THE APPLICATION OF CISG (United Nations Convention on

Contracts for the International Sale of Goods,1980) IN ASIA

Introduction

United Nations Convention on Contracts for the International Sale of Goods herein after
referred as CISG is one major achievement of UNCITRAL in 1980. 1 The CISG provides a
modern, uniform and fair regime for the settlement of disputes relating to the international
sale of goods, introducing certainty in commercial exchanges and thus decreasing transaction
costs. It is therefore considered one of the core treaties in international trade whose universal
adoption is particularly desirable. The adoption of its provisions, which were specially
tailored for cross-border exchanges, assists in more efficient contract management and may
lead to a more equitable result in case of litigation.2

The CISG has been ratified by 91 states, which account for a significant proportion of world
trade, making it one of the most successful international uniform laws. Liechtenstein was the
most recent state to adopt the Convention, having acceded to it on 30 April 2019.3

In fact, the CISG is a key component of an enabling environment for international trade.
Moreover, the CISG has an enabling effect on cross-border exchanges with respect to
bilateral and regional free trade agreements.

 Research objective

The research objective of this paper is to examine the scope and application of United
Nations Convention on Contracts for the International Sale of Goods (CISG), 1980 in Asia.

1
United Nations, Treaty Series, vol. 1489, p. 3. Additional information on the CISG, including its updated
status, is available on the UNCITRAL website at
http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.html
2
John Y. Gotanda, Assessing Damages in International Commercial Arbitration: A Comparison with
Investment Treaty Disputes, Investment Treaty Law: Current Issues III 75 (British Institute of International &
Comparative Law, 2009).
3
Supra note 1.
  Research questions

The paper sought to answer the underlying questions determining the scope and application
of United Nations Convention on Contracts for the International Sale of Goods (CISG), 1980
based on the ratification or accession by Asian countries party to CISG, 1980. The questions
of the research are as follows,

1. How many states are party to the CISG, 1980?

2. What was the law prior to the ratification in each respective state party to CISG, 1980
in Asia?
3. How the particular state has become a member of CISG, 1980 also whether there is
any reservation clause in there ratification or accession agreement or any sort of
declaration made therein?

Members of United Nations Convention on Contracts for the International

Sale of Goods (CISG), 1980 in Asia.

At present CISG has been ratified by 17 Asian as a step towards being a part of international
uniform laws with respect to cross border sale of goods. 

 The CISG in China

China is considered as one of the most actively involved trading nation in the Asian
continent. China signed CISG on 30th September 1981 and approved CISG with effect from
1st January 1998. Though, initially, China filed a declaration on Article 95 and a declaration
on the general subject of Article 96, on January 16, 2013, China deposited instrument with
the General Secretary of the United Nations showing intention to withdraw its declaration
under CISG. By doing so, China joined the vast majority group of CISG member states. that
do not require the written form for contracts for the international sale of goods. This
particular action of China took effect from 1 August 2013.

With respect to Hong Kong, which is considered as a "Special Administrative Region" of

China (which enjoys a higher degree of autonomy) with effect from 1 st July 1997, CISG did
not apply as it was signed after the special status was accorded to Hong Kong. Until and
unless an express depository notification is submitted by China stating to include Hong Kong
within the ambit of CISG, and the courts of China and Hong Kong are unlikely to regard
application of CISG in Hong Kong.

Prior to acceding and ratifying the CISG, the domestic laws that applied with respect to
international sale of goods are as follows:

1. Contract Law of the People's Republic of China.

2. Interpretations of the Supreme People's Court on Certain Issues Concerning the
Application of the Contract Law of the People's Republic of China.
3. Interpretations of the Supreme People's Court on Issues Concerning the Application
of Law for the Trial of Cases Involving Disputes over Sale and Purchase Contracts.
4. Product Quality Law of the People's Republic of China.
5. Interpretation of the Supreme People's Court on Issues concerning the Application of
Law in the Trial of Cases Involving Disputes over Contracts for the Sale and Purchase
of Commodity Housing.
6. Civil Procedure Law of the People's Republic of China.

 The CISG in Israel

Israel is also one among the 17 counties that has acceded CISG on 22nd January 2002 and
brought it into effective from 1st February 2003. While acceding and ratifying the convention,
Israel made no declarations or any reservations with respect to any part or provision of CISG.
After acceding and ratifying CISG, the domestic law of Israel concerning sale of goods called
Sales Law (International Sale of Goods) 5760-1999 was incorporated.

With respect to international sales contract which were concluded before the effective date of
CISG being incorporated into the domestic law of Israel, the previous law, that is, the 1964
Hague Sales and Formation Convention shall continue to be applicable.

The Sales Law (International Sale of Goods) 5760-1999, Section 3 states that along with the
requirement as mention in Article 1 of CISG, the provisions and rules of CISG shall also
apply to a party whose place of business is in the state which is not a member state of CISG.
This particular provision opens a wide ambit for the application of CISG in Israel in so far
that Article 1 (1) (a) and Article 1 (1) (b) become unwanted. This particular provision cannot
be considered as a ‘reservation’ as per Article 97 as it widens the scope of CISG.
  The CISG in Singapore

Singapore is another country in Asia which signed CISG on 11 th April 1980 and ratified the
same on 16th February 1995, thereafter on 1st March 1996 came CISG became effective
within the territory of Singapore.

