OP-UNIF160005 60..74

Global unification of contract law

Ingeborg Schwenzer*

I. Introduction

Before turning to the main subject matter of this article, a few words shall be said

about the development of international trade. Due to globalization, the overall

development of international trade over the last half-century is startling. Without

having regard to 2009’s dramatic decrease of world merchandise exports, which in

any case was basically equalized in 2010, it may be useful to have a look at the

demonstrated trend during the last decades. World Trade Organization (WTO)

ﬁgures for 2013 indicate that worldwide merchandise export trade amounted to

US $18.8 billion and worldwide merchandise import trade to US $18.9 billion.

These ﬁgures are approximately 100 times more than 50 years ago. The average

annual growth from 2000 to 2013 was more than 5 per cent for both exports and

imports worldwide.

No longer is the highest growth found in North America and

Europe, but, instead, it is the transition economies from different points of the

globe—particularly Brazil, China, Russia, India, and some African countries.

These economic developments have prompted legal answers in a variety of

ﬁelds.

The focus of this article, however, shall be on the harmonization and

uniﬁcation of contract law since contract law is at the very heart of international

trade.

II. The need for a uniform contract law

Contract law, and especially commercial contract law, has always been at the

forefront of the harmonization and uniﬁcation of private law. The reason is

that different domestic laws are perceived as being obstacles to international

trade.

This has always been true and still holds true nowadays as has been

* Professor for Private Law, University of Basel, Faculty of Law, Peter Merian-Weg 8, 4002 Basel,

Switzerland. Tel: +41 61 267 25 40. The author is deeply indebted to Lina Ali and Meret Rehmann

for editing the footnotes.

World Trade Organization, International Trade Statistics 2014, Tables A6 and A7, <www.wto.org/

english/res_e/statis_e/its2014_e/its14_appendix_e.htm> accessed 14 April 2015.

World Trade Organization, World Trade Report 2014,32<www.wto.org/english/res_e/booksp_e/

world_trade_report14_e.pdf> accessed 14 April 2015.

Ibid.

See Ingeborg Schwenzer and Claudio Marti Whitebread, ‘Legal Answers to Globalization’ in

Ingeborg Schwenzer and Yes¸im M Atamer and Petra Butler (eds), Current Issues in the CISG

and Arbitration (Eleven International Publishing 2014) 1ff.

Cf Ewan McKendrick, ‘Harmonisation of European Contract Law: The State We Are In’ in Stefan

Vogenauer and Stephen Weatherill (eds), The Harmonisation of European Contract Law,

For Permissions, please email [email protected]

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proven by many recent ﬁeld studies around the world.

In the nineteenth century,

it prompted uniﬁcation at the nation state level all over Europe, and in the

twentieth century, the Uniform Commercial Code (UCC) in the USA can be

mentioned as a prominent example as well as endeavours especially on the

European level.

Let me brieﬂy discuss who is in need of a uniform contract law and why. In

general, on the international level, roughly three different scenarios of contracting

parties may be distinguished. In the ﬁrst group, we ﬁnd parties from countries

where the same language is spoken. In general, these countries also belong to the

same legal family, with differences between the legal systems being minor if not

negligible.

This group includes, ﬁrst of all, parties from English-speaking

common law countries, such as parties from the USA and Canada, from

Australia and New Zealand, or from India and the United Kingdom. But it also

holds true for other scenarios such as those involving parties from France and

Cameroon, from Argentina and Mexico, or from Germany and Austria. First, it is

well possible that the parties can agree on one of their respective legal systems. If

this is not the case, they can be expected to choose the law of a third country with

the same language and belonging to the same legal tradition. In any case, the

outcome of a possible dispute—be it litigated or arbitrated—will be more or less

predictable. In this group, which comes close to purely domestic contracts, there

is hardly any need for a uniﬁcation of contract law as the parties would still prefer

the law that is more familiar to them than any uniﬁed law.

In the second group, a—most probably Western—company with overwhelm-

ing bargaining power contracts with an economically weaker party. The powerful

company usually will be able to impose anything that it wants on its contract

partner. It has sophisticated in-house lawyers who carefully draft the contract,

preferably with a choice-of-law clause designating its own domestic law. If this is

combined with a forum selection clause designating the domestic courts of the

economically stronger party, there will usually be no problems, at least not for the

powerful party and thus no need for a uniform contract law. The domestic courts

apply their domestic law, which in general will yield predictable and satisfactory

results for the company seated in this country. The picture may immediately

change, however, if the other party brings suit in the domestic courts of its

Implications for European Private Laws, Business and Legal Practice (Hart Publishing 2006) 5,

14–15.

