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T H E S I S
For the Degree of Master in Laws in
International Trade Law
(Class of 2004)
“Principle of Uniformity of CISG: Analysis of International Jurisprudence;
By: José Iván
Loustaunau-Godoy
Thesis Advisor:
PROFESSOR BORIS KOZOLCHYK
INDEX
I.
Introduction
II.
Brief
Description of the CISG: The Applicable Law to the International
A.
Principle of Uniformity; CISG Article 7 (1)
III.
What is
COMPROMEX?
A. What is COMPROMEX
B. Functions
1. Conciliation
2. Recommendations (non-binding opinions)
3. Arbitration
C.
COMPROMEX Committee
IV.
Brief
Description of the Ordinary Merchantile Trial Process According to the Mexican
Code of Commerce
A. Complaint
B. Answer by Defendant
C. Evidence
1. Burden of Proof
2. What can be proven?
3. Types of Evidence
a. Confessional
b. Documental
c. Expert witness
d. Judicial inspection
e. Testimonial
f. Presumptions
1. Types of Presumptions
4. Characteristics of proof
D. Arguments and Sentence
1. Arguments
2. Sentence
E.
Differences between the Ordinary Merchantile Procedure
and the Executive Merchantile Procedure.
V.
Analysis of Mexican
Cases: Judicial and Non-Judicial resolutions
A. First Case: Jose Luis Morales and/or Son Export, S.A. de C.V. v. Nez Marketing (see text of recommendation at Appendix A)
1. Facts
2. Application of the CISG; Article 1(1)(a)
3. Written Formality of the Contract; Article 11
4. Payment of the Price; Article 62
5. Rationale
B.
Second Case: Conservas
1. Facts
2. Application of the CISG; Article 1(1)(a) and the Effects of a Reservation Under CISG Article 96
3. Exceptions of the Seller; Inapplicability of the CISG, No SpecificWritten Form of the Contract; Articles 11, 12 and 96
4. Nonconformity of the Goods and Documents; Articles 35, 34
5. Damage of Goods in Transit; Articles 35 (2)(d), 36 (1), 66
6. Failure to Determine Fundamental Breach and the Likelihood to Dissolve the Contract
7. Comment to CMPROMEX recommendation
C.
Third Case: Mexican Judicial Resolution Issued by the
Sixth Civil Court of First Instance in the City of Tijuana, Baja California
(see text of judicial resolution at Appendix “C”)
1. Introduction
2. Comments on the Mexican sentence
a. Incorrect Use of Mexican Domestic Law
b.
Incorrect Declaration of Specific Performance
VI.
Analysis of
Cases From Other Jurisdictions
A. First Case-Canada: Nova Tool & Mold Inc. v. London Industries Inc.
1. Introduction
2. Facts
3. Issues
4. Application of Anglo-Canadian case law
5. Comments on Judge Zalev’s judgment
B. Second Case-Argentina: Quilmes
Combustibles v. Vigan
1. Introduction
2. Facts
3. Issue
4. Procedural History
a. First Instance
b. Appeal
C. Third Case-Italy: Nuova Fucinati v.
Fondmetall International
1. Introduction
2. Facts
3. Non-applicability of CISG
4.
Hardship; a
Remedy Not Included in the CISG
VII.
Conclusion
VIII.
Appendix
“A”- Text of recommendation issued by COMPROMEX on the case Jose Luis Morales and/or Son Export, S.A. de C.V. v Nez Marketing (English translation)
“B”- Text of recommendation
issued by COMPROMEX on the case Conservas
“C”- Text of judicial sentence issued by the Sixth Civil Court of First Instance in the City of Tijuana, Baja California (English translation)
“D”- Section III “Arbitral Proceedings” of the Inter-American Commercial Arbitration Commission Rules of Procedure
I.
Introduction
Despite countless
differences between legal systems of countries around the world, companies all
over the world accomplished the principle of uniformity to a great extent in
regard to commercial transactions dealing with exportation and importation of
goods. These commercial transactions and the common sense on which they are
based are generally governed by the commercial law of each country as well as
by international conventions and by what is called private international law.
