Nations Commission on International Trade Law, the International Maritime Organization (IMO), the International Civil Aviation Organization, the World Intellectual Property Organization, the International Labour Organization, the Hague Conference; there are many of them. In more recent times, the harmonization of laws has tended to shift to other forms of legal harmonization—for example, model laws or lists of principles. This article will focus on binding conventions. They deal with a large number of subjects relevant for commercial contracts: the sale of goods, transfer of payment, carriage by the various modes of transport, intellectual property, secured transactions, liability, and dispute settlement. However, their perception in legal scholarship appears to suffer from their position in a kind of no man’s land; commercial lawyers tend to deal with the national law of their country as the core of commercial law while considering uniform law conventions in their field as marginal; where they pay attention to them at all they focus on the substantive law provisions and disregard their particular nature as treaties under international law. On the other hand, the main thrust of public international law is on the action as well as the rights and obligations of States in their mutual relations, which are of minor significance in uniform law conventions; the only commitment that contracting States accept in such a convention is to bring their national law, within the scope of the instrument, in line with the uniform provisions. A third academic discipline that excludes uniform law conventions from its own purview is private international law. To the extent that uniform law conventions deal with substantive law and not with conflict rules, they are considered to be alien to the choice-of-law approach cherished by so many conflicts lawyers. Against this backdrop, it is unsurprising that in legal literature the general issues arising from uniform law conventions are rarely discussed.1 Rather, legal scholars and practitioners address specific instruments such as the European Patent Convention,2 the Convention on the International Sale of Goods (CISG),3 the Convention on the Contract for the International Carriage of Goods by Road (CMR),4 the Montreal Convention on International Carriage by Air,5 the Unidroit Convention on Stolen or Illegally Exported Cultural Objects,6 and many others. These conventions are not considered to be part of a comprehensive body of law giving rise to common issues. My following remarks will attempt to identify the place of uniform law conventions in the overall legal framework of international trade. This place is determined by the role of private actors and their risk aversion—in particular, their inclination to avoid legal uncertainty. Uniform law conventions are meant to reduce that uncertainty. Whether they effectively achieve that goal depends on the subsequent handling of such conventions: their interpretation, the filling of gaps, and the revision of outdated instruments. II. Uniform private law in the system of international trade law 1. Systematic considerations For many lawyers, the legal regime of international business transactions gives rise to confusion. It is laid down in a huge number of international treaties, both multilateral and bilateral. However, they cover very different subjects and do not appear to be part of a consistent whole. Some deal with the quota of goods permitted for importation or with customs duties and other regulatory conditions governing trade; others with restrictions or the outright exclusion of the trade in certain goods; again others with the rights and obligations of private parties or with dispute settlement. Whoever expects an overarching conception and a consistent regime will consider them as fragments and will have difficulty in perceiving them as part of a comprehensive system. Such a system of the law governing international trade can best be understood from the perspective of its participants. International business is in the hands of multiple actors, public and private. Private actors—that is, individuals and companies—are confined to private forms of action: contracts, unilateral declarations, and other acts performed for the promotion of private benefit. They can legally bind themselves but not third parties. They are subject to the applicable legal rules that often diverge between the various countries. Which rules and which country’s law will apply? It is up to private international law to answer this question. State actors behave in a double capacity. As sovereign States, making use of their unlimited powers, they create the legal framework for business transactions that are to be perfected by private actors. When performing this role of lawmakers, States pursue their own interest—that is, the balance of imports and exports, currency stability, and full employment of the national workforce; they usually aim at sponsoring the interest of their citizens as well, which is considered to form part of an amalgamated public interest. But they also act, similar to private actors, as private parties to commercial contracts—for example, through state-owned undertakings or in concession agreements. In the former capacity, they create legal rules; in the latter, they are governed by them. Needless to say, conflicts of interest may arise, and States sometimes avail themselves of their regulatory powers in order to seek an advantage for their citizens or for themselves. It is one of the tasks of public international law to control the potential partiality of State action. These preliminary remarks show that public international law affects commercial transactions in multiple ways. By multilateral and bilateral treaties such as the General Agreement on Tariffs and Trade7 and preferential trade agreements, which are also known as World Trade Organization-plus agreements,8 it limits, in a macro-economic perspective, state interference with trade. It thereby provides the framework for areas of free movement of goods and services; the specific transactions are then performed by cross-border contracts concluded by private actors within the framework staked out by public international law. In the terminology of a systematic legal scholarship, the latter contracts are considered to be part of commercial law, whereas the aforementioned treaties fall into the category of international trade law. While they do not directly address the relations between private actors, they establish the playing ground for them. It is not only the promotion of trade that is pursued by public international law. It also deals with restrictions. Where single States try to interfere with international trade—for example, by means of embargoes—the private parties affected, or their States of origin, may invoke certain rules of international law such as the principle of non-intervention or the principle of territoriality as a shield against such measures. In other instances, it is not the single States but, rather, the international community itself that wants to restrict international trade in certain sectors by pertinent treaties; this is, for example, the case with endangered species,9 narcotic drugs,10 or cultural objects.11 Such agreements create categories of goods close to res extra commercium, which the international community believes should not be freely traded for non-economic reasons. 2. Legal certainty for private actors Where cross-border trade is lawful in accordance with the bodies of law outlined so far, the private actors may still abstain from engaging in international commerce. On a micro-economic level, there may be good reason for such abstention: domestic products of a better quality available on the home market, the absence of competent post-delivery service for the foreign product, lower prices, faster delivery, and so on. One of the reasons is sometimes a lack of legal certainty in international transactions; it may relate to the delivery of the goods, to remedies for non-delivery, to risks inherent in the transfer of payment, to claims enforcement, and so on. Legal uncertainty is usually caused by the vagueness or divergence of the national laws, including the conflict rules of the jurisdictions involved, the absence of judicial cooperation, or a lack of confidence in the judiciary of a foreign country. Commercial tools such as collateral, letters of credit, or insurance can reduce the legal uncertainty, but they are costly and may give rise to other risks. They cure symptoms, not the disease itself. In order to increase legal certainty, the international community has engaged over the last 150 years in a progressive harmonization of commercial law and private international law. Various means such as the drafting of international contract forms by private organizations, the elaboration of model laws and principles by both private and public bodies, and the negotiation of international conventions by governments for the harmonization or coordination of laws have been conceived of.12 This article focuses on the latter type of instrument. Thus, uniform law mirrors at a micro-economic level the attempts made by States in pursuance of world trade law at a macro-economic level. While States aim at the predictability and reliability of the legal framework for their relations with other States, the private traders seek legal certainty in their relationships with other private actors. This observation raises the question to what extent legal certainty in the latter context is actually increased by uniform law. The answer depends not only on the quality of the agreed instruments but also on their subsequent application, on their interpretation, on gap-filling, and on their stability and revision. These topics will be treated in the following discussion. III. Interpretation of uniform law conventions 1. Uniform interpretation Once concluded, conventions have to be ratified and implemented by national legislatures. In the early years, they are thus often considered to form part of, and are interpreted in line with, national law.13 Over time, it has become clear that this approach by necessity amounts to divergences and runs counter, at the stage of application, to the goal of uniformity pursued by the instrument. After the Second World War, the upper courts of various countries acknowledged by and by that the ultimate goal of interpretation of an international convention must be the preservation and further development of its uniformity. For example, the German Federal Court said in relation to the CMR in 1975 that ‘in the interpretation of international conventions which regulate private law relations between the citizens of Contracting States it must be kept in mind that domestic concepts and principles cannot indiscriminately be considered as underlying the convention, since