See only Stefan Vogenauer and Stephen Weatherill, ‘The European Community’s Competence to

Pursue the Harmonisation of Contract Law—an Empirical Contribution to the Debate’ in

Vogenauer and Weatherill (n 5) 105, 125–6.

See eg the Principles of European Contract Law (PECL) (2002) <http://www.jus.uio.no/lm/eu.

contract.principles.parts.1.to.3.2002/> accessed 14 April 2015; for more information on PECL, see

Ole Lando and Hugh Beale (eds), Principles of European Contract Law, Parts I and II (Kluwer Law

International 1999) and Ole Lando and others (eds), Principles on European Contract Law, Part III

(Kluwer Law International 2003).

For an overview of the legal families with regard to domestic sales law, see Ingeborg Schwenzer,

Pascal Hachem and Christopher Kee, Global Sales and Contract Law (Oxford University Press

2012) paras 2.01–2.135.

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own country and there the forum-selection clause and/or the choice-of-law clause

are not honoured.

However, even if these courts accept the choice of law, it is a

totally different question how the courts will apply this foreign law. By agreeing

on arbitration, many of the aforementioned imponderabilities may be circum-

vented. Still, problems of ascertaining and proving the chosen law—as will be

described below—can be encountered.

The third group is probably by far the largest one. It consists of parties from

countries where different languages are spoken, be they from a common law and a

civil law country or from two civil law countries. If none of the parties has the

economic power to impose its own law upon the other party—that is, where the

parties are dealing at arm’s length with one another—more often than not they

will agree on a third law. This might be a law that appears to be closely related to

both parties because it inﬂuenced the law of both parties’ countries in one way or

the other, as is true, for example, for German law in relation to Italian and Korean

law.

If no such common background exists, more often than not the parties

think to solve their problems by resorting to what they believe is a ‘neutral law’,

thereby often confusing political neutrality with suitability of the chosen law for

international transactions.

In particular, this seems to be the case with Swiss law.

In such a case, the ﬁrst hurdle that the parties have to take, at least once it comes

to litigation or arbitration, is the language problem. They have to investigate a

foreign law in a foreign language. If the language is not the one of the litigation or

arbitration in question, all legal materials—statutes, case law, and scholarly writ-

ings—must be translated into the language of the court or of the arbitration. Legal

experts are required to prove the content of the law that is chosen by the parties. In

some countries, the experts may be appointed by the court; in others as well as

generally in arbitration, each party will have to come forward with sometimes

even several experts.

Needless to say, the procedures can be very expensive and

may be prohibitive for a party who does not have the necessary economic power

to invest these monies in the ﬁrst place. This may even be harsher under a pro-

cedural system where each party bears its own costs regardless of the outcome of

A prominent example is Brazil, where the validity of choice-of-law and choice-of-forum clauses is

highly controversial. For more information, see Dana Stringer, ‘Choice of Law and Choice of

Forum in Brazilian International Commercial Contracts: Party Autonomy, International

Jurisdiction, and the Emerging New Way’ (2005–6) 44 Columbia Journal of Transnational

Law 959.

For German inﬂuences on Italian civil law, see K Zweigert and H Ko

tz, An Introduction to

Comparative Law, translated by Tony Weir (3

edn, Oxford University Press 1998) 104–6; for

German inﬂuences in the East Asian region, see Schwenzer, Hachem and Kee (n 8) paras

2.123–2.127.

Cf Christiana Fountoulakis, ‘The Parties’ Choice of “Neutral Law” in International Sales

Contracts’ (2005) 7 European Journal of Law Reform 303, 306–7.

For court proceedings, cf Michele Taruffo, ‘Evidence’ (2010) 16 International Encyclopedia of

Comparative Law paras 7.65–7.66; for arbitration proceedings, cf Gabrielle Kaufmann-Kohler,

‘Globalization of Arbitral Procedure’ (2003) 36 Vanderbilt Journal of Transnational Law 1313,

1330; Siegfried H Elsing and John M Townsend, ‘Bridging the Common Law-Civil Law Divide in

Arbitration’ (2002) 18 Arbitration International 59, 63–4; see eg ICC Arbitration Rules (2012) art

25(3); UNCITRAL Arbitration Rules (2010) art 27(2).

