The purpose of the present work is to discuss the importance of CISG from an economical and legal perspective. The relevance of this analysis relies in the fact that this Covenant elucidates the efforts of the international community in the creation of a legal international framework that responds to the unprecedented growth of commercial relations between nations. After achieving this we will analyze from a technical legal perspective the legal requirements for the adoption of this instrument in Spain. Once completed, this assignment will unravel the State requirements for a successful implementation of a commercial driven International Covenant in Spain.
1. Advantages of the CISG
The increase of trading between nations had without doubt an important impact on their legal systems. Legal organizations had to respond to this circumstance eliminating barriers that present an obstacle to international commerce. It was in this context that International Instruments such as the Convention on contracts for the international sale of goods (CISG) and the UNIDROIT principles were created. The preamble of the CISG is very descriptive regarding the goals of this Covenant. According to this text, “Being of the opinion that the adoption of uniform rules which govern contracts for the international sale of goods and taking into account the different social, economic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade…”
Developing nations surely have benefited enormously with the appearance of these normative texts. Removal of international barriers clearly enhances the existence of more just and equitable rules regarding international transactions. Moreover, attorneys recognize the success of the CISG from a practical point of view. Thus, the existence of these instruments is almost obvious; it appears as a normative response to the globalization phenomena.
The normative harmonization tackles other substantial problems besides promoting international trading. These problems are detailed in a European Union consultation exercise. According to the European Union, normative differences impose in first place additional costs due to the need to find out about foreign law. If the costs are high, a business may decide that it would not be worth entering into international deals and might choose to forego otherwise profitable economic activity. On the other hand, a lack of uniform legislation could foster the existence of legal relationships with legal consequences that are not known. Finally, this may also motivate foreign companies to not risk international trading.
The success of The United Nations Convention on Contracts for the International sale of goods is also shown by the wide acceptability that this Covenant has had until present day. According to the UNCITRAL secretariat, the acceptance of the Covenant can be seen as every mayor geographical region, every stage of economic development and every major legal, social and economic system. Moreover as until 1 of September 2010, 76 States are parties of the Convention.
II. Problems of the CISG and their possible amendments.
Certainly, the legal harmonization process responds to the constant increasing trade among nations. Legal systems cannot ignore the need to find a common ground to regulate a complex reality. On the other hand, the process of harmonization has had their strong opponents. We will expose some of the various arguments against the creation of uniform legislation. Our intention is to evaluate these arguments in the light of the precepts of the CISG and of critical assessments presented by academics.
Gopalan succeeds in exposing clearly the arguments against the harmonization process. According to his work, detractors of legal uniformity denounce the obstruction to innovation that homogenous international trading could bring about. In the opinion of these detractors, this process entails the loss of the vital legal autonomy of national legal orders. This obstruction could represent a real impediment to developing countries as their own normative initiatives could be affected. On the other hand, the actual application of these covenants could find unsolvable barriers as courts with different legal traditions will normally resist the application of extravagant legislation. This is especially true regarding common law legal systems. In the U.S the difference between the precepts presented by CISG is so meaningful that there is the possibility that judges will ignore the application of the CISG to resolve a case. Academics, lawyers and judges have recognized this reality up to the point that some even argue that this treaty lacks applicability. Moreover, the flexibility in the interpretation of the Covenant present in article 7 has had as a result the proliferation of reserves and the consequent inapplicability of the Covenant or its partial application.
Not all of CISG critics rely in the covenant harmonization intention .There are important observations regarding the CISG´s technical content. These deficiencies could entail the non application of the Covenant in favor of internal legislation. From our perspective, the most relevant problems present in this precept consist in its flexibility and ambiguity. In relation to its flexibility, the parties can, according to the Covenant, “exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions.” The liberty bestowed to potential contractual parties obstructs the objective of the treaty, making its real implementation relative. John E. Murray clearly demonstrates this problem arguing that
“If we are to have a highly effective uniform law for international contracts for the sale of goods, there is the basic challenge of ascertaining that CISG will be the governing law. (…) CISG allows the parties to exclude its application entirely or derogate from or vary the effect of its provisions. Lack of familiarity with CISG may induce lawyers to avoid it because they fear the unknown and the attendant uncertain risks. Substantial familiarity with the Convention may still suggest avoidance, because counsel may decide that domestic law is more desirable for a client such as a buyer in a “battle of the forms” situation, which CISG Article 19 retrogresses to a pre-U.C.C. view that typically favors the seller. Even if counsel with such familiarity finds CISG provisions generally desirable, the unreliability of potential interpretations by courts of his own or other Contracting States may suggest that the safest course is to opt for domestic law.”