the objective of a uniform application of the law in the Contracting States cannot be achieved otherwise’.14 Two years later, the Belgian Court of Cassation pointed out ‘that it would be futile to elaborate a convention designed to establish an international statute if the courts of each State interpreted it in line with the concepts of their own law’.15 Throughout the same period, similar dicta can be reported from English decisions. Thus, Lord Diplock stated in Fothergill v Monarch Airlines that the 1929 Warsaw Convention on Air Carriers’ Liability ‘is meant to be understood in the same sense by the courts of all those States which ratify or accede to the Convention’.16 Likewise, the US Supreme Court gave a detailed report on European cases and scholarly opinions concerning the concept of accident in the Warsaw Convention before concluding: ‘[W]e find the opinions of our sister signatories to be entitled to considerable weight.’17 In 1980, the objective of a uniform and autonomous interpretation of international conventions was explicitly laid down for the first time in Article 7(1) of the CISG. The provision points out that ‘in the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application’. This is an unambiguous request for an autonomous interpretation in the light of comparative law—in particular, case law and legal literature from other contracting States.18 Numerous similar provisions have been included in more recent international instruments.19 Nowadays, the principle of autonomous interpretation is generally acknowledged, even for conventions that do not specifically provide for it. It follows from the very purpose of a uniform law convention—that is, the unification of the law; not only the law in the books but also the law in action. It is this purpose that is meant to guide the interpretation of treaties in general in accordance with the 1969 Vienna Convention on the Law of Treaties (VCLT). Articles 31–3 of the VCLT lay down the main rules on the interpretation of treaties, including conventions of uniform private law.20 They address the contracting States as such—that is, all legislative and executive bodies as well as the judiciary. This does not mean that the courts of countries following the dualist approach to international law have to ‘apply’ the VCLT in a strict sense. Rather, they take account of the interpretation rules laid down in the VCLT in order to ensure conformity of their jurisprudence with the international instrument at issue. This conformity requirement is almost universally recognized.21 While the VCLT has not been ratified by all States, the interpretive rules correspond to customary law.22 2. Text, context, and purpose Under Articles 31–3 of the VCLT, essential guidance for interpretation is given by three aspects of a rule: its text, its context, and its purpose. As opposed to the interpretative methods espoused in many jurisdictions, the historical background is only of subsidiary importance where the other methods lead to an unclear or unreasonable result. Nevertheless, international tribunals in practice do not appear to exclude historical arguments where the travaux préparatoires are available. Among the various methods of interpretation, the purpose of an instrument will usually have major weight. This has been clearly enunciated with respect to conventions drafted in several languages; where the language versions do not have the same meaning and where the other methods do not clarify the text, the purpose will be decisive under Article 33 of the VCLT. It is not possible in this context to deal with all of the aspects of interpretation in detail. Given the growing density and comprehensiveness of uniform private law, it should be pointed out, however, that the systematic interpretation mandated in Article 31(2) and (3) of the VCLT is gradually gaining a new meaning. Since, under Article 31(3)(c), the relevant context includes ‘any relevant rules of international law applicable in the relations between the parties’, the interpreter of a specific conventional rule is invited to take a look at corresponding provisions in neighbouring international conventions.23 Take the concept of the place of business as an example. The case law generated in the context of Article 1 of the CISG may be useful in the context of Article 2 of the Unidroit Convention on International Factoring24 or Article 1(1)(a) of the United Nations Convention on Independent Guarantees and Stand-By Letters of Credit.25 All three of these instruments and some others employ the concept of place of business and could relate to different aspects of one and the same international transaction. Despite the general approval of an autonomous and uniform interpretation, divergences in case law cannot always be avoided. How should the national courts react where such divergences become apparent? This issue has been discussed since around 1960 when French and German courts interpreted the Uniform Law on Bills of Exchange in different ways.26 The dispute dealt with the significance of an ‘aval’—that is, a guarantee for the payment of a bill of exchange given on the bill itself; under Article 31(4) of the Uniform Law, an aval must specify for whose account it is given. The provision continues: ‘In default of this it is deemed to be given for the drawer.’ While a French court considered this to be an irrebuttable presumption, the German courts allowed the proof that the aval was given on behalf of a different person.27 As a result, courts on both sides of the Rhine fell back into a choice-of-law approach and would apply the interpretation of Article 31(4) prevailing in the jurisdiction, the national law of which was held applicable under the choice-of-law principles.28 It is submitted that the return to a choice-of-law approach is incompatible with the very purpose of uniform substantive law and should be avoided unless a conflict rule is contained in the convention itself. Rather, the court should try to explore the differences of interpretation in a comparative assessment and take a fresh start on that basis. 3. Procedural devices The best solution, of course, would be a procedural device—in particular, the possibility of submitting the issue to an international panel or tribunal. Such international dispute settlement mechanisms have been created in other areas of international law such as international criminal law, the law of the sea, and world trade law. They have so far been rejected for uniform private law where the supreme courts of contracting States are the courts of last resort. But they cannot ensure international uniformity. With respect to uniform law conventions, which are in force for the European Union (EU), the Court of Justice of the European Union may appear to be a counter-example of an international tribunal having supranational jurisdiction. The Court in fact considers such conventions to be an integral part of EU law and, therefore, has jurisdiction to deal with their interpretation upon a prejudicial question submitted by a national court under Article 267 of the Treaty on the Functioning of the European Union.29 But the Court’s interpretation of a uniform law convention is only binding within the EU, not for third contracting States including Britain after Brexit. Moreover, the Court has not yet understood that the aim of uniform interpretation of such conventions requires a closer look at the practice of contracting States outside the EU.30 IV. Gap-filling in uniform law conventions Conventions on uniform commercial law never contain a complete regulation of their respective subject. Some are explicitly confined to the unification of ‘certain rules’,31 others explicitly exclude certain issues;32 it is possible to refer to both types of instruments as referring to external gaps. It is not uncommon either that conventions deal with a certain matter but do not cover single aspects. For example, Article 49 of the CISG permits the buyer to declare the contract avoided in cases of a serious breach of contract by the seller without indicating whether such a declaration of avoidance can be implied or must be explicit and without referring to the form of such a declaration. Gaps of this kind are often designated as internal gaps.33 How should they be filled? The external gaps relate to areas that the convention deliberately does not cover; thus, there is no reason to deviate from the traditional treatment of legal issues in cross-border relations—that is, from the choice-of-law approach. Unless private international law is unified or the national laws designated provide for the same outcome, divergent solutions are inevitable. But what about internal gaps related to issues within the scope of a convention? Such lacunae may in fact be called gaps. Some conventions indicate that they should be filled by reference to rules dealing with similar issues. Thus, several provisions of the CISG and, in particular, Article 11 allow for the conclusion that declarations of all kinds made by the parties do not require any specific form. Why should that be different in the case of Article 49 of the CISG? The alternative would be the recourse to the choice of the applicable national law and, thereby, to national law; this would imply the risk of deviating results and is therefore inappropriate. This is why Article 7(2) of the CISG mandates filling such internal gaps ‘in conformity with the general principles on which [CISG] is based’. It is only in the absence of such principles that recourse to private international law and, thereby, to national law is permitted. Article 7(2) is sometimes understood to the effect that those principles must be visible in the convention itself. However, this conclusion is not compelling. Even in the absence of visibility, a general principle can be one of the foundations on which a convention ‘is based’—a basis is not always visible. We know of many buildings that are based on invisible sub-soil foundations of ancient origin. In international trade, principles have developed since times immemorial that have not always explicitly been laid down but, nevertheless, are the basis of conventions such as the CISG. The purpose of Article 7(2) of the CISG and similar provisions in other conventions34 is to reduce recourse to private international law and, thereby, to national law. This purpose requires a wide interpretation of a concept of general principles on which a convention is based. With regard to the law of international business transactions, this reference should be understood as pointing to principles such as those laid down in the Unidroit Principles of International Commercial Contracts (PICC) or in similar catalogues.35 The parties, of course, are always permitted to prove by comparative evidence that a specific rule laid down in those works does not constitute a general