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the proceedings, as is especially the case under the so called ‘American Rule’ as it

applies not only in the USA but also, for example, in Japan.

However, even if a

party is willing to bear all of these costs to prove a foreign law in court or arbi-

tration, the question as to how this law is interpreted and applied can be highly

unpredictable.

Second, the parties will very often be taken by surprise when they realize the true

content of the law that they have chosen. Let us consider one example, which, in

my view, is rather typical for an international contract between two small- and

medium-sized enterprises—a sales contract between a Chinese seller and an

Italian buyer. As German law has had great inﬂuence on both Chinese and

Italian law,

the parties—although none of them speaks German—believe to

have a rough idea of German law and agree on German law to govern their

contract. The Chinese seller for its standard form contract copies a form it

ﬁnds on the Internet, including a limitation of liability clause. While the clause

may well live up to the standards of the US UCC, it is totally invalid under

German law, which provides for substantive control of the standard terms even

in business-to-business relationships.

This is certainly not what both parties

wanted and expected in choosing German law.

Third, the outcome of the case under the law chosen may be highly unpredict-

able. This especially holds true if the parties choose Swiss law. As Switzerland is

such a small country, many central questions of contract law have not yet been

decided by the Swiss Supreme Court, or if they have been decided, the decision

may have been rendered decades ago and is disputed by scholarly writings. This

makes the outcome of the case often rather unpredictable, which is another

reason that may well prevent a party from pursuing its rights under the contract.

Furthermore, Swiss domestic contract law in core areas, in particular, is unpre-

dictable and not suitable to international contracts. This can be demonstrated by

reference to only two examples. First, the Swiss Supreme Court distinguishes

between peius—that is, defective goods, and aliud—that is, different goods.

The latter gives the buyer the right to demand performance for ten years after

the conclusion of the contract, notwithstanding whether it gave notice of non-

performance or not,

while the former requires the buyer to give prompt notice

of defect according to Article 201 of the Swiss Code of Obligations (OR) to

preserve any remedies for breach of contract. Where the line between peius and

aliud will be drawn in a particular case can be extremely difﬁcult to predict.

The

second example is compensation of consequential losses.

Whether there is a

For a comparative overview as to how litigation costs and attorney fees are allocated between the

parties in civil litigation, see Mathias Reimann (ed), Cost and Fee Allocation in Civil Procedure

(Springer 2012).

Cf Schwenzer, Hachem and Kee (n 8).

Cf §§ 305-310 BGB (German Civil Code).

BGer, 5 December 1995, BGE 121 III 453 (Switzerland).

Cf Art 127 OR (Swiss Code of Obligations).

See Fountoulakis (n 11) 308–9; for more information on the differentiation between peius and

aliud, see Heinrich Honsell in Heinrich Honsell, Nedim Peter Vogt and Wolfgang Wiegand (eds),

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claim for damages without fault depends on the number of links in the chain of

causation.

Extremely short periods for giving notice of defects,

furthermore

militate against domestic Swiss law for the international context. Similar ex-

amples could be drawn from many domestic legal systems.

III. Global instruments on contract law

1. UNCITRAL endeavours

It was exactly against this background that the UN Commission on International

Trade Law (UNCITRAL) started working on the uniﬁcation of sales law in 1968,

culminating in the Convention on Contracts for the International Sale of Goods

(CISG), which entered into force on 1 January 1988. The CISG proved to be the

most successful international private law convention worldwide. Today, there are

84 contracting states, with the number continuously increasing.

According to

WTO trade statistics, nine of the ten largest export and import nations are

contracting states, with the United Kingdom being the only exception.

It can

be assumed that approximately 80 per cent of international sales contracts are

potentially governed by the CISG.

Moreover, a truly great success is the strong inﬂuence the CISG has exerted

at both the domestic and international level. In its sales part, the Uniform

Act on General Commercial Law by the Organization for the Harmonization

of Business Law in Africa (OHADA) is in many respects practically a

transcript of the CISG.