As previously mentioned, another problem found in the Covenant is the ambiguity of some of its precepts. For example, Article 7 of the Covenant refers to Good Faith or to the application of its general principles. Legal academics and practitioners coincide in recognizing the superfluous reference to these precepts. Regarding good faith, its vagueness generates authentic confusion on its accurate use. Indeed, a question that necessarily arises is how to interpret the result of this compromise and whether the principle of good faith in Article 7 is relevant only as an interpretative tool of the Convention or if it is also relevant as a standard of behavior for the contracting parties. The reference that article 7 makes to the general principles also finds similar problems. Although the mentioned article alludes to the covenant as the source of the general principles, the CISG does not contain such principles. How then, are parties to the treaty suppose to interpret the reference to the “principles” that this article makes?
In this sense, Professor John Honnold argues that “international unifying conventions, unlike true (civil law) codes, lack a general framework from which general principles can be derived.”If general principles of the Convention itself cannot be discovered, the alternative is to discover principles in conformity with the rules of private international law”.
Due to these problems new proposals regarding the creation of more appropriate legal instrument have emerged. According to this idea, the loops of the CISG claim the construction of a more comprehensive normative compendium. The supporters of this idea find in the Uniform Commercial Code a model that should guide future efforts to be followed by the international community. These authors see the Uniform Commercial Code as an excellent precedent of a legal body which has fostered the development of trade. According to Christopher Shifferthe, “UCC could be and effective guide for a Global Codification in three ways: First, and although no court is bound by a decision in separate sovereign state, courts interpreting the UCC often defer to other jurisdictions that have interpreted the Code (…) Second, in order to avoid any ambiguity in the Code, the UCC contains an official, systematic commentary to aid its interpretation(…) Finally, when the UCC was adopted by individual states, each jurisdiction was free to adopt the law as a whole or modify it(…) Nevertheless, it is necessary that any variation permitted under the Global Code is minimal and does not rise to the level of reservations acceptable under CISG”
From our point of view the problems presented by the CISG do not necessarily demand the creation of a new global Code. We also believe the ambiguity of the CISG and its excessive flexibility can definitely obstruct the application of the CISG in favor of national Laws. Nonetheless, this flexibility and ambiguity maintains from our point of view a realistic legal approach as it tries to maintain a balance between national sovereignty of the states and the statutory regime present in the CISG. Instead of fostering a harmonious trade between nations, the creation of a stricter global code would play in detriment of international commerce as more countries will “opt out” of the convenient. We believe a possible solution relies in facilitating the knowledge of the Covenant to members of the judicial power from national members. A stronger commitment by common law systems should be required as well.
III. The requirements for the validity of the CISG in Spain
The process of concluding International Conventions and the relations among these agreements and the internal law of the States can be explained by describing two different currents of thought. According to the first one, the dualist theory, international Law and internal Law are two completely different legal orders in their formation, material content and origin. This assumption implies that, in order for a legal system to adopt an international treaty, it is necessary to transform this international norm into an internal rule using the proper legislative mechanism. Moreover, the supporters of this doctrine assert that once the international rule transforms into an internal norm, the former can be voided or modified by subsequent regulations. On the contrary, the other current, led by Kelsen, affirmed that both orders were part of the same legal system, although international regulations prevail over the internal norms due to the fact that the latter can only be functional if it obeys and respects the system that has allowed its own formation.