principle. But, at least with regard to the PICC, which have been elaborated by high-ranking neutral experts on the basis of a broad comparison of national laws, an indication or even a rebuttable presumption for the existence of such principles appears appropriate.36 Thus, provisions like Article 7(2) of the CISG have the potential for the completion, maybe even a gradual extension, of uniform law of the respective convention by virtue of its judicial application. V. Revision of uniform law conventions 1. Aging conventions Legal rules, whether created by statute or by courts are often time dependent. This is true for national law and for international instruments. However, national statutes can be amended more easily than international conventions that require parliamentary approval of every amendment in all contracting States. Uniform law therefore has been said to be subject to solidification or even petrification.37 The international community is aware of this risk. While it has repeatedly tried to adjust outdated conventions to changed circumstances, the resulting texts frequently have been approved only by a limited number of the contracting States of the underlying convention. Consequently, the old and the new convention co-exist side by side and cause a fragmentation and disintegration of the uniform law. This can be illustrated by the limitation of shipowners’ liability. The first convention on the matter was concluded in Brussels in 1924;38 it still appears to be in force for eight States.39 Under this Convention, the liability fund was calculated in accordance with the value of a vessel that decreases over time, while the risk emanating from the vessel increases when it gets older. When this contradiction became more and more visible after the Second World War, many States terminated the Convention, and the international community concluded a successor convention in 1957, which uses the invariant size of the vessel as the basic criterion for the establishment of the liability fund.40 This Convention is still applied in more than 30 States, but was again terminated by several contracting States when it became apparent that the liability limits of the old Convention were not sufficient and when the validity of identity-of-carrier clauses in bills of lading was questioned, while the division of labour in international shipping required an extension of the limitation of liability to other service providers, particularly charterers.41 A new Convention on Limitation of Liability for Maritime Claims in 1976 takes account of these needs.42 It is currently in force for more than 50 States,43 but has again been amended by a Protocol in 1996 dealing with liability limits for personal injury.44 These and some minor instruments have created a legal labyrinth for shipping companies. 2. Simplified revision procedures The revision is an inescapable problem of aging conventions. Many instruments contain revision clauses that allow a given number of contracting States to convene a revision conference. As soon as the protocol amending the original convention has been approved, it will have to be ratified by the legislatures of the contracting States. Thus, at the stage of revision, there is again the two-phased process of legislation that is characteristic for uniform law; the first phase being the adoption of the international agreement and the second the national approval. Various factors such as a change of political preference or simply a packed agenda of the national legislative bodies may have the effect that some contracting States approve the amendment while others do not. Uniform law will thus fall apart. This effect can only be avoided where the second phase is somehow shortened and replaced by a mechanism ensuring a quick approval of amendments by a large number of the contracting States. Such mechanisms amount to a partial delegation of amending powers from national legislatures to international bodies. They must therefore be spelled out in the original convention in order to benefit from the approval of the national legislatures. So far, we find only a few examples. A rather far-reaching delegation is laid down in the International Convention for the Safety of Life at Sea (SOLAS Convention) with regard to safety precautions on vessels.45 The amendment of technical provisions such as those relating to the construction and equipment of vessels can be approved by a two-third majority of the Maritime Safety Committee of the IMO. As soon as a certain period of time has elapsed, they become binding for all contracting States unless objections are filed by the governments of those contracting States that dispose of more than 50 percent of the world commercial tonnage or that amount to more than a third of all contracting States.46 Some lawyers will reject the SOLAS mechanism as a model since it is exclusively geared to the adjustment of technical devices that lawyers tend to believe are of minor importance. However, such adjustments can be very costly, and no responsible government will accept them without close scrutiny. From this economic perspective, the change towards a simplified revision of international conventions appears possible in private law as well. In fact, there are some examples of a successful shift to the object-or-comply model of revision in this field. In the law of international carriage by rail, the Convention Concerning International Carriage by Rail established a revision committee deciding on certain amendments to the Convention that would take effect within a year unless a third of the Member States objected.47 The 1999 Protocol of Vilnius brought about a major change to the revision procedure, introducing a new Title VI on modifications of the Convention. One third of the States represented on the Revision Committee may now decide to submit a revision proposal to the General Assembly of the Intergovernmental Organisation for International Carriage by Rail (OTIF). By a majority of two thirds of the Member States, the General Assembly may adopt such modifications, which take effect after a year for all Member States except for those that have explicitly objected in time.48 A simplified amendment procedure has also been implemented with regard to the limitation of liability for maritime claims mentioned above. The 1996 Protocol bestows the legal committee of the IMO with the power to amend the liability limits of the Protocol at the request of 50 percent of the contracting States. At least half of the States represented on the Legal Committee must approve of the amendment; 25 percent of the contracting States have a blocking minority.49 With regard to procedural and institutional issues, a simplified revision procedure can also be found in intellectual property.50 A closer look demonstrates the great variety in these regulations, which, in principle, are indispensable for the future of uniform commercial law. VI. Conclusion The regulation of international trade by public international law has been interpreted in this article as consisting of two bodies of law addressing public and private actors. The numerous instruments of trade law coordinate and harmonize the actions of States and, by establishing a common legal framework, stake out a playing field where private actors, mostly undertakings, can make their deals. Whether they are actually prepared to engage in cross-border trade depends on how they evaluate the potential benefit and the risks linked with such transactions. Among the risks figures legal uncertainty caused by divergences of the laws involved. Ever since the late nineteenth century, States have made efforts, using uniform law conventions, to reduce this legal uncertainty and, thereby, to encourage private actors to decide in favour of cross-border trade. However, the conclusion of international conventions as such is not more than a first step towards the effective increase of legal certainty for cross-border commercial contracts. The second step would be uniform application and gap-filling. It is now acknowledged as an objective, but it will not be achieved in legal practice unless some kind of international dispute settlement mechanism provides for a procedural means of implementing uniformity. A third step would be a revision procedure that ensures, for most of the contracting States, the fast and effective transition from a convention to a successor instrument required by a change of circumstances. This article was presented at a conference organized by the University College London and University of Exeter on ‘The Future of the Commercial Contract in Scholarship and Law Reform: The Interface between Public International Law and Contract Law’, which was held at the Institute of Advanced Legal Studies, London, 20 October 2017. Footnotes 1 Since the Second World War, only a few comprehensive works have addressed general issues of uniform law. René David, The International Unification of Private Law, in: International Encyclopedia of Comparative Law, Bd. II, Kap. 5, Tübingen 1969; Jan Kropholler, Internationales Einheitsrecht – Allgemeine Lehren, Tübingen 1975; Stefania Bariatti, L’interpretazione delle convenzioni internazionali di diritto uniforme, Padova 1986; Urs Peter Gruber, Methoden des Internationalen Einheitsrechts (2004); Marco Torsello, Common Features of Uniform Commercial Law Conventions – A Comparative Study beyond the 1980 Uniform Sales Law, Munich 2004. 2 Convention on the Grant of European Patents, done at Munich on 5 October 1973, 1065 UNTS 199; see e.g. Ian Muir/Matthias Brandi-Dohrn/Stephan Gruber, European Patent Law, 2nd edn., Oxford 2002. 3 United Nations Convention on Contracts for the International Sale of Goods, done at Vienna on 11 April 1980, 1489 UNTS 3; cf. e.g. Peter Schlechtriem/Ingebort Schwenzer, eds., Commentary on the UN Convention for the International Sale of Goods (CISG), 4th edn., Oxford 2016. 4 Convention on the Contract for the International Carriage of Goods by Road (CMR), signed at Geneva on 19 May 1956, 399 UNTS 189; see e.g. Malcolm Clarke, International Carriage of Goods by Road, 6th edn., London 2014. 5 Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on 28 May 1999, 2245 UNTS 309; see e.g. Paul Stephen Dempsey/Michael Milde, International Air Carrier Liability, Montreal 2005. 6 Unidroit Convention on Stolen or Illegally Exported Cultural Objects, done at Rome on 24 June 1995, 2421 UNTS 457; see e.g. Lyndel Prott, Commentary on the Unidroit Convention on Stolen or Illegally Exported Cultural Objects 1995, Leicester 1997. 7 As amended in 1994 the General Agreement on Tariffs and Trade (GATT) is Annex 1A to the Marrakesh Agreement Establishing the World Trade Organization of 15 April 1994, 1867 UNTS 3, 190; it includes the original GATT of 1947. 