The International Institute for the Uniﬁcation of

Private Law (U

NIDROIT) Principles of International Commercial Contracts

Basler Kommentar, Obligationenrecht I (5

edn, Helbing Lichtenhahn Verlag 2011) art 206 paras

2–3.

Art 208(2) OR (Swiss Code of Obligations).

See BGer, 28 November 2006, BGE 133 III 257, 271 (Switzerland); Honsell (n 18) art 208 paras 7–8.

Cf art 201(1) OR (Swiss Code of Obligations), according to which the notice must be made

immediately (‘sofort’); see also BGer, 27 June 1950, BGE 76 II 221, 225 (Switzerland) (notice

within four days in time as these included a Sunday).

A list of all current contracting states to the CISG is provided by UNCITRAL <www.uncitral.org/

uncitral/en/uncitral_texts/sale_goods/1980CISG_status.html> accessed 14 April 2015. The most

recent accessions to the CISG are Brazil (entry into force: 1 April 2014), Bahrain (entry into force:

10 October 2014), Congo (entry into force: 1 July 2015), Madagascar (entry into force: 1 October

2015), Guyana (entry into force: 1 October 2015) and Viet Nam (entry into force: 1 January 2017).

Cf World Trade Organization (n 2) 34.

See Peter Schlechtriem and Ingeborg Schwenzer, ‘Introduction I’ in Ingeborg Schwenzer (ed),

Peter Schlechtriem and Ingeborg Schwenzer: Commentary on the Convention on the International

Sale of Goods (CISG) (3

edn, Oxford University Press 2010).

Acte uniforme portant sur le Droit commercial general (AUDCG) (1998, amended 2011)

<http://www.ohada.org/presentation-generale-de-lacte-uniforme/telechargements1.html>

accessed 26 January 2016; cf Ingeborg Schwenzer, ‘Regional and Global Uniﬁcation of Sales Law’

(2011) 13 European Journal of Law Reform 370, 373–6; Ulrich G Schroeter, ‘Das einheitliche

Kaufrecht der afrikanischen OHADA-Staaten im Vergleich zum UN-Kaufrecht’ (2001) Recht in

Afrika 163, 166.

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(PICC),

the Principles of European Contract Law (PECL),

the Draft

Common Frame of Reference (DCFR),

and the Draft Common European

Sales Law (CESL)

are all modelled on the CISG. Furthermore, the EC

Consumer Sales Directive heavily draws on the CISG.

Similarly, the Sale

of Goods Act in the Nordic Countries,

the modernized German Law of

Obligations,

the Contract Law of the People’s Republic of China and other

East Asian codiﬁcations,

and the majority of the recent post-Soviet codiﬁ-

cations in Eastern Europe,

Central Asia,

and in two of the Baltic States

build on the CISG. Likewise, the draft for a new Civil Code in Japan follows

the CISG.

It is reported that in developing countries, the CISG is used to

teach traders the structures of contract law so as to improve their level of

sophistication.

In addition to the CISG, UNCITRAL has embarked upon the uniﬁcation of

many other areas of international trade. Some of these instruments again touch

upon various questions of general contract law,

especially the 1974 Convention

UNIDROIT Principles of International Commercial Contracts (2010) (PICC) <www.unidroit.org/

english/principles/contracts/principles2010/integralversionprinciples2010-e.pdf> accessed 14

April 2015; cf Michael J Bonell, ‘The CISG, European Contract Law and the Development of a

World Contract Law’ (2008) 56 American Journal of Comparative Law 1, 16–18.

For more information on PECL, see n 7; cf Ole Lando, ‘CISG and Its Followers: A Proposal to

Adopt Some International Principles of Contract Law‘ (2005) 53 American Journal of

Comparative Law 379, 381.

Cf Christian von Bar and Eric Clive (eds), Principles, Deﬁnitions and Model Rules of European

Private Law, Draft Common Frame of Reference (DCFR) (Sellier 2009).

See Ingeborg Schwenzer, ‘The Proposed Common European Sales Law and the Convention on the

International Sale of Goods’ (2012) 44 Uniform Commercial Code Law Journal 457. The draft

forms Annex I of the Proposal for a Regulation of the European Parliament and of the Council on a

Common European Sales Law COM (2011) 635 ﬁnal (11 October 2012) <http://eur-lex.europa.

eu/LexUriServ/LexUriServ.do?uri=COM:2011:0635:FIN:EN:PDF> accessed 14 April 2015.

Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain

aspects of the sale of consumer goods and associated guarantees <http://eur-lex.europa.

eu/LexUriServ/LexUriServ.do?uri=OJ:L:1999:171:0012:0016:EN:PDF> accessed 26 January 2016.

Cf Cecilie Kjelland, Das neue Kaufrecht der nordischen La

nder im Vergleich mit dem Wiener

Kaufrecht (CISG) und dem deutschen Kaufrecht (Shaker Verlag 2000).

Peter Schlechtriem, ‘International Einheitliches Kaufrecht und neues Schuldrecht’ in Barbara

Dauner-Lieb, Horst Konzen and Karsten Schmidt (eds), Das neue Schuldrecht in der Praxis

(Heymanns 2003) 71.

Cf Gary F Bell, ‘Harmonisation of Contract Law in Asia—Harmonising Regionally or Adopting

Global Harmonisations—The Example of the CISG’ (2005) Singapore Journal of Legal Studies

362, 365–6.

Rolf Knieper, ‘Celebrating Success by Accession to CISG’ (2005) 25 Journal of Law and Commerce

477, 478.

Ibid.

Cf Martin Ka

erdi, ‘Die Neukodiﬁkation des Privatrechts der baltischen Staaten in vergleichender

Sicht’ in Helmut Heiss (ed), Zivilrechtsreform im Baltikum (Mohr Siebeck 2006) 19.

For the English version of the draft proposal, see <www.shojihomu.or.jp/saikenhou/English/

index_e.html> accessed 14 April 2015.

Schwenzer, Hachem and Kee (n 8) para 3.21.

1974 Convention on the Limitation Period in the International Sale of Goods; 1978 United

Nations Convention on the Carriage of Goods by Sea (the ‘Hamburg Rules’); 1980 United

Nations Convention on International Multimodal Transport of Goods; 1983 Uniform Rules on

Contract Clauses for an Agreed Sum Due upon Failure of Performance; 1988 United Nations

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on the Limitation Period in the International Sale of Goods, the 1983 Uniform

Rules on Contract Clauses for an Agreed Sum Due upon Failure of Performance,

the 1992 UNCITRAL Legal Guide on International Countertrade Transactions,

and the 2005 United Nations Convention on the Use of Electronic

Communications in International Contracts. However, this still leaves important

areas to domestic law.

Despite this notable worldwide success, the CISG is merely a sales law conven-

tion that nevertheless covers core areas of general contract law. In addition to the

obligations of the parties and typical sales law issues such as conformity of the

goods and passing of risk, it contains provisions on the formation of contracts and

remedies for breach of contract.

The shortcomings of the CISG ﬁrstly relate to

the areas not at all covered by the Convention, which amounts to approximately

50 per cent of the entire area of general contract law. In particular, the CISG does

not deal with agency, validity questions such as mistake, fraud, duress, gross

disparity, illegality, and control of unfair terms, third party rights, conditions,

set-off, the assignment of rights, the transfer of obligations, the assignment of

contracts, and the plurality of obligors and obligees. Furthermore, many issues

that were still highly debated in the 1970s had to be left open in the CISG, such as

the problem of the battle of the forms, speciﬁc performance, as well as the ap-

plicable interest rate.

In the meantime, some areas that are covered by the CISG

have proven to need more detailed attention, such as the rules on the unwinding

of contracts. Finally, conventions meant to supplement the CISG, such as the

1974 Convention on the Limitation Period in the International Sale of Goods

and the 2005 United Nations Convention on the Use of Electronic

Communications in International Contracts,

have not attracted as many mem-

bers as the CISG, thereby also diminishing their unifying effect.