As the majority of its neighboring countries, Spain has adopted the Kelsian model, thus its legal system, in one hand, does not demand the transformation of international norms into internal ones and, on the other, establishes the preference of International Law over internal Law. Taking this into consideration, the present work will briefly analyze the formal, the material and the constitutional revisions that Spain has to pursue to concludethe United Nations Convention on Contracts for the International sales of goods (CISG) in respect to the principles of freedom of form for the contract, good faith and general principles present in this Treaty.
The Formal Revision
A The Negotiation of the Treaty
In first place, in order to determine the rule of law in the process of negotiation and celebration of the CISG, it is important to underline that Spain acceded to the Vienna Convention on the Law of Treaties on May 2, 1972 (CLT), Treaty that was taken into effect the 27th of January, 1980 after its publication on the Official Bulletin of the State (BOE). The other regulation to consider is the Decree 801/1972 which regulates the activity of the State Administration in the Law of Treaties.
According to article 3 of the Decree and 7 of the Vienna Convention, several authorities are competent to represent Spain in the negotiation of the Treaties, such as the Heads of State, Heads of Government and Minister of Foreign Affairs. Other persons not listed in these articles need to have full powers and to have been designated by the Ministry of Foreign affairs or to carry out the negotiation.
Furthermore, in Spain the initiative to negotiate the conclusion of a Treaty belongs exclusively to the Government in accordance to article 97 of the Spanish Constitution. The decision to negotiate is taken in the cabinet and the competence to carry out this act corresponds to the Ministry of Foreign Affairs, previously authorized by the Executive Power (article 9 of the Decree). No other authority has the power to initiate the negotiation although Independent Communities (CCAA) are able to request the Government the celebration of Treaties in matters that redound in their interest. Moreover, the Government has the duty to inform the Independent Communities the negotiation and subsequent celebration of Covenants that might affect their interests, as expressed in several dispositions of the Statues of these Communities.
B Adoption and authentication
In order to explain the process of the adoption and authentication of an international text it is convenient to clarify the meaning of these procedures. According to article 9 of the CLT, the adoption of the text of a treaty takes place by the consent of all the States participating in its drawing up. On the other hand, if the adoption was done at an international conference it will take place by the vote of two-thirds of the States present and voting, unless that, by the same majority, they decide to apply a different rule. Meanwhile, the authentication is an act in law that provides testimony of the veracity of the adopted text that should follow the formalities present in article 10 of the CLT.
In Spain the competence to authorize the adoption and authentication of the CISG or any other international instrument belongs to the Cabinet of the Government as established in article 13 of the Decree and article 5.d) of the Law of Government (Law 50/1997, 27 of November). Nonetheless, as article 11 of the decree stipulates, it is possible that the rubric needed to authenticate the text is given by one of the representatives mentioned in article 3 of this norm and 7 of the Vienna Convention. In these cases, article 14 of the Decree establishes that, exceptionally, the Minister of Foreign Affairs can also authorize the signature ad referendum (rubric of the representatives) although it is necessary to seek the final approval form the Cabinet.
Finally, it is crucial to point out that the adoption and authentication of the text is not a mean to bound Spain to an International Covenant, this effect only emerges when the procedures to express the consent present in articles 13 to 17 of the CLT and the Constitution of Spain are followed. Moreover, the only obligations that derive from the adoption and authentication are the need to act in good faith and to respect the obligation of not defeating the object and purpose of the Treaty.
C. Intervention of the General Courts
The involvement of the General Courts in the process of concluding a Treaty is legally justified by means of the supervision and control that article 66 of the Spanish Constitution concedes to this authority over the foreign activity of the Executive Power.
This control translates, depending on the issue or the obligations established in the Treaty, in the need to obtain the authorization of the Covenant by the Courts or in the obligation of informing this power the conclusion of an international agreement.