8 After the failure of the Doha Round the world trade system has increasingly been characterized by bilateral trade agreements that are concluded on the basis of the exception provided by Art. XXIV GATT and liberalize trade between the Parties; see Peter Behrens, Europäisches Marktöffnungs- und Wettbewerbsrecht, Heidelberg 2017, p. 113ff., § 8 no. 216. 9 Convention on International Trade in Endangered Species of Wild Fauna and Flora, signed at Washington, DC on 3 March 1973, 993 UNTS 243. 10 See United Nations Convention against Illicit Traffic in Narcotic Drugs and Psycotropic Substances, adopted at Vienna on 20 December 1988, 1582 UNTS 165. 11 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property, done at Paris on 14 November 1970, 823 UNTS 231; see also the convention cited above at fn. 6. 12 While this goal of uniform law has been a common place in legal scholarship, it has recently been discovered by political scientists in international relations, see Asif Efrat, Promoting Trade through Private Law: Explaining International Legal Harmonization, The Review of International Organizations 11 (2016) 311–36; the author argues that ‘the public-law and private-law channels of spurring trade serve as policy substitutes’, p. 313. While this may be true from a political science perspective focusing on government action, the actor-based approach adopted in this article rather points to a complementarity of both channels. 13 See e.g. the dictum by Hermann Isay, a prominent practitioner of the 1920s, in the preface to his book ‘Die privaten Rechte und Interessen im Friedensvertrag’, 3rd edn., Berlin 1923: ‘On the basis of our pre-war experience we all thought… that the Peace Treaty of Versailles could essentially be interpreted by means of German concepts and German methods’ (author’s translation). 14Bundesgerichtshof (BGH), 28 February 1975, Neue Juristische Wochenschrift (NJW) 1975, 1597, 1598 sub. IV 1 (author’s translation). 15Cour de cassation belge, 27 January 1977, Pasicrisie 1977, I 574, 582 (author’s translation). 16Fothergill v Monarch Airlines, [1981] Appeal cases 251, 281. The Warsaw Convention on the Unification of Certain Rules Relating to International Carriage by Air, signed at Warsaw on 12 October 1929, 137 LNTS 11 was the predecessor of the Montreal Convention, above at fn. 5. 17Air France v Saks, 470 U.S. 372, 404 (1985); El Al Israeli Airlines v Tsui Yuan Tseng, 525 U.S. 155, 176 (1998); with regards to the Hague Abduction Convention also Abbott v. Abbott, 560 U.S. 1, 17 (2010). This principle does not appear to be affected by the opposition, in legal literature, against comparative interpretation of US law; this opposition has been heavily criticized (‘silly’, ‘parochial’) by Jay Westbrook, Interpretation Internationale, Temple L. Rev. 87 (2015) 739–58 (751); on uniform interpretation in general see Michael Sturley, International Uniform Law in National Courts: The Influence of Domestic Law in Conflicts of Interpretation, Va. J. Int’l L. 27 (1987) 729–802. 18 See e.g. Hein Kötz, Unification and Harmonization of Laws, in Rudolf Bernhardt, ed., Encyclopedia of Public International Law, vol. 4, Amsterdam 2000, p. 1013–18 (1016). 19 See Art. 3 of the United Nations Convention on the Carriage of Goods by Sea, done at Hamburg on 31 March 1978 (Hamburg Rules), 1695 UNTS 3; Art. 2 United Nations Convention on Contracts for the International Carriage of Goods wholly or partly by Sea, done at Rotterdam on 11 December 2008, UN Doc. A/Res/63/122 of 2 February 2009, not yet printed in UNTS; Art. 8(1) Convention Concerning International Carriage by Rail (COTIF), done at Berne on 9 May 1980, as amended by the Vilnius Protocol of 3 June 1999, UNTS Registration no. 23353; Art. 4 of the Unidroit Convention on International Factoring, done at Ottawa on 28 May 1988, 2323 UNTS 373; Art. 6 of the Unidroit Convention on International Financial Leasing, done at Ottawa on 28 May 1988, 2321 UNTS 195; Art. 5 of the United Nations Convention on Independent Guarantees and Stand-By Letters of Credit, done at New York on 11 December 1995, 2169 UNTS 163; Art. 5 Convention on International Interests in Mobile Equipment, done at Cape Town on 16 November 2001, 2307 UNTS 285; Art. 23 of the Convention on Choice of Court Agreements, done at The Hague on 30 June 2005, UNTS Registration no. 53483; Art. 20 Protocol on the Law Applicable to Maintenance Obligations, done at The Hague on 23 November 2007, UNTS Registration no. 51361. 20 See Arts. 31(1) and 33(4) of the Vienna Convention on the Law of Treaties, done at Vienna on 23 May 1969, 1155 UNTS 331. 21 See Pierre-Marie Dupuy, International Law and Domestic (Municipal) Law, in Rüdiger Wolfrum, ed., Max Planck Encyclopedia of Public International Law: http://opil.ouplaw.com, para. 83 ff.; Christoph Schreuer, The Interpretation of Treaties by Domestic Courts, British YB Int’l L 45 (1971) 255– 301 (283 ff.). 22 With regard to Arts. 31 and 32 this was confirmed by the International Court of Justice, see ICJ 3 February 1994 (Lybia v. Tchad), ICJ Rep. 1994, 3 at 19, para. 41; Anthony Aust, Modern Treaty Law and Practice, Cambridge 2000, p. 185ff. 23 See Franco Ferrari, The Relationship between International Uniform Law Conventions, Unif. L. Rev. 5 (2000) 69–84; Gruber, above at fn. 1, p. 157ff. 24 Unidroit Convention on International Factoring, done at Ottawa on 28 May 1988, 2322 UNTS 373. 25 United Nations Convention on Independent Guarantees and Stand-By Letters of Credit, done at New York on 11 December 1995, 2169 UNTS 163. 26 Uniform Law on Bills of Exchange and Promissory Notes, Annex I of the Convention Providing a Uniform Law for Bills of Exchange and Promissory Notes, signed at Geneva on 7 June 1930, 143 LNTS 257. 27 For a comparative account, see Ernst E. Hirsch, Einheitliches Wechselgesetz oder einheitliches Wechselrecht? NJW 1961, 1089–94. 28 See BGH, 29 October 1962 – II ZR 28/62, NJW 1963, 252; Cass., 4 March 1963, Revue critique de droit international privé 53 (1964) 264. 29 See for the 1999 Montreal Convention on Air Transport, CJEU 10 January 2006, Case C-344/04 (The Queen ex parte IATA c Department of Transportation), ECLI:EU:C:2006:10, para. 36. 30 See the critical comment by Christian Kohler/Sibylle Seyr/Jean-Christophe Puffer-Mariette, Unionsrecht und Privatrecht – Zur Rechtsprechung des EuGH im Jahre 2010, Zeitschrift für Europäisches Privatrecht (ZEuP) 2011, 874–900 (881). 31 See e.g. the title of the 1999 Montreal Convention, above at fn. 5. 32 See e.g. Art. 4 CISG, above at fn. 3: exclusion of validity issues and property effects of a sales contract. 33 The distinction between internal and external gaps was already made by Peter Schlechtriem, Das Wiener Kaufrechtsübereinkommen von 1980 (Convention on the International Sale of Goods), IPRax 1990, 277–92 (279ff.). 34 See Art. 4 of the Factoring Convention and Art. 6 of the Convention on Financial Leasing as well as Art. 5 of the Cape Town Convention on Interests in Mobile Equipment, all above at fn. 19. 35 Unidroit, Principles of International Commercial Contracts, Rome 2010. 36 On the significance of the Unidroit Principles for the interpretation of international conventions see the subtle and detailed considerations of Ralf Michaels, Preamble I: Purposes, legal nature and scope of the PICC, in Stefan Vogenauer, ed., Commentary on the Principles of International Commercial Contracts (PICC), 2nd edn., Oxford 2015, paras. 123–31. 37Peter Behrens, Voraussetzungen und Grenzen der Rechtsfortbildung durch Rechtsvereinheitlichung, RabelsZ 50 (1986) 19–34 (26). 38 International Convention for the Unification of Certain Rules Relating to the Limitation of the Liability of Owners of Seagoing Vessels, with Protocol of Signature, signed at Brussels on 25 August 1924, 120 LNTS 123. 39 On the status of the Convention, see the website of the Comité Maritime International: www.comitemaritime.org (accessed 14 March 2018), Publications (Status of Maritime Conventions), CMI Yearbook 2016 (2017) 374. 40 International Convention Relating to the Liability of Owners of Sea-Going Ships, done at Brussels on 10 October 1957, 1412 UNTS 80. 41 See CMI Yearbook 2016, above at fn. 39, p. 401. 42 Convention on Limitation of Liability for Maritime Claims, done in London on 19 November 1976, 1456 UNTS 221. 43 See CMI Yearbook 2016, above at fn. 39, p. 453ff. 44 Protocol of 1996 to Amend the Convention on Limitation of Liability for Maritime Claims, 1976, not published in UNTS, but see the publication of the English text in Bundesgesetzblatt (BGBl.) 2000-II, 790; a consolidated text can be found on the website of the European Maritime Safety Agency: www.emsa.europa.eu (accessed 14 March 2018). 45 See Art. VIII lit. (b) of the International Convention for the Safety of Life at Sea (SOLAS) of 1 November 1974, 1184 UNTS 274, cf. Thomas Mensah, Maritime Safety Regulations, in Rüdiger Wolfrum, ed., Max Planck Encyclopedia of Public International Law: http://opil.ouplaw.com, para. 8ff. 46 See Art. VIII lit. b (vi)(2) SOLAS, previous fn. 47 Convention Concerning International Carriage by Rail (COTIF), done at Berne on 9 May 1980, 1397 UNTS 76, see Articles 19 § 3 and 21 § 2. 48 Protocol of 3 June 1999 for the Modification of the Convention Concerning International Carriage by Rail (COTIF) of 9 May 1980, Vilnius 3 June 1999, UNTS Registration no. 23353; see in particular Article 33 § 4 and Article 34 § 2. 49 See Art. 8 of the 1996 Protocol, above at fn. 44. 50 See Art. 13 of the Madrid Agreement Concerning the International Registration of Marks, done at Madrid on 14 April 1891, as amended in Stockholm on 14 July 1967, 828 UNTS 390; closely related is Art. 61 of the Patent Cooperation Treaty, done at Washington on 19 June 1970, 1160 UNTS 231. © The Author(s) (2018). Published by Oxford University Press on behalf of Unidroit. All rights reserved. For permissions, please email journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Uniform Law Review/Revue De Droit Uniforme Oxford University Press

International economic law and commercial contracts: promoting cross-border trade by uniform law conventions

Basedow, Jürgen
Uniform Law Review/Revue De Droit Uniforme , Volume Advance Article (1) – Mar 23, 2018
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Oxford University Press
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© The Author(s) (2018). Published by Oxford University Press on behalf of Unidroit. All rights reserved. For permissions, please email journals.permissions@oup.com
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Abstract