Convention on International Bills of Exchange and International Promissory Notes; 1991 United

Nations Convention on the Liability of Operators of Transport Terminals in International Trade;

1992 UNCITRAL Legal Guide on International Countertrade Transactions; 1992 UNCITRAL

Model Law on International Credit Transfers; 1995 United Nations Convention on

Independent Guarantees and Stand-by Letters of Credit; 1996 UNCITRAL Model Law on

Electronic Commerce with Guide to Enactment, with additional article 5 bis as adopted in

1998; 2001 UNCITRAL Model Law on Electronic Signatures with Guide to Enactment; 2001

United Nations Convention on the Assignment of Receivables in International Trade; 2005

United Nations Convention on the Use of Electronic Communications in International

Contracts; 2007 UNCITRAL Legislative Guide on Secured Transactions; 2007 Promoting

Conﬁdence in Electronic Commerce: Legal Issues on International Use of Electronic

Authentication and Signature Methods; 2008 United Nations Convention on Contracts for the

International Carriage of Goods Wholly or Partly by Sea (‘Rotterdam Rules’); 2010 UNCITRAL

Legislative Guide on Secured Transactions: Supplement on Security Rights in Intellectual

Property.

The formation of contracts is dealt with in arts 14–24 CISG. The buyer’s remedies for breach of

contract are to be found in arts 45–52, the seller’s remedies in arts 61–5.

On the battle of forms, see Ulrich G Schroeter in Schwenzer (n 24) art 19 paras 31–51; on the

applicable rate of interest, see Klaus Bacher in Schwenzer (n 24) art 78 paras 26–43.

See for text and status <www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/

1974Convention_limitation_period.html> accessed 26 Januar 2016.

See for text and status <www.uncitral.org/uncitral/uncitral_texts/electronic_commerce/2005

Convention.html> accessed 26 January 2016.

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2. Principles of International Commercial Contracts (PICC)

On a global scale, UNIDROIT has engaged in elaborating Principles of

International Commercial Contracts (PICC).

Whereas the 1994 version of

the U

NIDROIT Principles mostly covered the areas already dealt with under the

CISG and in addition validity issues, the 2004 version also addressed the

authority of agents, contracts for the beneﬁt of third parties, set-off, limitation

periods, the assignment of rights and contracts, and the transfer of obligations.

Finally, the 2010 version contains a chapter on illegality and a section on

conditions as well as detailed rules on the plurality of obligors and obligees

and on the unwinding of contracts. Thus, the PICC 2010 now cover all areas

that are perceived as contract law in most legal systems. Still, the practical

importance of the PICC is rather limited, as they are an opting-in instrument

that is applicable only by the parties’ choice of law.

Surveys suggest that in

international commercial contracts, the PICC are chosen in only 0.6 per cent

of all cases.

Furthermore, the PICC being soft law, many domestic courts

will not even accept such a choice of law.

Furthermore, there are some shortcomings concerning the content of the

PICC. The terminology used by the PICC is not always in line with that used

by the CISG. For example, where the CISG uses the word avoidance for

breach of contract, the PICC instead use the word termination,

whereas

avoidance is used in relation to defects of intent,

which would otherwise

also be called rescission. This certainly gives rise to misunderstanding and

confusion.

Since the circle of representatives at UNIDROIT is not as inclusive

as at UNCITRAL, the PICC display a certain tendency towards civil law

concepts. The frequent use of good faith

is hardly acceptable to many

common law lawyers. Likewise, there are too many provisions known to

French legal systems only but unknown to both common law as well as

Germanic systems, such as the rules on astreinte , a private penalty,

those on conditions.

For further information on PICC, see n 26.

Cf the Preamble of the PICC.

See Simon Greenberg, Christopher Kee and J Romesh Weeramantry, International Commercial

Arbitration: An Asia-Paciﬁc Perspective (Cambridge University Press 2011) para 3.140.

Ralf Michaels, ‘Preamble’ in Stefan Vogenauer and Jan Kleinheisterkamp (eds), Commentary on

the U

NIDROIT Principles of International Commercial Contracts (PICC) (Oxford University Press

2009) para 7.

See ch 7, s 3 PICC titled ‘Termination’.

See ch 3, s 2 PICC titled ‘Grounds for Avoidance’.

See also Schwenzer, Hachem and Kee (n 8) para 47.09.

See arts 1.7, 4.8, 5.1.2, 5.3.3, 5.3.4 PICC.

Ibid art 7.2.4 PICC; see also Schwenzer, Hachem and Kee (n 8) para 43.67–43.68.

See ch 5, s 3 PICC.