The Spanish Constitution indicates in articles 93 and 94.1 that, in order to consider binding the expression of the consent given in the Treaties mentioned in these articles, it is necessary to evoke previously the authorization of the Court. The first article refers to Treaties that attribute the exercise of competences derived from the Constitution in favor of Institutions or international Organizations, case in which the previous authorization of the Court needs the approval of the absolute majority of its members. The second precept lists different kinds of Covenants such as Treaties with political or military content; being only necessary in these cases the vote of the simple majority of the Courts. Moreover, and, as mentioned before, the authorization is not required if the subject of the Treaty is not regulated in these articles, in which case the Courts only have to receive immediate information about the Treaties already celebrated (art 94.2 SC).
Taking into consideration the aforementioned mechanism, the expression of the consent for Spain to be bound by the CISG wouldn’t need the authorization of the Courts due to the fact that its content does not match the ones present in articles 93 and 94.1 of the Constitution. Nevertheless, it would be necessary to comply with the need to provide the information to the General Courts demanded in article 94.2 of the Constitution.
D The expression of the consent to be bound by a Treaty
Initially, the consent to be bound by the CISG or any other Treaty is given by the king of Spain when it is expressed by ratification or accession (article 63.2 of the Constitution). Moreover, the consent of the king is always countersigned by the Minister of Foreign affairs, and is not necessary in the other means of expressing the consent present in articles 11-17 of the CLT.
E) Moment of Efficacy of the International Treaty in the internal order
As mentioned in the introduction, the Spanish legal system doesn’t require the creation of an internal Law in order to assume the regulations of an International Covenant celebrated by the competent authorities. In this sense, article 96.1 of the Spanish Constitution establishes that “international Treaties validly celebrated, once officially published in Spain, will comprise the internal ordering”, rule similarly displayed by article 1.5 of the Civil Code although the latter specifies that the Treaty needs to be published in the Official Bulletin of the State (BOE) . According to these articles, the only formal requirement that is needed for the CISG to become part of the internal system is its official publication, and once this has been accomplished, the international Treaty becomes a direct source of law and completely effective or self-executive in the internal Law, “maintaining its international nature and its special legal efficacy.”
II The material and Constitutional revision
The CISG recognizes in articles 7 to 11 the principles of free-will autonomy, good faith and liberty of form. These principles are also recognized in the Spanish internal law: The principle of free-will autonomy is included in article 12555 of the Civil Code, provided that it does not contradict other laws or disturbs the public order, while good faith is incorporated in article 1258 of the same legal text. Furthermore, the liberty of form is explicitly recognized in articles 1278 of the Civil Code and 51 of the commercial Code. Finally and, regarding the first two principles, although the Spanish Constitution does not recognize them literally, the exercise of several fundamental rights implies the indirect Constitutional recognition of the principles of free-will autonomy and good faith. Moreover, due to the compatibility between the general principles of the Covenant and the internal Law it is possible to assert that no conflict would emerge in the reception of this Treaty by Spain,
Nonetheless, supposing that the CISG was effective in Spain but contained principles that contradicted the ones present in the internal order, the superior legal hierarchy of the Treaty over the internal law would obstruct the allegation that a Treaty infringes internal norms such as the ones that recognize good faith or the free-will autonomy. This assertion is corroborated by article 95.2 of the Constitution, precept that consolidates the primacy of the international Treaties over internal norms by establishing that “the dispositions (of the treaties) can only be modified annulled, or suspended by the means of the same Treaties or according to the general norms of international Law.” This is also the criteria that the Spanish Supreme Court follows in its decisions such in the sentence 22 of may, 1989, case when it declared that a Covenant was not annulled by the subsequent publication of a Law due to the primacy of the Treaty over internal Law. In addition, the Constitutional Court has also adopted this position, affirming in many decisions the superiority of the Treaty and indicating as well that, in case of a collision among these norms, the internal law should not be applied.
Furthermore, the relationship between the Constitution and International Treaties follows a different path. In these cases, the principle of hierarchy is not an adequate instrument to solve the conflicts given the complexity of the confronted norms, although the constitutional articles that attend this issue implicitly manifest the preponderance of the Constitution. As important authors have noted, in these cases the solution given should be based instead on “the principle of the coherence that has to rule the interior and exterior activity.”