Abstract International conventions establishing uniform law for commercial contracts have become more and more numerous ever since the late nineteenth century. From a functional perspective these instruments are close to international trade law. The paper dwells upon the systematic relationship between uniform commercial law and international trade law, using an actor-based approach: while in international trade law States stake out the playing ground for private cross-border business, the conventions on uniform commercial law are meant to reduce legal uncertainty for private actors and to reduce their hesitations to engage in cross-border trade. Their aptitude for that purpose does not only depend on the quality of the texts and the number of States willing to adhere, but also on their future application, in particular their interpretation, the filling of gaps and their revision and adjustment to changed circumstances. The paper focuses on these issues which are common to uniform law conventions in many fields. I. Introduction The number of international conventions establishing uniform law for commercial contracts has grown ever since the late nineteenth century. They are usually drafted and adopted under the auspices of international organizations such as the International Institute for the Unification of Private Law (Unidroit), the United Nations Commission on International Trade Law, the International Maritime Organization (IMO), the International Civil Aviation Organization, the World Intellectual Property Organization, the International Labour Organization, the Hague Conference; there are many of them. In more recent times, the harmonization of laws has tended to shift to other forms of legal harmonization—for example, model laws or lists of principles. This article will focus on binding conventions. They deal with a large number of subjects relevant for commercial contracts: the sale of goods, transfer of payment, carriage by the various modes of transport, intellectual property, secured transactions, liability, and dispute settlement. However, their perception in legal scholarship appears to suffer from their position in a kind of no man’s land; commercial lawyers tend to deal with the national law of their country as the core of commercial law while considering uniform law conventions in their field as marginal; where they pay attention to them at all they focus on the substantive law provisions and disregard their particular nature as treaties under international law. On the other hand, the main thrust of public international law is on the action as well as the rights and obligations of States in their mutual relations, which are of minor significance in uniform law conventions; the only commitment that contracting States accept in such a convention is to bring their national law, within the scope of the instrument, in line with the uniform provisions. A third academic discipline that excludes uniform law conventions from its own purview is private international law. To the extent that uniform law conventions deal with substantive law and not with conflict rules, they are considered to be alien to the choice-of-law approach cherished by so many conflicts lawyers. Against this backdrop, it is unsurprising that in legal literature the general issues arising from uniform law conventions are rarely discussed.1 Rather, legal scholars and practitioners address specific instruments such as the European Patent Convention,2 the Convention on the International Sale of Goods (CISG),3 the Convention on the Contract for the International Carriage of Goods by Road (CMR),4 the Montreal Convention on International Carriage by Air,5 the Unidroit Convention on Stolen or Illegally Exported Cultural Objects,6 and many others. These conventions are not considered to be part of a comprehensive body of law giving rise to common issues. My following remarks will attempt to identify the place of uniform law conventions in the overall legal framework of international trade. This place is determined by the role of private actors and their risk aversion—in particular, their inclination to avoid legal uncertainty. Uniform law conventions are meant to reduce that uncertainty. Whether they effectively achieve that goal depends on the subsequent handling of such conventions: their interpretation, the filling of gaps, and the revision of outdated instruments. II. Uniform private law in the system of international trade law 1. Systematic considerations For many lawyers, the legal regime of international business transactions gives rise to confusion. It is laid down in a huge number of international treaties, both multilateral and bilateral. However, they cover very different subjects and do not appear to be part of a consistent whole. Some deal with the quota of goods permitted for importation or with customs duties and other regulatory conditions governing trade; others with restrictions or the outright exclusion of the trade in certain goods; again others with the rights and obligations of private parties or with dispute settlement. Whoever expects an overarching conception and a consistent regime will consider them as fragments and will have difficulty in perceiving them as part of a comprehensive system. Such a system of the law governing international trade can best be understood from the perspective of its participants. International business is in the hands of multiple actors, public and private. Private actors—that is, individuals and companies—are confined to private forms of action: contracts, unilateral declarations, and other acts performed for the promotion of private benefit. They can legally bind themselves but not third parties. They are subject to the applicable legal rules that often diverge between the various countries. Which rules and which country’s law will apply? It is up to private international law to answer this question. State actors behave in a double capacity. As sovereign States, making use of their unlimited powers, they create the legal framework for business transactions that are to be perfected by private actors. When performing this role of lawmakers, States pursue their own interest—that is, the balance of imports and exports, currency stability, and full employment of the national workforce; they usually aim at sponsoring the interest of their citizens as well, which is considered to form part of an amalgamated public interest. But they also act, similar to private actors, as private parties to commercial contracts—for example, through state-owned undertakings or in concession agreements. In the former capacity, they create legal rules; in the latter, they are governed by them. Needless to say, conflicts of interest may arise, and States sometimes avail themselves of their regulatory powers in order to seek an advantage for their citizens or for themselves. It is one of the tasks of public international law to control the potential partiality of State action. These preliminary remarks show that public international law affects commercial transactions in multiple ways. By multilateral and bilateral treaties such as the General Agreement on Tariffs and Trade7 and preferential trade agreements, which are also known as World Trade Organization-plus agreements,8 it limits, in a macro-economic perspective, state interference with trade. It thereby provides the framework for areas of free movement of goods and services; the specific transactions are then performed by cross-border contracts concluded by private actors within the framework staked out by public international law. In the terminology of a systematic legal scholarship, the latter contracts are considered to be part of commercial law, whereas the aforementioned treaties fall into the category of international trade law. While they do not directly address the relations between private actors, they establish the playing ground for them. It is not only the promotion of trade that is pursued by public international law. It also deals with restrictions. Where single States try to interfere with international trade—for example, by means of embargoes—the private parties affected, or their States of origin, may invoke certain rules of international law such as the principle of non-intervention or the principle of territoriality as a shield against such measures. In other instances, it is not the single States but, rather, the international community itself that wants to restrict international trade in certain sectors by pertinent treaties; this is, for example, the case with endangered species,9 narcotic drugs,10 or cultural objects.11 Such agreements create categories of goods close to res extra commercium, which the international community believes should not be freely traded for non-economic reasons. 2. Legal certainty for private actors Where cross-border trade is lawful in accordance with the bodies of law outlined so far, the private actors may still abstain from engaging in international commerce. On a micro-economic level, there may be good reason for such abstention: domestic products of a better quality available on the home market, the absence of competent post-delivery service for the foreign product, lower prices, faster delivery, and so on. One of the reasons is sometimes a lack of legal certainty in international transactions; it may relate to the delivery of the goods, to remedies for non-delivery, to risks inherent in the transfer of payment, to claims enforcement, and so on. Legal uncertainty is usually caused by the vagueness or divergence of the national laws, including the conflict rules of the jurisdictions involved, the absence of judicial cooperation, or a lack of confidence in the judiciary of a foreign country. Commercial tools such as collateral, letters of credit, or insurance can reduce the legal uncertainty, but they are costly and may give rise to other risks. They cure symptoms, not the disease itself. In order to increase legal certainty, the international community has engaged over the last 150 years in a progressive harmonization of commercial law and private international law. Various means such as the drafting of international contract forms by private organizations, the elaboration of model laws and principles by both private and public bodies, and the negotiation of international conventions by governments for the harmonization or coordination of laws have been conceived of.12 This article focuses on the latter type of instrument. Thus, uniform law mirrors at a micro-economic level the attempts made by States in pursuance of world trade law at a macro-economic level. While States aim at the predictability and reliability of the legal framework for their relations with other States, the private traders seek legal certainty in their relationships with other private actors. This observation raises the question to what extent legal certainty in the latter context is actually increased by uniform law. The answer depends not only on the quality of the agreed instruments but also on their subsequent application, on their interpretation, on gap-filling, and on their stability and revision. These topics will be treated in the following discussion. III. Interpretation of uniform law conventions 1. Uniform