Thus, the commercial terms regarding the allocation of risk for loss and damage
of goods, bill of lading clauses, certificates and maritime insurances in the
letters of credit, arbitration clauses and some other instruments used in
exportation-importation generally relate to enterprises operating in the
international trade area and are regulated by similar rules in all countries.
Such general similarities
in commercial transactions are due in part to the common commercial needs
shared by all those countries participating in international commercial
transactions. As compared to domestic commerce, international trade usually
requires transportation of goods through long distances, frequently by sea, and
involves a considerable number of parties located in different countries.
Because of such complexity, international commercial transactions inevitably
increase the possibility of complaints before a judicial or arbitral tribunal
in a foreign country if something goes wrong in a transaction. For this reason,
parties in an international commercial transaction are strongly encouraged to
use universally understood commercial terms indicating which risks and which
party will bear them in respect of time and location.
The uniformity of
international trade law is due not only to the fact that persons participating
in international trade all around the world face common problems but also
because such merchant-persons, ship owners, insurance companies, bankers and
others either acting as individuals, entities or governmental agencies are part
of an international community of merchants with a continuous history of
negotiations.
Within international
trade and the international sale of goods, a contract is the most important
factor to be considered in an exportation-importation transaction. However,
such transaction is supported by other related contracts reflecting the
complexity of the transaction and number of parties involved. Such supporting
contracts include the following: first, a transportation contract whether it is
by sea, land or air; second, an insurance contract by which parties protect
themselves from risks of loss and damage of goods in transit; third, payment on
the goods carried out through a bank transaction frequently made by a letter of
credit.
For purposes of this
paper, I will focus on analysis of the international sale of goods contracts in
the light of the CISG[1]
and resolutions rendered by judicial and non-judicial agencies particularly
made by
II.
Brief Description of the CISG: The
Applicable Law to International
A great number of
international sales of goods contracts entered into by parties domiciled in
Thus, for instance, if an
international sale of goods contract is silent in regard to the applicable law
or it is stated that the domestic law of a country is to be applied; such
contract will be governed by the CISG and not by the domestic sales law per-se. If the Argentinean lawyer thinks
that he has won the negotiation with his counterpart lawyer by having inserted
a clause in the international sale of goods contract stating that Argentinean law
will be applicable, he may be very surprised when he discovers that the Argentinean
law is precisely the CISG rather than any rules provided by the Argentinean,
Civil and Commercial Codes. [8]
The same situation occurs
in
A. Principle of Uniformity; CISG: Article 7 (1)
One of the most important
principles of the CISG is the principle of uniformity included in its Article 7
(1) which reads as follows:
“In the interpretation of
this Convention, regards 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”.
In other words, the CISG
aims to promote its uniform application by judges all around the world. It is
not sufficient that parties to a contract have a uniform law internationally
valid, if at the moment of its application, judges from different countries give
the CISG their own interpretation without following what is established Article
7 (1). In such case the CISG purposes will be frustrated. [9] In this order of ideas, in order to apply the
CISG uniformly, judges and lawyers must analyze what other courts in other
jurisdictions have resolved [10] as
well as taking into consideration opinions made by experts in this area.[11]
One of the reasons for
the topic of this paper is because of the following questions: how have Mexican
and other jurisdictions courts performed when applying the CISG?; has the principle
of uniformity provided in Article 7 (1) been met?, In the case of Mexico the answer
to these questions is not easy since only one judicial resolution has been
rendered by a court in Tijuana, Baja California, Mexico. However, the Mexican
Commission for the Protection of Foreign Trade (COMPROMEX) has had at least
three opportunities to apply the CISG; nevertheless, its resolutions have been
merely non-binding recommendations. In the opinion of those who have made
comments in respect of such recommendations the performance of COMPROMEX has
been deficient. However, its recommendations can serve as a guide to the type
of controversies that many Mexican judges will face in the future when applying
the CISG.