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IV. Regional instruments on contract law

On a regional level, a number of initiatives can be discerned. Several approaches

can be found in Europe which all aimed at a European civil code or at least a

European contract law. First and foremost, the Principles of European Contract

Law (PECL) shall be mentioned here.

Starting with preparatory work in the

1980s, the PECL were published in three parts (1995, 1999, and 2003), Part I

covering performance, non-performance, and remedies, Part II covering forma-

tion, agency, validity, interpretation, content, and effects of contracts, and Part III

covering plurality of parties, assignment of claims, substitution of the debtor, set-

off, limitation, illegality, conditions, and capitalization of interest. The PECL have

a clear European focus but also take into account the US UCC as well as the

Restatements on Contracts and Restitution.

Like the PICC, the PECL are so-

called soft law. Although the parties at least in arbitration may choose the PECL,

there are no reported cases where this has happened.

More recently, the Study Group on a European Civil Code and the Research

Group on EC Private Law published the DCFR in 2009.

In contrast to the PICC

and the PECL, the DCFR addresses not only general contract law but virtually all

matters typically addressed in civil codes except family law and law of inheritance.

The DCFR, however, was met with severe criticism not only with regard to the

general idea of the project

but also especially with regard to drafting and style

as well as speciﬁc solutions in the area of general contract and sales law.

Building on the DCFR, the European Commission published a proposal for a

Regulation of the European Parliament and of the Council on a CESL in October

2011.

Thus, the idea of a general contract law on the European level was not

pursued anymore but, rather, narrowed down to sales law. The content of the

CESL was almost identical to that of the CISG and the UN Limitation Convention

with additional provisions on defects of consent, unfair contract terms, pre-con-

tractual information duties, and contracts to be concluded by electronic means.

Most notably, in contrast to the CISG, the CESL was not only to be applied to

business-to-business contracts but also was in fact primarily aimed at contracts

with consumers. The CESL, too, was an opting-in instrument. Throughout the

European Union, this proposal has been met with the utmost criticism from

academia as well as from practice. Therefore, recently, the proposal has been

For further information on the PECL, see n 7.

Lando and Beale (n 7).

For further information on the DCFR, see n 28.

Schwenzer, Hachem and Kee (n 8) para 3.63.

Horst Eidenmu

ller and others, ‘Der Gemeinsame Referenzrahmen fu

r das Europa

ische

Privatrecht: Wertungsfragen und Kodiﬁkationsprobleme’ (2008) JuristenZeitung 529, 549;

Ulrich Huber, ‘Modellregeln fu

r ein Europa

isches Kaufrecht’ (2008) 16 Zeitschrift fu

r euro-

isches Privatrecht 708, 742.

Huber (n 58) 744; Ingeborg Schwenzer and Pascal Hachem, ‘Drafting New Model Rules on Sales:

CFR As an Alternative to the CISG?’ (2009) 11 European Journal of Law Reform 459.

For further information on CESL, see n 29.

68 Ingeborg Schwenzer

Unif. L. Rev., Vol. 21, 2016, 60–74

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withdrawn, and the future of this instrument is unclear. In Europe, a few more

private initiatives undertook similar projects, among them the Academy of

European Private Lawyers (Pavia Group), which issued the preliminary draft

for a European Code (2001)

and the Trento Common Core Project.

In Africa, ﬁrst regard is to be given to OHADA’s Uniform Act on General

Commercial Law (1998, amended 2011).

As mentioned above, the sales part

of this act strongly relies on the CISG, although it contains certain modiﬁcations.

Unfortunately, the 2011 amendments have implemented additional concepts

stemming from French law and thus blurring the clear concepts achieved by

the CISG.

In addition to this act, OHADA initiated works on a Uniform Act

on Contract Law. A draft was prepared in cooperation with U

NIDROIT and pub-

lished in 2004, heavily drawing on the PICC.

At the time being, the future of this

project is uncertain. Considerations for the harmonization of contract law based

on the current international experience are also voiced in the framework of the

East African Community.

Another recent private initiative aiming at the elaboration of Principles of

Asian Contract Law (PACL) can be found in Asia since 2009. Among others,

participants come from Cambodia, Vietnam, Singapore, People’s Republic of

China, Japan, and South Korea. Until today, the chapters on formation, validity,

interpretation, performance, and non-performance of the contract have been

ﬁnalized.

