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CISG and international arbitration Choice of CISG as governing law

CISG and international arbitration Choice of CISG as governing law. Karolína Horáková. Interplay between procedural and substantive aspects of the case. Purpose of arbitration: fair, neutral and flexible procedure capable of efficiently resolving disputes

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CISG and international arbitration Choice of CISG as governing law

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  1. CISG and international arbitrationChoice of CISG as governing law Karolína Horáková

  2. Interplay between procedural and substantive aspects of the case • Purpose of arbitration: • fair, neutral and flexible procedure capable of efficiently resolving disputes According to 2012 International Arbitration Survey • 3 aspects of flexibility • Choice of the law governing substance of the dispute • Choice of the seat of arbitration • Choice of the arbitral institutions and/or arbitrators

  3. Interplay between procedural and substantive aspects of the case • Relationship between the seat of arbitration and the law governing the substance • Reasons for selecting preferred seats of arbitration: 2015 International ArbitrationSurvey, Improvements and Innovations in International Arbitration, p. 13

  4. What influences choice of governing law? Top 4 aspects influencing choice • Perceived neutrality and impartiality of the legal system with regard to the parties and their contract • The appropriateness of the law for the type of contract • The party´s familiarity with the law • Place of performance of contract 2010 International ArbitrationSurvey, p. 11

  5. Which law is prefered? 2010 International Arbitration Survey, p. 13, 14

  6. And where is CISG? 2010 International ArbitrationSurvey, p. 15

  7. Neutrality and impartiality • CISG is not a national law – cannot be considered as biased in favour of one of the contracting parties • It is deemed to be balanced concerning buyers and sellers

  8. Appropriateness for type of contract • Sphere of application (Art. 1(1)): „contracts of sale of goods“ • Excluded sales (Art. 2), by type or method of conclusion of contract: • sale of goods for personal, family or household use; sale of stocks, shares, investment securities, negotiable instruments or money; sale of ships, vessels, hovercraft or aircraft; sale of electricity; • sale by auction; sale on execution or otherwise by authority of law

  9. Appropriateness for type of contract • CISG thus can apply only to a part of international business transactions • International business transactions are often not clear-cut sales contracts for goods • National legal orders have an advantage as they offer comprehensive regulation for hybrid international business transactions, as well as those not covered by CISG

  10. Familiarity and experience with the CISG • Familiarity vs. Neutrality • CISG is not a national law of any party to the contract, which limits the depth of familiarity with the instrument • However, there is advantage for Czech businessmen – CISG served as model for the relevant provisions of the former Commercial Code and is similar to the current new Civil Code

  11. Choice of law imposed by other party • Strong preference forlawofthehomejurisdiction may turn choice of law into a contentious situation • Levelofbargainingpower in therelationship 2010 International ArbitratonSurvey, p. 7 • CISG may limit these conflicts – neutrallaw, potentialhighfamiliarityeven ifneverused by a party

  12. Place of performance of the contract • CISG covers 85 stateparties (nearlyhalf thenumberofstates) • CISG covers most exporting countries(lawsofwhichwouldnormally apply ifthereis no agreement on applicablelaw) Status map – CISG (http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG_status_map.html) Trademap (http://www.trademap.org/Country_SelProduct_Graph.aspx)

  13. Conclusion Compliance with criteria Non-compliance with criteria Apropriate for a specific type of contract Lackof experience with application • Neutrality and impartiality • Familiarity (to some degree) • No discomfort if imposed by other party • Place of performance of the contract

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