III.
What is COMPROMEX?
The Mexican Commission for the Protection of Foreign Commerce (COMPROMEX)
is a Mexican organism which
in 1976 it became a subdivision of the Mexican Bank for Foreign Trade (BANCOMEXT). COMPROMEX was created by
The Law which creates a Commission for The Protection of International Trade of
Mexico hereinafter the Compromex Law. Such Law was published in the “Diario
Oficial de
A. Functions
In addition to its advisory role on matters of foreign trade, COMPROMEX
has the ability to act as a conciliator and arbitrator in foreign trade
disputes. Services provided by COMPROMEX focus specifically in foreign trade
dispute resolutions arising from importation-exportation transactions to which
companies domiciled in Mexico and their counterparts domiciled overseas are
part. Claims may be submitted by either the Mexican or non-Mexican party
directly to COMPROMEX, or through Mexican trade representatives at Mexican
embassies and consulates. The claim procedure is divided into two stages.
First, COMPROMEX tries to reach a settlement through a conciliation hearing,
and if no settlement is reached, the parties are urged to accept arbitration
administered by COMPROMEX.[12]
If these attempts fail, COMPROMEX may render a recommendation based on the
evidence submitted by the parties.[13]
This decision is rendered without prejudice to the parties' rights to resort to
any judicial authority to settle the dispute.[14]
1.
Conciliation.
This is a method of
amicable dispute resolution between the parties to an international commercial
transaction. In this process COMPROMEX acts as conciliator which assists the
parties in reaching a settlement in their dispute.
Process
Filing a claim before COMPROMEX. In
the event the claimant party is Mexican and the defendant party is domiciled in
a country where the original language is not spanish then such claim shall be
presented in Spanish and English. The claim must include the following
supporting documents:
a. Full name of corporation and/or its
representative (s)
b. Address of both parties. In the case
of the Mexican party, the address must be accompanied by the Federal Taxpayer
Registry number
c. Detail description of the facts on
which the claim is based
d. Photocopy of documents on which such
action is based, i.e. international contract of sale (if it exists), commercial
invoices, purchase orders, custom documents, transportation documents (bill of
lading, certificate of origin, letters of credit, packing list, interchange of
communication in writing (emails, letters, faxes, etc)
e. Amount claimed in US legal tender
f. Letter by claimant indicating his
acceptance to pay ($3600.00 pesos Mx. Cy. or its equivalent in US dollars,
approx. $300.00) the non-refundable service fee taking into consideration the
corresponding rate
2.
Recommendations (non-binding opinions)
With respect to the claim
procedure Article 14 of COMPROMEX states that: “When the parties did not
submit expressly to arbitration and
a claim exists filed by one of them or when without the existence of a claim
the Commission shall intervene according to Article 2, the process described in
the two aforementioned Articles shall be firstly exploited. The Commission will render a recommendation which immediately after, shall be forwarded to the
Secretary of Economy with the objective that the latter orders its publication
in the Federal Official Gazette of Mexico and considers the possibility of
adopting administrative measures that may be suggested by such recommendation”
This procedures begins by
petition of the interested party, however we should not forget the non-binding
character of the recommendation since under such situation the parties have not
agreed to submit to what is said by the recommendation. If the parties agree to
such submission then we would be talking about arbitration same that is legally
recognized and accepted within the international context. [15]
In that order of ideas,
Article 12 of COMPROMEX LAW states that “all
claims to which Article 2 III refers shall be filed in writing including a
detailed description of the facts on which it is based”. Upon reception,
the Commission will ask the parties to appear before such Commission, (when
they or their representatives reside in the Federal District) to an adevenience
meeting in which a satisfactory settlement and the compliance of the parties’
obligations will try to be reached.[16]
If such satisfactory
settlement is not successful the parties will be advised to settle their
dispute under arbitration which will be conducted by the COMPROMEX Permanent
Committee.