Likewise, in Latin America, general contract principles are being

developed since 2009 within the framework of the Proyecto sobre Principios

Latinoamericanos de Derecho de los Contratos hosted by a Chilean university.

The countries covered up to now are Argentina, Uruguay, Chile, Colombia, and

Venezuela. However, the European approach seems to be considered as well.

In 2011, the biannual Conference of Private Law Teachers in Latin America

recommended working towards a uniform civil code for the Latin American

region and using the work of the above mentioned Pavia Group as a starting

point.

For further information on the so-called Pavia Draft of a European Contract Code, see Giuseppe

Gandolﬁ, ‘The Academy of European Private Lawyers and the Pavia Draft of a “European Contract

Code”’, <http://ec.europa.eu/consumers/cons_int/safe_shop/fair_bus_pract/cont_law/stake

holders/5-20.pdf> accessed 14 April 2015.

For further information on the Trento Common Core Project, see <www.common-core.org/>

accessed 14 April 2015.

For further information on the AUDCG see n 25.

Cf Schwenzer, Hachem and Kee (n 8) para 3.40.

OHADA Uniform Act on Contract Law, Preliminary Draft (2004) <www.unidroit.

org/english/legalcooperation/OHADA%20act-e.pdf> accessed 26 January 2016.

For further information on Principles of Asian Contract Law, see <http://www.fondation-droit

continental.org/en/document/the-pacl-principles-of-asian-civilcommercial-law-or-contract-law-

in-east-and-southeast-asia/> accessed 14 April 2015.

For further information on this project, see <http://fundacionfueyo.udp.cl/proyecto-sobre-prin

cipios-latinoamericanos-de-derecho-de-los-contratos/> accessed 14 April 2015.

See Luis FP Leiva Fernandez, ‘Autour d’un ‘Code des contrats’: Le Congre

s des civilistes

latino-ame

ricains a

Tucuman’ (2012) 64 Revue international de droit compare

334 <http://

www.unisob.na.it/universita/facolta/giurisprudenza/age/leiva.pdf> accessed 14 April 2015.

Global uniﬁcation of contract law 69

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Along these initiatives, a trend aiming at building common regional law by using

global texts also exists, for instance, in the framework of the North American Free

Trade Agreement and now also in the framework of the Dominican Republic–

Central America Free Trade Agreement.

Regional endeavours to harmonize and

unify general contract law, however, cannot fulﬁl the needs of international trade.

Rather, different legal regimes in different regions lead to fragmentation. Instead of

saving transaction costs and thus facilitating cross-border trade, international con-

tracting may become even more complicated. Regional uniﬁcation adds one more

layer to domestic rules and the well-established instrument of the CISG.

Additionally, in many instances, not only does the terminology used in the general

contract law instruments differ from that of the CISG, which in itself leads to

confusion, but, frequently, there will also be contradicting solutions to one and

the same legal problem. Finally, the regionalization of legal systems reduces the

number of cases decided on a truly international level and, hence, has a negative

impact on the predictability of the outcomes.

V. International Chamber of Commerce

For decades, important contributions to the harmonization of international trade

law have emanated from the International Chamber of Commerce (ICC). As far

back as 1936, the ICC published the International Commercial Terms

(Incoterms

). Their latest version, the eighth edition, dates from 2010.

Although in many sales contracts they are agreed upon and thus are of the

utmost practical importance, Incoterms

cover only a small fraction of the par-

ties’ obligations in an international sales contract. With the Uniform Customs

and Practice for Documentary Credits (UCP), the ICC has created another im-

portant instrument to facilitate international trade.

Finally, the ICC provides

innumerable model contracts and clauses for use in various types of international

commercial transactions.

VI. Possible future work on global contract law

All of the endeavours described above clearly demonstrate the urgent need to

further harmonize, if not unify, general contract law. UNCITRAL would be the

Cf Stephen Zamora, ‘NAFTA and the Harmonization of Domestic Legal Systems: The Side Effects

of Free Trade’ (1995) 12 Arizona Journal of International and Comparative Law 401; see also Craig

L Jackson, ‘The Free Trade Agreement of the Americas and Legal Harmonization’ ASIL Insights

(June 1996) <www.asil.org/insights/volume/1/issue/3/free-trade-agreement-americas-and-legal-

harmonization> accessed 14 April 2015.