interpretation Once concluded, conventions have to be ratified and implemented by national legislatures. In the early years, they are thus often considered to form part of, and are interpreted in line with, national law.13 Over time, it has become clear that this approach by necessity amounts to divergences and runs counter, at the stage of application, to the goal of uniformity pursued by the instrument. After the Second World War, the upper courts of various countries acknowledged by and by that the ultimate goal of interpretation of an international convention must be the preservation and further development of its uniformity. For example, the German Federal Court said in relation to the CMR in 1975 that ‘in the interpretation of international conventions which regulate private law relations between the citizens of Contracting States it must be kept in mind that domestic concepts and principles cannot indiscriminately be considered as underlying the convention, since the objective of a uniform application of the law in the Contracting States cannot be achieved otherwise’.14 Two years later, the Belgian Court of Cassation pointed out ‘that it would be futile to elaborate a convention designed to establish an international statute if the courts of each State interpreted it in line with the concepts of their own law’.15 Throughout the same period, similar dicta can be reported from English decisions. Thus, Lord Diplock stated in Fothergill v Monarch Airlines that the 1929 Warsaw Convention on Air Carriers’ Liability ‘is meant to be understood in the same sense by the courts of all those States which ratify or accede to the Convention’.16 Likewise, the US Supreme Court gave a detailed report on European cases and scholarly opinions concerning the concept of accident in the Warsaw Convention before concluding: ‘[W]e find the opinions of our sister signatories to be entitled to considerable weight.’17 In 1980, the objective of a uniform and autonomous interpretation of international conventions was explicitly laid down for the first time in Article 7(1) of the CISG. The provision points out that ‘in the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application’. This is an unambiguous request for an autonomous interpretation in the light of comparative law—in particular, case law and legal literature from other contracting States.18 Numerous similar provisions have been included in more recent international instruments.19 Nowadays, the principle of autonomous interpretation is generally acknowledged, even for conventions that do not specifically provide for it. It follows from the very purpose of a uniform law convention—that is, the unification of the law; not only the law in the books but also the law in action. It is this purpose that is meant to guide the interpretation of treaties in general in accordance with the 1969 Vienna Convention on the Law of Treaties (VCLT). Articles 31–3 of the VCLT lay down the main rules on the interpretation of treaties, including conventions of uniform private law.20 They address the contracting States as such—that is, all legislative and executive bodies as well as the judiciary. This does not mean that the courts of countries following the dualist approach to international law have to ‘apply’ the VCLT in a strict sense. Rather, they take account of the interpretation rules laid down in the VCLT in order to ensure conformity of their jurisprudence with the international instrument at issue. This conformity requirement is almost universally recognized.21 While the VCLT has not been ratified by all States, the interpretive rules correspond to customary law.22 2. Text, context, and purpose Under Articles 31–3 of the VCLT, essential guidance for interpretation is given by three aspects of a rule: its text, its context, and its purpose. As opposed to the interpretative methods espoused in many jurisdictions, the historical background is only of subsidiary importance where the other methods lead to an unclear or unreasonable result. Nevertheless, international tribunals in practice do not appear to exclude historical arguments where the travaux préparatoires are available. Among the various methods of interpretation, the purpose of an instrument will usually have major weight. This has been clearly enunciated with respect to conventions drafted in several languages; where the language versions do not have the same meaning and where the other methods do not clarify the text, the purpose will be decisive under Article 33 of the VCLT. It is not possible in this context to deal with all of the aspects of interpretation in detail. Given the growing density and comprehensiveness of uniform private law, it should be pointed out, however, that the systematic interpretation mandated in Article 31(2) and (3) of the VCLT is gradually gaining a new meaning. Since, under Article 31(3)(c), the relevant context includes ‘any relevant rules of international law applicable in the relations between the parties’, the interpreter of a specific conventional rule is invited to take a look at corresponding provisions in neighbouring international conventions.23 Take the concept of the place of business as an example. The case law generated in the context of Article 1 of the CISG may be useful in the context of Article 2 of the Unidroit Convention on International Factoring24 or Article 1(1)(a) of the United Nations Convention on Independent Guarantees and Stand-By Letters of Credit.25 All three of these instruments and some others employ the concept of place of business and could relate to different aspects of one and the same international transaction. Despite the general approval of an autonomous and uniform interpretation, divergences in case law cannot always be avoided. How should the national courts react where such divergences become apparent? This issue has been discussed since around 1960 when French and German courts interpreted the Uniform Law on Bills of Exchange in different ways.26 The dispute dealt with the significance of an ‘aval’—that is, a guarantee for the payment of a bill of exchange given on the bill itself; under Article 31(4) of the Uniform Law, an aval must specify for whose account it is given. The provision continues: ‘In default of this it is deemed to be given for the drawer.’ While a French court considered this to be an irrebuttable presumption, the German courts allowed the proof that the aval was given on behalf of a different person.27 As a result, courts on both sides of the Rhine fell back into a choice-of-law approach and would apply the interpretation of Article 31(4) prevailing in the jurisdiction, the national law of which was held applicable under the choice-of-law principles.28 It is submitted that the return to a choice-of-law approach is incompatible with the very purpose of uniform substantive law and should be avoided unless a conflict rule is contained in the convention itself. Rather, the court should try to explore the differences of interpretation in a comparative assessment and take a fresh start on that basis. 3. Procedural devices The best solution, of course, would be a procedural device—in particular, the possibility of submitting the issue to an international panel or tribunal. Such international dispute settlement mechanisms have been created in other areas of international law such as international criminal law, the law of the sea, and world trade law. They have so far been rejected for uniform private law where the supreme courts of contracting States are the courts of last resort. But they cannot ensure international uniformity. With respect to uniform law conventions, which are in force for the European Union (EU), the Court of Justice of the European Union may appear to be a counter-example of an international tribunal having supranational jurisdiction. The Court in fact considers such conventions to be an integral part of EU law and, therefore, has jurisdiction to deal with their interpretation upon a prejudicial question submitted by a national court under Article 267 of the Treaty on the Functioning of the European Union.29 But the Court’s interpretation of a uniform law convention is only binding within the EU, not for third contracting States including Britain after Brexit. Moreover, the Court has not yet understood that the aim of uniform interpretation of such conventions requires a closer look at the practice of contracting States outside the EU.30 IV. Gap-filling in uniform law conventions Conventions on uniform commercial law never contain a complete regulation of their respective subject. Some are explicitly confined to the unification of ‘certain rules’,31 others explicitly exclude certain issues;32 it is possible to refer to both types of instruments as referring to external gaps. It is not uncommon either that conventions deal with a certain matter but do not cover single aspects. For example, Article 49 of the CISG permits the buyer to declare the contract avoided in cases of a serious breach of contract by the seller without indicating whether such a declaration of avoidance can be implied or must be explicit and without referring to the form of such a declaration. Gaps of this kind are often designated as internal gaps.33 How should they be filled? The external gaps relate to areas that the convention deliberately does not cover; thus, there is no reason to deviate from the traditional treatment of legal issues in cross-border relations—that is, from the choice-of-law approach. Unless private international law is unified or the national laws designated provide for the same outcome, divergent solutions are inevitable. But what about internal gaps related to issues within the scope of a convention? Such lacunae may in fact be called gaps. Some conventions indicate that they should be filled by reference to rules dealing with similar issues. Thus, several provisions of the CISG and, in particular, Article 11 allow for the conclusion that declarations of all kinds made by the parties do not require any specific form. Why should that be different in the case of Article 49 of the CISG? The alternative would be the recourse to the choice of the applicable national law and, thereby, to national law; this would imply the risk of deviating results and is therefore inappropriate. This is why Article 7(2) of the CISG mandates filling such internal gaps ‘in conformity with the general principles on which [CISG] is based’. It is only in the absence of such principles that recourse to private international law and, thereby, to national law is permitted. Article 7(2) is sometimes understood to the effect that those principles must be visible in the convention itself. However, this conclusion is not compelling. Even in the absence of visibility, a general principle can be one of the foundations on which a convention ‘is based’—a basis is