Moreover, the Constitution and the CTL contain articles that refer to possible solutions of conflicts that might arise between international Treaties and the Constitution such as in the case of adopting a Covenant that contains principles that collide with the fundamental norm. The first of these solutions is the constitutional control of the international Treaties previous to the expression of the consent (article 95.2 SC). According to this mechanism, the Government or any of the Chambers can demand the Constitutional Court to declare whether the CISG or any other treaty contains stipulations that contradict the Constitution. The second possibility is the constitutional control of the Treaty through the action of unconstitutionality present in article 161.1a) in the cases in which the international norm has already been received by the internal order. The last feasible control is the reformation of the Constitution for the State to become a party of the Treaty (articles 166-169).
Finally, the formulation of reservations in accordance with articles 19 and 20 of the CTL can also prevent the adoption of international rules that violate constitutional norms. This is possible since the reservation is, according to Diez de Velazco, a declaration of will from a State to be party of a Treaty with the purpose of not accepting completely the general terms of the Treaty. Hence, if a State believes that a precept of the international Treaty infringes a Constitutional or internal law it can prevent this violation by deciding to exclude or modify the legal effects of certain provisions of the Treaty in their application to that State (article 2.d CTL
Fair trade directs a special mandate to the International Community that consists in the progressive elimination of economical barriers. This process entails as well a harmonization of legal systems. The United Nations Convention on contracts for the international sale of goods is a good example of a text product of this homogenization. Its appearance is in terms with the increase of trading practices and, as its preamble clearly stipulates, is an instrument which has as one of its goals the promotion of equality. The aim of the present work consisted in assessing the accomplishments of this Treaty. We have been able to expose the virtues of the Covenant as well as its material and formal legal holes. Although far from perfect, we believe it presents a realistic framework to balance legal national needs with the interests of the international community.
The other aim of the preset work consisted in describing the legal requirements for the validity of International Covenants in Spain. According to the formal, the material and the constitutional revision of the CISG it is possible to conclude that the reception of this Treaty by the Spanish legal order would not present many problems. In first place, there is not an observable inconvenient for the CISG to comply with the formal requisites that are necessary to validly negotiate and celebrate a Treaty. Instead, the formal process in the conclusion of this treaty presents an advantage since it is not an international instrument which would require the authorization of the General Courts. Secondly, the ratification of the CISG wouldn’t entail the infringement of the internal Spanish Law since its general principles respect and coincide with the notions of free-will autonomy, good faith and liberty of form present in the Spanish Civil and Commercial Law. In addition, due to the supremacy of international Treaties over internal Law that exists in Spain, once the Covenant has become part of the Spanish system it would be impossible to oppose the violation of an internal provision by an international clause. In third place, from a constitutional perspective is possible to assure that adoption of the CISG wouldn’t present any problem due to the fact that principles of the Covenant correspond generally with the articles of the Constitution. Nevertheless, in this case there are legal mechanisms to prevent the contravention of the Spanish Constitution. Finally, we can also verify that Spain has adopted the Kelsen’s monist system, which at the same has served to explain the reception in Spain of international Treaties.
- Cook, Susanne CISG from the perspective of the practitioner. Journal of Law and Commerce (1998) p.343-253.
- Diez de Velazco, Manuel “Instituciones de Derecho Internacional Publico” Madrid, 2001
-Gopalan, Sandeep, The creation of International Commercial Law: sovereignty failed? HeinOnline — 5 San Diego Int’l L.J. 267 2004
-Kroll, Stefan Selected problems concerning the CISG´s scope of applicaltion Law Centre for European and International Cooperation, R.I.Z., Cologne, LL.M. (London).
-John Honnold, The United States Uniform Commercial Code: Interpretation by the Courts of the States of the Union, 181, 183, in International Uniform Law in Practice.