Such recommendations
shall be published in the Federal Official Gazette of Mexico, when the parties
did not agreed in the contract to resolve their differences under arbitration
by the Commission, but when the parties did agree to resolve their differences
under arbitration, the Commission may settle their dispute issuing an arbitral
award.
3.
Arbitration
As established in its law COMPROMEX may act as arbitrator when the parties in a
controversy so indicate, as long as, one of them is Mexican.
Part of COMPROMEX’s job
is to serve as a liaison between the parties and try to help them in reaching a
satisfactory settlement, by using different offices that COMPROMEX have all
over the world. It is important to mention that COMPROMEX relies on the
Inter-American Commercial Arbitration (IACAC) rules of procedure when it
renders an arbitral award. [17]
The arbitral procedure is regulated by Section III (articles 12-26) of the
IACAC rules of procedure. [18]
B. COMPROMEX Committee
Compromex has set up a committee composed of representatives of various
official bodies involved in foreign commerce, to which Mexican parties and
their foreign trading partners submit commercial disputes.
COMPROMEX is comprised by
10 representatives from the following agencies:
-Secretary
of Economy
-Ministry
of Foreign Affairs
-Ministry of Finance and Public
Credit
-Secretary of Hydraulic Resources and
Agriculture
-Bancomext
-National Confederation of Chambers
of Commerce
-National Chamber of the Industrial
Transformation
-
-National Association of Importers
and Exporters
However, the analysis of
the described and other faculties of COMPROMEX is not a specific concern of
this paper. The purpose of this paper is the analysis of COMPROMEX performance
applying the CISG when resolving the cases mentioned in this paper.
Up to date COMPROMEX has
not issued one single binding opinion, but three non-binding recommendations
where it applied the CISG. In any of these resolutions other resolutions from
other neither jurisdictions nor citations by experts were analyzed.
IV.
Brief Description of the Ordinary
Merchantile Trial Process According to the Mexican Code of Commerce [19]
Ordinary merchantile trials are regulated by Article 1055 of the Mexican
Code of Commerce (hereinafter the C.c.), such legal provision establishes the
formality on which such trials have to be filed. Article 1055 reads as follows:
“Ordinary, executive or special merchantile trials
which are regulated by merchantile law are subject to the following rules:
1.
All petitions must be presented in
Spanish, clearly and legibly written and signed by the parties involved
2.
Documents written in a foreign
language must include their corresponding Spanish translation
3.
All petitions must include dates and
quantities in letters as opposed to numbers and, no abbreviations must be used
4.
All petitions must be authorized
(under sanction of nullification) by the public officer who certified or gave
public faith to the act(s) included in the petitions
5.
The tribunal may order the
petitioners to correct any omission
In addition to Article
1055, Article 1377 states that: “Every dispute between parties which has not a
special procedure will be settled through ordinary
trial”.
A. Complaint
The process begins with the stage of the complaint, but it is not until
the tribunal admits the answer by the defendant when the actual procedural
relation between the parties begins (as explained in the next step). Going back
to the complaint, it must be in writing and must meet the requirements[20]
provided by Article 1061 and such are:
1.
Power of attorney of
representative(s) of the plaintiff
2.
Mention to the private and public
documents related to the complaint
3.
Complete names of witnesses who might
have been present at the time facts occurred
B. Answer by Defendant
Once the complaint has been admitted, a procedural relation between the
parties has been established (fijacion de
la litis) and the defendant will be required to answer it within the next
nine days after admittance. In this case, the defendant may:
1. Admit or object the complaint
2. Present his defenses
3. Present his evidence
4. Counter sue the plaintiff according to articles 1379-1381 of the
C.c.
C. Evidence
Evidence plays a fundamental role in the process of every trial since it
is the instrument through which the parties intend to persuade the Judge about
the certainty of the facts presented, in other words, evidence is considered to
be the persuasion method by which the plaintiff tries to prove his action and
the defendant tries to justify his defenses against the plaintiff’s action.
