Opt-In or Opt-Out of the CISG: Cases and GTCs Analyses andTips for Contract Negotiators

Assoc.Prof. Dr Nguyen Minh Hang

Dean- Faculty of Law – Foreign Trade University, Hanoi, Vietnam

Arbitrator of the Vietnam International Arbitration Center (VIAC)

General Secretary of the Vietnam International Commercial Mediation Center (VICMC)

VIAC cases on the CISG

Case no Parties Applicable law clause in the

contract

Application of the CISG

Notes

102/19 HCM Nigeria - Taiwan Yes, referring to the CISG

Yes Nigeria is not a state member

43/19 HCM Italy- Vietnam No Yes, art 1.1.a CISG

12/19 HN France- Vietnam No Yes, art 1.1.a CISG

48/19 HCM Singapore- Vietnam No Yes, art 1.1.a CISG

197/19 HCM Taiwan- Vietnam Yes, Vietnamese Law

Yes Not an exclusion

Interviews on the use of CISG (2019)

Interviewees- 10 judges- 10 lawyers- 15 arbitratorsResults:- Courts: not applied yet, trend to apply Vietnamese Law- Arbitrators: yes- Lawyers: good awareness, still trend to avoid application

Reasons to opt-in of the CISG

- CISG is already adopted by important trading partners of Vietnam (and of ASEAN)

- The CISG brings many benefits for SMEs with no power in the negotiation

- CISG is considered as the source of law with cheapest fee to learn with all texts, cases and articles accessed online and free of charge

- Your lawyers can argue arbitration cases using the CISG –no need to hire foreign lawyers who know a foreign law.

Tips for negotiators for CISG opt-in

• Combine the choice of CISG with an arbitration clause

• Should refer to the model international sale contracts of the ICC and the ITC for drafting the applicable law clause

Opt-in of the CISG - drafting the applicable law clause (1)

Any questions relating to this Contract which are not expressly or implicitly settled by the provisions contained in the Contract itself shall be governed :A. by the United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention of 1980, hereafter referred to as CISG), andB. to the extent that such questions are not covered by CISG, by reference to the law of the country where the Seller has his place of business.

ICC Model International Sale Contract (ICC publication no 738E -2013)

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Opt-in of the CISG – drafting the applicable law clause (2)

«Questions relating to this contract that are not settled by the provisions contained in the contract itself shall be governed by the United Nations Convention on Contracts for the International Sale of Goods (Vienna Sales Convention of 1980, hereafter referred to as CISG).

Questions not covered by the CISG shall be governed by the UNIDROITPrinciples of International Commercial Contracts (hereafter referred toas UNIDROIT Principles), and to the extent that such questions are notcovered by the UNIDROIT Principles, by reference to [specify the relevantnational law]”

Model Contracts for Small Firms – International Trade Center (ITC)

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• BHP Billiton Marketing General Terms and Conditions of Sale and Purchase v3

• Anglo American GTC for Term Sales of Iron Ore on a CIF basis (Dec 2014 Edition)

• ECC 2002

• FOSFA International (Federation of Oil, Seeds and Fats Associations)

• Gafta No.120 (THE GRAIN AND FEED TRADE ASSOCIATION- FOB CONTRACT FOR THAI RICE IN BAGS OR BULK 2006)

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Exclusion of the CISG in the GTCs

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BHP Billiton Marketing General Terms and Conditions of Sale and Purchase

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Anglo American GTC for Term Sales of Iron Ore on a CIF basis (Dec 2014 Edition)

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ECC (European Contract for Coffee) 2002

• Lack of understanding CISG

• Afraid of spending time and money to learn new sources of law.

• Differences between the CISG and national law

• The path dependence on the GTCs

• The ability to impose their own national laws

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Reasons to opt-out of the CISG

Tips for negotiators

• Negotiate to put the CISG selection clause on the specific terms of contract, which prevails the GTCs

Thank you!