International economic law

and commercial contracts:

promoting cross-border

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trade by uniform law
conventions
Jürgen Basedow*

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 commer-
cial 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
*
Jürgen Basedow, Director emeritus, Max Planck Institute for Comparative and International Law,
Mittelweg 187, D-20148 Hamburg, Germany and Professor of Law, University of Hamburg;
Member, Institut de droit international. Email: basedow@mpipriv.de. 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.

! The Author(s) (2018). Published by Oxford University Press on behalf of UNIDROIT.

All rights reserved. For permissions, please email journals.permissions@oup.com

Unif. L. Rev., Vol. 23, 2018, 1–14

doi:10.1093/ulr/uny007
Advance Access publication: 23 March 2018
2 Jürgen Basedow

Hague Conference; there are many of them. In more recent times, the harmon-
ization 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

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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 par-
ticular 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 obli-
gations 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 instru-
ment, in line with the uniform provisions. A third academic discipline that ex-
cludes 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

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.

Unif. L. Rev., Vol. 23, 2018, 1–14

 International economic law and commercial contracts 3

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 con-
ventions in the overall legal framework of international trade. This place is deter-

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mined 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 condi-
tions 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

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.

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4 Jürgen Basedow

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

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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 commer-
cial 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 pro-
vides 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 ter-
minology of a systematic legal scholarship, the latter contracts are considered to
be part of commercial law, whereas the aforementioned treaties fall into the cat-
egory 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 interna-
tional 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 inter-
national community itself that wants to restrict international trade in certain
sectors by pertinent treaties; this is, for example, the case with endangered spe-
cies,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.

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.

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 International economic law and commercial contracts 5

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 com-
merce. 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

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competent post-delivery service for the foreign product, lower prices, faster de-
livery, 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 enforce-
ment, and so on.
Legal uncertainty is usually caused by the vagueness or divergence of the na-
tional 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 coun-
try. 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 interna-
tional community has engaged over the last 150 years in a progressive harmon-
ization of commercial law and private international law. Various means such as
the drafting of international contract forms by private organizations, the elabor-
ation 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 sta-
bility 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
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 pri-
vate-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.

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6 Jürgen Basedow

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

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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 deci-
sions. 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

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).
14
Bundesgerichtshof (BGH), 28 February 1975, Neue Juristische Wochenschrift (NJW) 1975, 1597,
1598 sub. IV 1 (author’s translation).
15
Cour de cassation belge, 27 January 1977, Pasicrisie 1977, I 574, 582 (author’s translation).
16
Fothergill 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.
17
Air 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’, ‘paro-
chial’) 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.

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 International economic law and commercial contracts 7

contracting States.18 Numerous similar provisions have been included in more

recent international instruments.19
Nowadays, the principle of autonomous interpretation is generally acknowl-
edged, 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;

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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 con-
ventions 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 re-
quirement 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

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.

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8 Jürgen Basedow

appear to exclude historical arguments where the travaux préparatoires are avail-
able. 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 pur-

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pose 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 inter-
national 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 busi-
ness 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

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.

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 International economic law and commercial contracts 9

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.

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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 uni-
form 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 ex-
ample, 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

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.

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10 Jürgen Basedow

a declaration of avoidance can be implied or must be explicit and without refer-

ring 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

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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 desig-
nated 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 declar-
ations 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 prin-
ciple 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, never-
theless, 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,

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.

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 International economic law and commercial contracts 11

an indication or even a rebuttable presumption for the existence of such prin-

ciples 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.

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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 fre-
quently 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 con-
vention 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 termi-
nated the Convention, and the international community concluded a successor
convention in 1957, which uses the invariant size of the vessel as the basic criter-
ion 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 suf-
ficient 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

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.
37
Peter 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.

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12 Jürgen Basedow

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.

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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 con-
vene a revision conference. As soon as the protocol amending the original con-
vention 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 govern-
ments 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
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.

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 International economic law and commercial contracts 13

minor importance. However, such adjustments can be very costly, and no re-
sponsible government will accept them without close scrutiny. From this eco-
nomic perspective, the change towards a simplified revision of international
conventions appears possible in private law as well. In fact, there are some ex-
amples of a successful shift to the object-or-comply model of revision in this field.

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In the law of international carriage by rail, the Convention Concerning
International Carriage by Rail established a revision committee deciding on cer-
tain 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 proced-
ure 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 inter-
preted 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

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 par-
ticular 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.

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14 Jürgen Basedow

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

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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.

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