At the moment of presenting evidence by the parties it must be taken
into consideration the following:
1. Burden of Proof
This is the need of the parties to prove their facts in order to receive
a satisfactory decision. Evidence is not a legal obligation, but instead a burden of proof which is regulated by
Chapter XII of the C.c. (Articles 1194-1196).
Article 1194. – “The party
affirming is obliged to prove, consequently, the plaintiff must prove his
action and the defendant his defenses”
Article 1195. – “The party denying
is not obliged to prove unless his denial involves an express affirmation of a
fact”
Article 1196. – “The party denying
is also obliged to prove, when doing so, ignores the legal presumption that his counter part has in his favor”
The following Mexican jurisprudence[21]
published by the Semanario Judicial de
EXCEPTION OF PAYMENT. WHEN THE
PLAINTIFF DOES NOT OBJECT THE DOCUMENTAL EVIDENCE TRYING TO PROVE SUCH
EXCEPTION AND STATES THAT THE PAYMENT WAS MADE TO COVER A DIFFERENT DEBT THAN
THAT CLAIMED THE BURDEN OF PROOF IN THIS CASE IS ON THE PLAINTIFF
Article 1195 of the Code of Commerce establishes as a general rule that
the Party denying is not obliged to prove, BUT
as an exception he must do it when his denial involves an express
affirmation of a fact. In such situation the Plaintiff must bear the burden of
proof in order to demonstrate that the payment with which his counterpart
intents to defend with is different to the claimed debt, when on the hearing
such Plaintiff not only does not object the documental evidence on which the
defense is based but states that such payment was made with the purpose of
payment of another debt, provided that, at the same time he is denying that the
payment used as a defense by his counterpart corresponds to the debt claimed he
is affirming expressly that such payment was made to comply with another
obligation.
2. What can be proven?
The object of all evidence consists on anything that must be proven,
that is, every fact and laws are subject to be proven. However there are some
exceptions to such general rule; Article 1197 says: “Only the facts are subject to be proven, the law will be only when it
is foreign, the one invoking such foreign law must prove the existence of it
and that it is applicable to a case”. Article 1199 reads as follows: “Evidence must be presented clearly
expressing the fact(s) that are tried to be proven, as well as the reasons why
the offeror thinks such evidence will prove the facts; If the Court considers that the evidence presented does not meet
with this requirements they will be dismissed taking into consideration Article
1203 of this code. In no time evidence against the law or good costumes will be admitted”.
This other Mexican jurisprudence[22]
will help us to better understand Article 1199 of the C.c., as to evidence that
is not properly admitted by the Judge.
MERCHANTILE EVIDENCE THAT HAS
NOT BEEN EXPRESSLY ADMITTED CANNOT BE EXAMINED BY THE JUDICIAL AUTHORITY
From the adequate interpretation of Articles 1205 and 1325 of the C.c.,
it is understood that in merchantile matters, every type of elements which may
be persuasive according to the Judge shall be admitted as evidence giving
compliance to Article 1324 of the C.c. which confirms the guaranties of
legality and legal security originally included in articles 14 and 16 of the
Mexican Constitution, by considering that every sentence must be legally
rendered …..However, this does not mean that the corresponding judicial authority
can examine evidence that has not been admitted to the trial…
FIRST COLEGIATE TRIBUNAL OF THE TWENTY FOURTH CIRCUIT. XXIV. 1ST.,
No.
Continuing with the admittance of evidence it is worth to say that
supervening evidence in an appeal trial will not be admitted and the following
jurisprudence[23] explains
why.
MERCHANTILE APPEAL TRIAL.
SUPERVENING EVIDENCE IS NOT ADMISSIBLE BY THE
According to the legal provisions governing the ordinary merchantile
process, supervening evidence will not be admitted by the second instance court
since Articles 1061 section IV, 1202 and 1387 of the C.c. regulate events
occurred only in the first instance and such articles do not permit the
presentation of such evidence in the appeal trial. On the other hand, Articles
1054 and 1342 of the C.c. state that the appellate trial has a special summary
substantiation. In other words, the merchantile appeal trial, as a general
rule, only admits the recourse, the presentation of only one writ by the parties and the report available
in the tribunal.