not always visible. We know of many buildings that are based on invisible sub-soil foundations of ancient origin. In international trade, principles have developed since times immemorial that have not always explicitly been laid down but, nevertheless, are the basis of conventions such as the CISG. The purpose of Article 7(2) of the CISG and similar provisions in other conventions34 is to reduce recourse to private international law and, thereby, to national law. This purpose requires a wide interpretation of a concept of general principles on which a convention is based. With regard to the law of international business transactions, this reference should be understood as pointing to principles such as those laid down in the Unidroit Principles of International Commercial Contracts (PICC) or in similar catalogues.35 The parties, of course, are always permitted to prove by comparative evidence that a specific rule laid down in those works does not constitute a general principle. But, at least with regard to the PICC, which have been elaborated by high-ranking neutral experts on the basis of a broad comparison of national laws, an indication or even a rebuttable presumption for the existence of such principles appears appropriate.36 Thus, provisions like Article 7(2) of the CISG have the potential for the completion, maybe even a gradual extension, of uniform law of the respective convention by virtue of its judicial application. V. Revision of uniform law conventions 1. Aging conventions Legal rules, whether created by statute or by courts are often time dependent. This is true for national law and for international instruments. However, national statutes can be amended more easily than international conventions that require parliamentary approval of every amendment in all contracting States. Uniform law therefore has been said to be subject to solidification or even petrification.37 The international community is aware of this risk. While it has repeatedly tried to adjust outdated conventions to changed circumstances, the resulting texts frequently have been approved only by a limited number of the contracting States of the underlying convention. Consequently, the old and the new convention co-exist side by side and cause a fragmentation and disintegration of the uniform law. This can be illustrated by the limitation of shipowners’ liability. The first convention on the matter was concluded in Brussels in 1924;38 it still appears to be in force for eight States.39 Under this Convention, the liability fund was calculated in accordance with the value of a vessel that decreases over time, while the risk emanating from the vessel increases when it gets older. When this contradiction became more and more visible after the Second World War, many States terminated the Convention, and the international community concluded a successor convention in 1957, which uses the invariant size of the vessel as the basic criterion for the establishment of the liability fund.40 This Convention is still applied in more than 30 States, but was again terminated by several contracting States when it became apparent that the liability limits of the old Convention were not sufficient and when the validity of identity-of-carrier clauses in bills of lading was questioned, while the division of labour in international shipping required an extension of the limitation of liability to other service providers, particularly charterers.41 A new Convention on Limitation of Liability for Maritime Claims in 1976 takes account of these needs.42 It is currently in force for more than 50 States,43 but has again been amended by a Protocol in 1996 dealing with liability limits for personal injury.44 These and some minor instruments have created a legal labyrinth for shipping companies. 2. Simplified revision procedures The revision is an inescapable problem of aging conventions. Many instruments contain revision clauses that allow a given number of contracting States to convene a revision conference. As soon as the protocol amending the original convention has been approved, it will have to be ratified by the legislatures of the contracting States. Thus, at the stage of revision, there is again the two-phased process of legislation that is characteristic for uniform law; the first phase being the adoption of the international agreement and the second the national approval. Various factors such as a change of political preference or simply a packed agenda of the national legislative bodies may have the effect that some contracting States approve the amendment while others do not. Uniform law will thus fall apart. This effect can only be avoided where the second phase is somehow shortened and replaced by a mechanism ensuring a quick approval of amendments by a large number of the contracting States. Such mechanisms amount to a partial delegation of amending powers from national legislatures to international bodies. They must therefore be spelled out in the original convention in order to benefit from the approval of the national legislatures. So far, we find only a few examples. A rather far-reaching delegation is laid down in the International Convention for the Safety of Life at Sea (SOLAS Convention) with regard to safety precautions on vessels.45 The amendment of technical provisions such as those relating to the construction and equipment of vessels can be approved by a two-third majority of the Maritime Safety Committee of the IMO. As soon as a certain period of time has elapsed, they become binding for all contracting States unless objections are filed by the governments of those contracting States that dispose of more than 50 percent of the world commercial tonnage or that amount to more than a third of all contracting States.46 Some lawyers will reject the SOLAS mechanism as a model since it is exclusively geared to the adjustment of technical devices that lawyers tend to believe are of minor importance. However, such adjustments can be very costly, and no responsible government will accept them without close scrutiny. From this economic perspective, the change towards a simplified revision of international conventions appears possible in private law as well. In fact, there are some examples of a successful shift to the object-or-comply model of revision in this field. In the law of international carriage by rail, the Convention Concerning International Carriage by Rail established a revision committee deciding on certain amendments to the Convention that would take effect within a year unless a third of the Member States objected.47 The 1999 Protocol of Vilnius brought about a major change to the revision procedure, introducing a new Title VI on modifications of the Convention. One third of the States represented on the Revision Committee may now decide to submit a revision proposal to the General Assembly of the Intergovernmental Organisation for International Carriage by Rail (OTIF). By a majority of two thirds of the Member States, the General Assembly may adopt such modifications, which take effect after a year for all Member States except for those that have explicitly objected in time.48 A simplified amendment procedure has also been implemented with regard to the limitation of liability for maritime claims mentioned above. The 1996 Protocol bestows the legal committee of the IMO with the power to amend the liability limits of the Protocol at the request of 50 percent of the contracting States. At least half of the States represented on the Legal Committee must approve of the amendment; 25 percent of the contracting States have a blocking minority.49 With regard to procedural and institutional issues, a simplified revision procedure can also be found in intellectual property.50 A closer look demonstrates the great variety in these regulations, which, in principle, are indispensable for the future of uniform commercial law. VI. Conclusion The regulation of international trade by public international law has been interpreted in this article as consisting of two bodies of law addressing public and private actors. The numerous instruments of trade law coordinate and harmonize the actions of States and, by establishing a common legal framework, stake out a playing field where private actors, mostly undertakings, can make their deals. Whether they are actually prepared to engage in cross-border trade depends on how they evaluate the potential benefit and the risks linked with such transactions. Among the risks figures legal uncertainty caused by divergences of the laws involved. Ever since the late nineteenth century, States have made efforts, using uniform law conventions, to reduce this legal uncertainty and, thereby, to encourage private actors to decide in favour of cross-border trade. However, the conclusion of international conventions as such is not more than a first step towards the effective increase of legal certainty for cross-border commercial contracts. The second step would be uniform application and gap-filling. It is now acknowledged as an objective, but it will not be achieved in legal practice unless some kind of international dispute settlement mechanism provides for a procedural means of implementing uniformity. A third step would be a revision procedure that ensures, for most of the contracting States, the fast and effective transition from a convention to a successor instrument required by a change of circumstances. This article was presented at a conference organized by the University College London and University of Exeter on ‘The Future of the Commercial Contract in Scholarship and Law Reform: The Interface between Public International Law and Contract Law’, which was held at the Institute of Advanced Legal Studies, London, 20 October 2017. Footnotes 1 Since the Second World War, only a few comprehensive works have addressed general issues of uniform law. René David, The International Unification of Private Law, in: International Encyclopedia of Comparative Law, Bd. II, Kap. 5, Tübingen 1969; Jan Kropholler, Internationales Einheitsrecht – Allgemeine Lehren, Tübingen 1975; Stefania Bariatti, L’interpretazione delle convenzioni internazionali di diritto uniforme, Padova 1986; Urs Peter Gruber, Methoden des Internationalen Einheitsrechts (2004); Marco Torsello, Common Features of Uniform Commercial Law Conventions – A Comparative Study beyond the 1980 Uniform Sales Law, Munich 2004. 2 Convention on the Grant of European Patents, done at Munich on 5 October 1973, 1065 UNTS 199; see e.g. Ian Muir/Matthias Brandi-Dohrn/Stephan Gruber, European Patent Law, 2nd edn., Oxford 2002. 3 United Nations Convention on Contracts for the International Sale of Goods, done at Vienna on 11 April 1980, 1489 UNTS 3; cf. e.g. Peter Schlechtriem/Ingebort Schwenzer, eds., Commentary on the UN Convention for the International Sale of Goods (CISG), 4th edn., Oxford 2016. 