Chapter 3: Character and Application of Good faith

under CISG

3.1. Brief History of good faith of CISG and early

challenges

CISG is known as a compromise between civil and common law concepts. It is considered to
be a successful document in respect of international sale of goods at a global level. The
background of CISG is also important in understanding different principles enshrined in it.
The concept of good faith is also important from historical perspective. The actual history or
background of CISG cannot be tracked. Yet, the importance of draft conventions on the sale
of goods and the formation of Contracts must be considered from historical perspectives. The
said two drafts later got merged into a Single Draft Convention on Contracts for the
International Sale of Goods. This was also approved by UNCITRAL. In 1980, the official
approval was given by UN members at the Diplomatic Conference of Vienna wherein the
draft was announced and approved led to the birth of the UN Convention i.e. CISG.

It is believed that CISG has created uniform rules for international trade. However,
academics and scholars have had reservations over drafting of CISG. In fact, it is viewed as
diplomatic one as it had not overcome the inequality in respect of bargaining power of the
countries regarding representatives that were involved in the drafting. This had caused CISG
to be delayed and debated for several years. It had caused problems for the draftsmen
particularly the language used for CISG provisions. The draftsmen employed general terms
including imprecise language to avoid further conflicts and disagreements. The more pressing
case in this regard is of the doctrine of good faith which is enshrined under Article 7 of CISG.

3.2. Challenges to Article 7 of CISG and duty of good faith

According to Shani Salama disagreements among draftsmen and using imprecise language in
CISG provisions had raised various concerns that could also be seen in the drafting of Article
7.1 Felemegas believes that Article 7 gives support to uniform application of CISG. It needs
to be considered when any interpretation takes place in respect of CISG. This suggests that
Article 7 is essential for the success of CISG. The issues in respect of formation and
performance of sale of goods contract are myriad and Article 7 is the only one to rescue such
issues.

Nevertheless, draftsmen failed to foresee the challenges that such language might pose. They
did not foresee the importance of Article 7 for the success of the CISG. Generally, it was of
the view that rules would be simple for interpreting provisions of CISG. However, the
wording in Article 7 is not straight forward. According to Allen Rosset, the wording is rather
difficult to be interpreted in a flexible manner. Such issues with Article 7 also cause
ambiguity in respect of CISG’s provisions where meaning is not clear. In this way, the
remark of Komarov is important to state here. He says that “from the outset it was argued that
the application of Article 7(1) could be unpredictable because it was inevitably vague and, as
a consequence, would have been open to surprising results”. This vagueness of Article 7 is
considered threatening for other CISG provisions. It is also not true that ambiguity is because
of Article 7. The ambiguity in respect of CISG is beyond it at times. For instance, Scott
provides that CISG does not clarify about terms goods and sale.

3.2.1. Scope of Article 7 and problems of interpretations

It is believed that Article 7 performs two extensive role. As per Article 7(1) it is viewed as
interpretative tool for the CISG as a whole. Secondly, it has a gap filling character on which
bases judge can decide if CISG provisions are silent about such matter in question.

This can be further envisaged by reading the text of Article 7 of CISG.

“(1) 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 and the observance of good faith in
international trade”.

it demonstrates that good faith must be configured while there is interpretation about the
CISG. It also provides that the international trade is subject to good faith which means in
conducting of international there must be due regard and or observance of good faith.
1
Shani Salama, ‘Pragmatic Responses to Interpretive Impediments: Article 7 of the CISG, an Inter-American
Application’(2006) 38(1) The University of Miami Inter-American Law Review 225–50
This international character of Article 7 speaks for a variety of issues and controversies in the
minds of commentators and academics. For instance, Keily provides that the interpretation of
any domestic legislation is normally based on practices and principles which are derived by
courts within the given jurisdiction. 2 It means courts usually interpret legislation in view of
the accepted and recognised norms and rules. It means the domestic interpretation techniques
cannot be employed for interpreting CISG or another international instrument. It is because
CISG is prepared by different countries so that it cannot be interpreted on the basis of single
legislative techniques of domestic nature.