SECOND CIVIL COLEGIATE TRIBUNAL OF THE FIRST CIRCUIT. I.2o.C., No.
The above jurisprudence is in some way similar to the Common Law Parol
Evidence Rule[24] which
establishes that where the parties have reduced their agreement to final
written form, evidence of prior or contemporaneous agreements is inadmissible
to vary or contradict the terms of the final written agreement. The thrust of
the Parol evidence rule is that if the court finds the writing to have been
intended as a complete and exclusive statement of the terms of the parties'
agreement, then the writing alone constitutes the contract and evidence of
prior negotiations or "side agreements" will not be resorted to in
interpreting the final written agreement.
3. Types of evidence
a. Confessional
This type of proof is regulated by Article 1214 of the C.c. which
clearly states: “The confessional proof
can be presented along with the complaint and its answer, and no later than 10
days before of the hearing, where the parties are obliged to swear under oath
that everything they confess is true”
b. Documental
This is also known as “instrumental”
and consists of presenting every public or private document where facts (s)
are included. Public documents are those issued by public officers representing
governmental organisms and by Notaries Public or Commercial Brokers. Private
documents are those issued by particular individuals or entities.
The following Mexican jurisprudence[25]
shows how documental evidence is treated in practice.
DOCUMENTAL EVIDENCE IN THE
MERCHANTILE PROCESS. IF ITS INTEGIRTY IS NOT ESTUDIED, THE UNITARY VALORATION
PRINCIPLE IS VIOLATED
According to articles 1296 and 1298 of the C.c., private documents
presented in trial as evidence constitute full proof which means that such
private documents shall be considered as unitary acts, that is, if such
documents contain several acts related between each other their perception must
be unified associating such acts in order to be jointly appreciated as a
indivisible unit which permits the judge give such documents their
corresponding provable value, such as in the case where a judge granted the
evidence presented by a public accountant partial provable value and such act
by the Judge is contrary to the unitary valoration principle.
FIFTH COLEGIATE TRIBUNAL OF THE SEVENTIETH CIRCUIT. XVII. 5TH,
No.
c. Expert witness
Regulated by Article 1252 of the C.c., expert witness must have a degree
in the area on which he is serving as witness.
d. Judicial inspection
In this type of proof the Judge is the one who presents evidence based
on the examination of a person, real or personal property or documents. [26]
This type of evidence can be presented either by petition of an interested
party or officially, if the judge consider it necessary.
e. Testimonial
This evidence is presented by individuals. Oral or written information
is expected to be received with respect to the facts occurred.
Article 1261 establishes that: “Any
person with knowledge of the facts that must be proven by the parties, are
obliged to declare as witnesses”
Each party must present its own witness. Article 1262: “The parties must present their own
witnesses. However, when the parties are unable to present them the Judge will
be the one to present them”
f. Presumptions
Presumptions constitute a form of evidence in which the Judge valuates
an unknown fact resulting from a known fact.
Article 1277 defines presumption as follows: “Presumption is the consequence that the Judge or the law deducts form
a known fact in order to investigate the truth of the unknown fact”
1.
Types of presumptions
Legal: Article 1278 says that legal presumption will take place when:
a.
It is established by law
b.
The consequence is immediate and
direct
Human or natural: Article 1279 defines it as: “Human presumption will occur when from a proven fact another is
deducted which is a result form the first”
4. Characteristics of the
Proof
The proof or evidence must be crucial
(very important). According to the law, the proof must be accepted by persons
with a decent criteria, that is, the Judge uses his discretional faculties in
order to determine how crucial (important) the proof is. Another characteristic
of the proof is that it must be precise (exact
and certain). This means that there must be a relation between the proven fact
and the one that is intended to be proven.
On the other side, there must be no contradiction between the facts
presented; otherwise the proof will be dismissed.
D. Arguments and Sentence