-Sheaffer, Christopher. The failure of the United Nations Convention on contracts for the international sale of goods and a proposal for a new uniform global con in International sales code. On http://www.cisg.law.pace.edu/cisg/biblio/sheaffer.html (as of 26 of may 2011)
-Ferrari, Franco What sources of law for contracts for the International Sale of Goods. Why one has to look beyond the CISG. International Review of Law and Economics 25 (2005) 314-341
-Zaccaria, Elena Christine The dilemma of Good Faith in International Commercial Trade. http://www.austlii.edu.au/au/journals/MqBLJ/2004/5.html (as of 26 of may 2011)
-United Nations Commission on International trade Law, United Nations Convention on Contracts for the International Sale of Goods. New York 2010.
- Constitution of Spain, 1978
- Convention on the Law of Treaties on May 2, 1972
- United Nations Convention on Contracts for the International sales of goods, 1980
- Decree 801/1972
- Law of Government 50/1997, 27 of November
-Spanish Civil Code
-Spanish Commercial Code
- STS 22 of May, 1989, Aranzadi n.9680
- STC 155/1997, 29 of September, BOE , October 30 1997
 United Nations Commission on International trade Law, United Nations Convention on Contracts for the International Sale of Goods. New York 2 010
 See Cook, Susanne CISG from the perspective of the practitioner. Journal of Law and Commerce (1998) p. 343-253
 Gopalan, Sandeep, The creation of International Commercial Law: sovereignty failed? HeinOnline — 5 San Diego Int’l L.J. 267 2004
 United Nations Commission on International trade Law, United Nations Convention on Contracts for the International Sale of Goods. New York 2010.
 United Nations Commission on International trade Law, United Nations Convention on Contracts for the International Sale of Goods. New York 2010. Article 6.
 John Honnold, The United States Uniform Commercial Code: Interpretation by the Courts of the States of the Union, 181, 183, in International Uniform Law in Practice, Acts and Proceedings of the 3rd Congress on Private Law Held by the International Institute for the Unification of Private Law, UNIDROIT, Rome, September, 1987; Kroll, Stefan Selected Problems Concerning the CISG´s Scope of application.
 John Honnold, The United States Uniform Commercial Code: Interpretation by the Courts of the States of the Union, 181, 183, in International Uniform Law in Practice, Acts and Proceedings of the 3rd Congress. on Private Law Held by the International Institute for the Unification of Private Law, UNIDROIT, Rome, September, 1987.
 Diez de Velasco, Manuel “Instituciones de Derecho Internacional Publico” Capitulo IX La recepción del Derecho Internacional por los ordenamientos internos, pp.194 y SS, Madrid, 2001.
 We have replaced the term nationalization given in the main exercise by the word conclusion due to the fact that, in our opinion, nationalization would refer to a dualist system, model that, as we mentioned, is not the one that Spain has adopted.
 Article 97 of the Spanish Constitution establishes that one of the functions of the Government is the “Direction of internal and external policy”
 The internal Statues of The Communities include the possibility to make this request in several issues such as for the establishment of cultural relations among States – art 6 of the Statue of El Pais Vasco, article 27.4 of the Statue of Cataluna and 35.3 of the Statue of Galicia-, as well as for the negotiation of Treaties relevant to immigrant reception-Article 23, Statue of Analucia, article 40.3,Statue of Castilla-La Mancha.-
 Article 26.5 Statue of Cataluna, article 12.2 Statue of Murcia, article 20.5 Pais Vasco…
 Diez de Velazco, Manuel “Instituciones de Derecho Internacional Publico” Capitulo VI Los Tratados Internacionales II, p.148, Madrid, 2001.
 Diez de Velazco, Manuel “Instituciones de Derecho Internacional Publico” Capitulo IX La recepción del Derecho Internacional por los ordenamientos internos, pp.194 y SS, Madrid, 2001
 Article 17,22,32,38 of the Spanish Constitution
 STS 22 of May, 1989, Aranzadi n.9680
 STC 155/1997, 29 of September, BOE , October 30 1997
 Diez de Velazco, Manuel “Instituciones de Derecho Internacional Publico” Capitulo IX La recepción del Derecho Internacional por los ordenamientos internos, p 200, Madrid, 2001
 Ibid, Capitulo V Pag. 135