It must be kept in view that CISG does not provide any legal rules of literal nature that can be
adopted by courts for the sake of clarifying any ambiguity about provisions through
interpretation. The history illustrates that CISG was compounded on several agreements. It
again means that there was not a single legal system or devices on which they relied on for
the sake of resolving ambiguity about provisions. Similarly, different use of system led to
borrowing of different legislative tools for interpretation. Therefore, CISG provisions cannot
be interpreted from a single legislative system.

Considering such problematic aspects with interpretation per any domestic legal system, the
draftsmen therefore spoke about international character of the CISG per Article 7(1).
According to Felemegas, it is concerned with two questions to consider for.3 The first point is
that any interpreter of the CISG or person who is interpreting it must not do it from domestic
legal techniques.4 It means UK courts cannot do so in respect of common law techniques per
literal or mischief rule. As long as the practice in force has domestic touch, it cannot be
trusted for interpreting CISG provisions.5 The rationale behind such international rule is
because domestic interpretations are at variance with the commonly established principles of
international law or rules. This can be conceived and observed in respect of purposive
interpretation derived by UK from European Union Law. The parliament had however shown
greated reluctance to allow courts to adopt such purposive interpretation. If such an approach
is configured in the case of good faith per Article 7 in interpreting CISG provisions, it may
not seem to be consistent in respect of interpretations.

2
T Keily, ‘Good Faith and the Vienna Convention on Contracts for the International Sale of Goods (CISG)’
(1999) 1 Victorian Journal of International Law 11-14
3
Zeller, B., ‘Four-Corners: The Methodology for Interpretation and Application of the UN Convention on
Contracts for the International Sale of Goods’ (2003) CISG PACE LAW 36
4
Ibid
5
Ibid
Discouraging the approach of domestic jurisdictions or domestic interpretation by CISG , per
Diedrich this is termed as homeward trend.6 It is important for maintaining international
character of the CISG that also saves it from any conventional or rigid interpretation which is
commonly used by common law courts.7 It is believed that domestic interpretation is rather
narrow in nature.8 Bianca further clarifies the position of CISG by demonstrating that “the
Convention is a piece of legislation which has been prepared and agreed upon at an
international level. It remains an autonomous body of law even after its formal incorporation
into the different national legal systems.”9

In essence, CISG must not be equated with domestic legislation, in fact it has its own
independent existence which makes it different from domestic legislative instruments. 10
Therefore, CISG must not be interpreted in a way that is suitable for domestic law. The
academics also warn that the interpretation as per domestic terms involve familiarity of the
interpreter which in turn can narrow the scope of CISG. 11 Therefore, the CISG must be
interpreted in light of its own international character.

A way to bring certainty in respect of legal interpretation of CISG is through autonomous

interpretation. It is because of the draftsmen of CISG did not configure from any single
system. Therefore, this mechanism of interpretation is central to it. It gives the limited
approach to domestic interpretation and essentially maintains the international character of
CISG and its provisions. Thus, it can be concluded that draftsmen did not observe domestic
interpretation for CISG provisions unless one points to Article 7(2) which has a gap filing
character.

6
F Diedrich, ‘Maintaining Uniformity in International Uniform Law via Autonomous Interpretation: Software
Contracts and the CISG’ (1996) 8 PILR 303, 304-305
7
Ibid
8
‘The Role of Good Faith in the United Nations Convention on Contracts for the International Sale of Goods
(CISG)’(2015) University of Leicester 93-95
9
C Bianca and M Bonell, Commentary on the International Sales Law (Giuffrè, 1987) 73
10
Shani Salama, ‘Pragmatic Responses to Interpretive Impediments: Article 7 of the CISG, an Inter-American
Application’ (2006) 38(1) The University of Miami Inter-American Law Review 225, 227
11
Ole Lando, ‘CISG and Its Followers: A Proposal to Adopt Some International Principles of Contract Law’
(2005) 53(2) The American Journal of Comparative Law 379, 382
3.2.2. Gap filing character of CISG and interpretation of good
faith

Academics have varied opinion about adoption of domestic legal techniques for the
interpretation of CISG in pursuant to Article 7(2).12 It reads that:

“(2) Questions concerning matters governed by this Convention which are not
expressly settled in it are to be settled in conformity with the general principles on
which it is based or, in the absence of such principles, in conformity with the law
applicable by virtue of the rules of private international law”.