4 Convention on the Contract for the International Carriage of Goods by Road (CMR), signed at Geneva on 19 May 1956, 399 UNTS 189; see e.g. Malcolm Clarke, International Carriage of Goods by Road, 6th edn., London 2014. 5 Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on 28 May 1999, 2245 UNTS 309; see e.g. Paul Stephen Dempsey/Michael Milde, International Air Carrier Liability, Montreal 2005. 6 Unidroit Convention on Stolen or Illegally Exported Cultural Objects, done at Rome on 24 June 1995, 2421 UNTS 457; see e.g. Lyndel Prott, Commentary on the Unidroit Convention on Stolen or Illegally Exported Cultural Objects 1995, Leicester 1997. 7 As amended in 1994 the General Agreement on Tariffs and Trade (GATT) is Annex 1A to the Marrakesh Agreement Establishing the World Trade Organization of 15 April 1994, 1867 UNTS 3, 190; it includes the original GATT of 1947. 8 After the failure of the Doha Round the world trade system has increasingly been characterized by bilateral trade agreements that are concluded on the basis of the exception provided by Art. XXIV GATT and liberalize trade between the Parties; see Peter Behrens, Europäisches Marktöffnungs- und Wettbewerbsrecht, Heidelberg 2017, p. 113ff., § 8 no. 216. 9 Convention on International Trade in Endangered Species of Wild Fauna and Flora, signed at Washington, DC on 3 March 1973, 993 UNTS 243. 10 See United Nations Convention against Illicit Traffic in Narcotic Drugs and Psycotropic Substances, adopted at Vienna on 20 December 1988, 1582 UNTS 165. 11 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property, done at Paris on 14 November 1970, 823 UNTS 231; see also the convention cited above at fn. 6. 12 While this goal of uniform law has been a common place in legal scholarship, it has recently been discovered by political scientists in international relations, see Asif Efrat, Promoting Trade through Private Law: Explaining International Legal Harmonization, The Review of International Organizations 11 (2016) 311–36; the author argues that ‘the public-law and private-law channels of spurring trade serve as policy substitutes’, p. 313. While this may be true from a political science perspective focusing on government action, the actor-based approach adopted in this article rather points to a complementarity of both channels. 13 See e.g. the dictum by Hermann Isay, a prominent practitioner of the 1920s, in the preface to his book ‘Die privaten Rechte und Interessen im Friedensvertrag’, 3rd edn., Berlin 1923: ‘On the basis of our pre-war experience we all thought… that the Peace Treaty of Versailles could essentially be interpreted by means of German concepts and German methods’ (author’s translation). 14Bundesgerichtshof (BGH), 28 February 1975, Neue Juristische Wochenschrift (NJW) 1975, 1597, 1598 sub. IV 1 (author’s translation). 15Cour de cassation belge, 27 January 1977, Pasicrisie 1977, I 574, 582 (author’s translation). 16Fothergill v Monarch Airlines, [1981] Appeal cases 251, 281. The Warsaw Convention on the Unification of Certain Rules Relating to International Carriage by Air, signed at Warsaw on 12 October 1929, 137 LNTS 11 was the predecessor of the Montreal Convention, above at fn. 5. 17Air France v Saks, 470 U.S. 372, 404 (1985); El Al Israeli Airlines v Tsui Yuan Tseng, 525 U.S. 155, 176 (1998); with regards to the Hague Abduction Convention also Abbott v. Abbott, 560 U.S. 1, 17 (2010). This principle does not appear to be affected by the opposition, in legal literature, against comparative interpretation of US law; this opposition has been heavily criticized (‘silly’, ‘parochial’) by Jay Westbrook, Interpretation Internationale, Temple L. Rev. 87 (2015) 739–58 (751); on uniform interpretation in general see Michael Sturley, International Uniform Law in National Courts: The Influence of Domestic Law in Conflicts of Interpretation, Va. J. Int’l L. 27 (1987) 729–802. 18 See e.g. Hein Kötz, Unification and Harmonization of Laws, in Rudolf Bernhardt, ed., Encyclopedia of Public International Law, vol. 4, Amsterdam 2000, p. 1013–18 (1016). 19 See Art. 3 of the United Nations Convention on the Carriage of Goods by Sea, done at Hamburg on 31 March 1978 (Hamburg Rules), 1695 UNTS 3; Art. 2 United Nations Convention on Contracts for the International Carriage of Goods wholly or partly by Sea, done at Rotterdam on 11 December 2008, UN Doc. A/Res/63/122 of 2 February 2009, not yet printed in UNTS; Art. 8(1) Convention Concerning International Carriage by Rail (COTIF), done at Berne on 9 May 1980, as amended by the Vilnius Protocol of 3 June 1999, UNTS Registration no. 23353; Art. 4 of the Unidroit Convention on International Factoring, done at Ottawa on 28 May 1988, 2323 UNTS 373; Art. 6 of the Unidroit Convention on International Financial Leasing, done at Ottawa on 28 May 1988, 2321 UNTS 195; Art. 5 of the United Nations Convention on Independent Guarantees and Stand-By Letters of Credit, done at New York on 11 December 1995, 2169 UNTS 163; Art. 5 Convention on International Interests in Mobile Equipment, done at Cape Town on 16 November 2001, 2307 UNTS 285; Art. 23 of the Convention on Choice of Court Agreements, done at The Hague on 30 June 2005, UNTS Registration no. 53483; Art. 20 Protocol on the Law Applicable to Maintenance Obligations, done at The Hague on 23 November 2007, UNTS Registration no. 51361. 20 See Arts. 31(1) and 33(4) of the Vienna Convention on the Law of Treaties, done at Vienna on 23 May 1969, 1155 UNTS 331. 21 See Pierre-Marie Dupuy, International Law and Domestic (Municipal) Law, in Rüdiger Wolfrum, ed., Max Planck Encyclopedia of Public International Law: http://opil.ouplaw.com, para. 83 ff.; Christoph Schreuer, The Interpretation of Treaties by Domestic Courts, British YB Int’l L 45 (1971) 255– 301 (283 ff.). 22 With regard to Arts. 31 and 32 this was confirmed by the International Court of Justice, see ICJ 3 February 1994 (Lybia v. Tchad), ICJ Rep. 1994, 3 at 19, para. 41; Anthony Aust, Modern Treaty Law and Practice, Cambridge 2000, p. 185ff. 23 See Franco Ferrari, The Relationship between International Uniform Law Conventions, Unif. L. Rev. 5 (2000) 69–84; Gruber, above at fn. 1, p. 157ff. 24 Unidroit Convention on International Factoring, done at Ottawa on 28 May 1988, 2322 UNTS 373. 25 United Nations Convention on Independent Guarantees and Stand-By Letters of Credit, done at New York on 11 December 1995, 2169 UNTS 163. 26 Uniform Law on Bills of Exchange and Promissory Notes, Annex I of the Convention Providing a Uniform Law for Bills of Exchange and Promissory Notes, signed at Geneva on 7 June 1930, 143 LNTS 257. 27 For a comparative account, see Ernst E. Hirsch, Einheitliches Wechselgesetz oder einheitliches Wechselrecht? NJW 1961, 1089–94. 28 See BGH, 29 October 1962 – II ZR 28/62, NJW 1963, 252; Cass., 4 March 1963, Revue critique de droit international privé 53 (1964) 264. 29 See for the 1999 Montreal Convention on Air Transport, CJEU 10 January 2006, Case C-344/04 (The Queen ex parte IATA c Department of Transportation), ECLI:EU:C:2006:10, para. 36. 30 See the critical comment by Christian Kohler/Sibylle Seyr/Jean-Christophe Puffer-Mariette, Unionsrecht und Privatrecht – Zur Rechtsprechung des EuGH im Jahre 2010, Zeitschrift für Europäisches Privatrecht (ZEuP) 2011, 874–900 (881). 31 See e.g. the title of the 1999 Montreal Convention, above at fn. 5. 32 See e.g. Art. 4 CISG, above at fn. 3: exclusion of validity issues and property effects of a sales contract. 33 The distinction between internal and external gaps was already made by Peter Schlechtriem, Das Wiener Kaufrechtsübereinkommen von 1980 (Convention on the International Sale of Goods), IPRax 1990, 277–92 (279ff.). 34 See Art. 4 of the Factoring Convention and Art. 6 of the Convention on Financial Leasing as well as Art. 5 of the Cape Town Convention on Interests in Mobile Equipment, all above at fn. 19. 35 Unidroit, Principles of International Commercial Contracts, Rome 2010. 36 On the significance of the Unidroit Principles for the interpretation of international conventions see the subtle and detailed considerations of Ralf Michaels, Preamble I: Purposes, legal nature and scope of the PICC, in Stefan Vogenauer, ed., Commentary on the Principles of International Commercial Contracts (PICC), 2nd edn., Oxford 2015, paras. 123–31. 37Peter Behrens, Voraussetzungen und Grenzen der Rechtsfortbildung durch Rechtsvereinheitlichung, RabelsZ 50 (1986) 19–34 (26). 38 International Convention for the Unification of Certain Rules Relating to the Limitation of the Liability of Owners of Seagoing Vessels, with Protocol of Signature, signed at Brussels on 25 August 1924, 120 LNTS 123. 39 On the status of the Convention, see the website of the Comité Maritime International: www.comitemaritime.org (accessed 14 March 2018), Publications (Status of Maritime Conventions), CMI Yearbook 2016 (2017) 374. 40 International Convention Relating to the Liability of Owners of Sea-Going Ships, done at Brussels on 10 October 1957, 1412 UNTS 80. 41 See CMI Yearbook 2016, above at fn. 39, p. 401. 42 Convention on Limitation of Liability for Maritime Claims, done in London on 19 November 1976, 1456 UNTS 221. 43 See CMI Yearbook 2016, above at fn. 39, p. 453ff. 44 Protocol of 1996 to Amend the Convention on Limitation of Liability for Maritime Claims, 1976, not published in UNTS, but see the publication of the English text in Bundesgesetzblatt (BGBl.) 2000-II, 790; a consolidated text can be found on the website of the European Maritime Safety Agency: www.emsa.europa.eu (accessed 14 March 2018). 45 See Art. VIII lit. (b) of the International Convention for the Safety of Life at Sea (SOLAS) of 1 November 1974, 1184 UNTS 274, cf. Thomas Mensah, Maritime Safety Regulations, in Rüdiger Wolfrum, ed., Max Planck Encyclopedia of Public International Law: http://opil.ouplaw.com, para. 8ff. 46 See Art. VIII lit. b (vi)(2) SOLAS, previous fn. 47 Convention Concerning International Carriage by Rail (COTIF), done at Berne on 9 May 1980, 1397 UNTS 76, see Articles 19 § 3 and 21 § 2. 48 Protocol of 3 June 1999 for the Modification of the Convention Concerning International Carriage by Rail (COTIF) of 9 May 1980, Vilnius 3 June 1999, UNTS Registration no. 23353; see in particular Article 33 § 4 and Article 34 § 2. 49 See Art. 8 of the 1996 Protocol, above at fn. 44. 50 See Art. 13 of the Madrid Agreement Concerning the International Registration of Marks, done at Madrid on 14 April 1891, as amended in Stockholm on 14 July 1967, 828 UNTS 390; closely related is Art. 61 of the Patent Cooperation Treaty, done at Washington on 19 June 1970, 1160 UNTS 231. © The Author(s) (2018). Published by Oxford University Press on behalf of Unidroit. All rights reserved. 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Published: Mar 23, 2018

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