While ratifying CISG, Singapore filed a declaration for reservation of Article 96 of CISG; "In
accordance with article 95 ...the Government of the Republic of Singapore will not be bound
by sub-paragraph (1) (b) of article 1 of the Convention and will apply the Convention to the
Contracts of Sale of Goods only between those parties whose places of business are in
different States when the States are Contracting States.". This particular reservation by
Singapore restricts of private international law in determining how far the applicability of
CISG would be when both parties to the contract do not have their place of business in the
member states of CISG.

The existing domestic law with respect to sale of goods in Singapore prior to ratifying CISG
are as follows:

1. Sale of Goods Act (Cap 393, 1999 Revised Edition) (SOGA)

2. Consumer Protection Fair Trading Act (Cap 52A, 2009 Revised Edition) (CPFTA).
3. Unfair Contract Terms Act (Cap 396, 1994 Revised Edition) (UCTA).

After ratifying CISG, the Singaporean government passed the Sale of Goods (United Nations
Convention) Act (Cap 283A, 1996 Edition) in order to effectively incorporate CISG
provisions within its domestic laws.

 The CISG in Uzbekistan

The Republic of Uzbekistan acceded to CISG on 27th November 1996, thereafter CISG
became effective for Uzbekistan from 1st December 1997. CISG had been actually in force in
the Soviet Republic of Uzbekistan, effective from 1 st September 1991. However, when
Uzbekistan became an independent State, the Republic of Uzbekistan elected to rather adopt
the Convention by accession than by succession with an effective date of 1st December 1997.

While acceding to the Convention the Republic of Uzbekistan made no declarations or had
any kind reservations thereto with respect to any provisions or parts of the Convention.

The local domestic laws existing with respect to contracts regarding sale of goods before and
after acceding to CISG in Uzbekistan are as follows:

1. Custom Code of the Republic Uzbekistan (1997)

2. Code of Economic Procedure of the Republic Uzbekistan (1997)
3. Tax Code of the Republic Uzbekistan (1997)
4. Civil Code of the Republic Uzbekistan - Part One (1995)
5. Civil Code of the Republic Uzbekistan - Part Two, (1996)
6. The charter of market law - a new Civil Code
7. Stimulation of small and private entrepreneurship (1995)
8. Foreign economic activity of the Republic Uzbekistan (1991, 2000)

 The CISG in Vietnam

Vietnam acceded to CISG on 18th December 2015, followingly CISG became effective for
Vietnam from 1st January 2017.

After acceding to CISG Vietnam made a declaration and thereby made a reservation stating
that in accordance with respect to Articles 12 and 96 of the Convention, Vietnam declared
that any provision of Articles 11, 29 or Part II of the Convention which allows a contract for
sale or its modification or termination by agreement or by any offer, acceptance or other
indication of intention to be made in any form other than in writing, would not apply where
any party had his place of business in its territory.

The existing domestic laws that apply respect to sale of goods contract in Vietnam before and
after acceding to the Convention are as follows:

1. Civil Code 2015.

2. Code of Civil Procedure 2015.
3. Law on Commerce 2005.
 4. Ordinance on Foreign Exchange Control 2005.
5. Ordinance 2013 on amending and supplementing a number of articles of the
Ordinance on Foreign Exchange Control.
6. Law on Foreign Trade Management 2017.
7. Law on Commercial Arbitration 2010.
8. Law on Consumer Protection 2010.
9. Law Providing Assistance to Small and Medium-sized Enterprises 2017 and its
guiding instruments protecting small business against adverse effects of transactions
with other legal entities
10. Vietnam is also developing a law in order to protecting the interests of small and
medium-sized enterprises in Vietnam in commercial disputes.

 The CISG in Japan

The CISG has entered into force with respect to Japan on August 1, 2008. Japan is the 71st
Contracting State to the CISG.

Prior to accession The Japanese Civil Code was followed which became effective in 1898.
Though there had been several amendments since that time, basic provisions concerning the
sale of goods have not been changed. The CISG provisions seem more practical and a better
fit with actual commercial practices.

After accession to CISG by Japan, Japanese companies need not provide for the specific
governing law in their sales contract with Chinese companies, because then both Japan and
China will both be contracting states to CISG. If the Chinese party insists on the application
of Chinese domestic law as governing law, it will be easier for the Japanese party to insist on
the application of CISG as governing law because CISG will be a part of both Chinese law
and Japanese law, and because it is believed to be fair and specifically designed for
international sales transactions. Also, by using CISG as governing law, it will be easier for
Japanese companies to draft the general terms and conditions of their printed sales contract
forms.

Japan has made no such declaration as well as reservation in its accession to United Nations
Convention on Contracts for the International Sale of Goods (CISG), 1980.
  The CISG in Mongolia

Mongolia acceded to the CISG on 31 December 1997, and the CISG therefore will enter into
force for on 1 January 1999.