Apparently, this provision speaks for advancing character in respect of techniques of

interpretation especially when there is no other case of interpretation per CISG provisions. It
provides that certain actions or questions which are not discussed by CISG can be configured
through general principles of CISG. On this basis, it is believed that courts cannot resort to
domestic interpretation or consider interpretation as per domestic legal principles. Yet, this
position is only existent as long as the question cannot be settled by CISG provisions.
According to Rosenberg, Article 7(2) does not provide courts with a free hand to seek
assistance from domestic techniques.13 However, the said provision is also true for seeking
domestic principles when CISG general principles and CISG provisions are insufficient to
cater any question. In essence, Article 7 has a bigger role than only provides for good faith
application.

Apart from gap filling charter and interpretation per Article 7, the case of good faith is also
visible in it. it is believed that good faith application under CISG is a mere reflection of
Article 31(1) of the Vienna Convention on the Law of Treaties of 1969 (the VCLT). 14 It
provides that in respect of international transactions, good faith must be given due
consideration by parties to international contracts. Article 31(1) is important to mention here,
which states that “[a] treaty shall be interpreted in accordance with the ordinary meaning to
be given to the terms of the treaty in their context and in the light of its object and purpose.”

12
Bruno Zeller (supra) 226
13
M Rosenberg, ‘The Vienna Convention: Uniformity in Interpretation for Gap-filling - An Analysis and
Application’ (1992) 20 Australian Business Law Review 442, 445
14
Ibid
However, it is of the view that VCLT application of CISG is only subject to agreements
concluded between states at international level.15 And it is mainly based on the aspects which
is rooted in the idea of common law based international setup. However, CISG is like private
international law.16 Yet, CISG is rather broad in nature. It provides for individuals who are
dealing with each at international per international transactions or commercial contract. 17
Secondly, it operates in respect of member states. In essence, there is mutual obligation per
CISG on members in respect of interpretation and acquiescing good faith at international
level while doing international trade.18

However, it is of the view that VCLT application of CISG is only subject to agreements
concluded between states at international level. And it is mainly based on the aspects which is
rooted in the idea of common law based international setup.19 However, CISG is like private
international law. Yet, CISG is rather broad in nature.20 It provides for individuals who are
dealing with each at international per international transactions or commercial contract.
Secondly, it operates in respect of member states. In essence, there is mutual obligation per
CISG on members in respect of interpretation and acquiescing good faith at international
level while doing international trade.

3.3.

15
E Allan Fransworth, ‘The Vienna Convention: History and Scope’ (1984) 18(1) The International Lawyer 17,
17
16
Eduardo Grebler, ‘Fundamental Breach of Contract Under the CISG: A Controversial Rule’ (2007) 101
Proceedings of the Annual Meeting (American Society of International Law) 407, 410
17
Ibid 411
18
Ibid
19
Kilian, M., ‘CISG and the Problem with Common Law Jurisdictions’ (2001) 10 Journal Transnational Law ad
Poly 217, 225
20
Ibid
3.4. Conclusion

From the mere reading of Article 7 it can be said that good faith is a tool of interpretation for
judges and courts. The gap filing character of CISG further supports this view because after
considering all the general principles of CISG and interpretation of previsions. However, in
respect of good faith there are various doubts regarding it. It cannot be said that there no duty
of good faith while conducting international trade. However, from English perspective the
approach can be considered from two strands. Yet, there is a room for issues to resolve.