Mongolia has made no such declaration as well as reservation in its accession to United
Nations Convention on Contracts for the International Sale of Goods (CISG), 1980.

 The CISG in Turkey

Turkey acceded to the CISG on July 7, 2010, and the CISG therefore will enter into force for
Turkey on August 1, 2011. Turkey’s accession to the CISG, 1980 brings to seventy-six the
growing number of parties to the CISG, which has included the United States since 1988.

Now that Turkey is a party to the CISG, the uncertainty and the associated dispute resolution
costs are readily reduced or eliminated, as the contract and the contract dispute described in
the hypothetical situation would be governed not by domestic sales law, but by the CISG, no
matter which court U.S., Turkish, or Italian hears the claim.

As the CISG becomes increasingly relevant in the United States and as trade with Turkey
continues to rise, Turkey’s accession to the CISG creates an important common legal
framework for sales transactions between Turkish and U.S. contracting parties. The CISG
therefore has immediate importance for international sale of goods transactions involving
counterparties located in numerous jurisdictions that have particular significance for Turkey.

Prior to CISG the Turkish International Private and Procedural Law, 2007 was followed in
reference to Art.24 which states that applicable law to a sale contract is the law that has been
chosen by the parties.4 CISG and the TCO have many similarities regarding to formation of
the contract. Because, Turkey is a Civil Law country like many European countries.

Turkey has made no such declaration, and Turkish courts should therefore apply the CISG
not only when the parties to the contract for the sale of goods have their respective places of
business in different countries that are parties to the CISG, but also when Turkey’s principles
pertaining to private international law would lead to application of the substantive law of any
party to the CISG, including Turkey.

4
The Turkish International Private and Procedural Law (Act No. 5718) enacted on 27 November 2007 was
entered into force on 12 December 2007. The intention of this law is to establish a system in compliance with
the international agreements to which Turkey is a party and in accordance with the Turkish national legislation.
  The CISG in Iraq

Iraq acceded to the CISG on 5 March 1990, and the CISG therefore will enter into force for
on 1 April 1991. Iraq has made no such declaration as well as reservation in its accession to
United Nations Convention on Contracts for the International Sale of Goods (CISG), 1980.

 The CISG in Lebanon

Lebanon acceded to the CISG on 21 November 2008, and the CISG therefore will enter into
force for on 1 December 2009. Lebanon has made no such declaration as well as reservation
in its accession to United Nations Convention on Contracts for the International Sale of
Goods (CISG), 1980.

After the accession companies of Lebanon need not accommodate the particular governing
law in their deal with other multinational companies party to CISG, since then it will be
simpler for the companies of Lebanon to demand the use of CISG as governing law in light
of the fact that CISG is accepted to be reasonable and explicitly intended for global
transactions involving sale of goods.

Conclusion

South East Asian States are an integral part of East Asian supply chains, which extends from
Japan to Australia. Those supply chains are structured and constantly fine-tuned to maximize
profits: their efficient management is a priority, and diversity of applicable laws may create
uncertainty in the applicable legal framework, thus increasing transaction costs.

The fact that East Asian commercial law is eclectic, having been influenced by European
models of common and civil law, and, in the civil law, as vastly different as are the French
and the German legal systems, by US common law, by local sources and by Islamic law
further increases the challenges in identifying the applicable law and ascertaining its content.
Moreover, East Asia has not chosen to pursue close regional economic integration, along the
lines, for instance, of the European Union. Rather, it seems oriented towards a looser
harmonization model under which free trade agreements are complemented by an enabling
legal environment built on the voluntary adoption of global uniform texts by States.5

In other words, East Asian States seem to hesitate in transferring legislative competence to a
supranational entity. The Association of Southeast Asian Nations (ASEAN) probably
represents the most advanced experiment in economic integration in the region; however, its
reach has not yet directly covered the law of international business transactions.
Harmonization and, sometimes, unification is therefore pursued through the adoption of
uniform global standards.

In the field of international sale of goods, ASEAN has adopted the important ASEAN Trade
in Goods Act (ATIGA), which needs to be paired with the CISG in order to effectively
facilitate regional exchanges. In fact, the two treaties are complementary, as they deal,
respectively, with private law and public law aspects of that trade. Moreover, the accession to
the CISG by all major East Asian trading nations outside ASEAN provides a significant
example and incentive to ASEAN Member Nations. It seems therefore likely that Singapore
will not remain alone in ASEAN as a State party to the CISG for much longer.

Vietnam has taken the lead in that respect since, after thorough consideration and a public
consultation process, the Prime Minister has in January 2013 made a decision to move in that
direction. Thailand might follow soon given the interest expressed in that country, and
positive signs towards CISG adoption may be seen in Indonesia and the Philippines, too.
Hopefully, once the movement towards accession reaches a critical mass, it will involve all
ASEAN member nations, thus providing a major contribution to the establishment of a global
sales law.

5
North American Free Trade Agreement (NAFTA) and to the Central America Free Trade Agreement-
Dominican Republic (CAFTA-DR) members have de facto adopted certain UNCITRAL texts, such as the New
York Convention or the CISG, as their common law for international trade.