Journal of Korea Trade

Korea Trade Research Association (한국무역학회)
권호 표지
DOI QR코드

DOI QR Code

Can Economic Sanctions be Grounds for Exemption under the CISG?

  • Kyujin Kim (Underwood International College, Yonsei University)
  • Received : 2022.04.05
  • Accepted : 2022.08.05
  • Published : 2022.08.31
Download PDF
⟨ Previous Next ⟩

Abstract

Purpose - This paper studies whether economic sanctions can be used as grounds for a party to an international sales contract to get an exemption if he fails to meet his contractual obligation. Because the answer can differ depending on the governing law of the contract, this study focuses on CISG, the most widely recognized international uniform legal instrument as the governing law of the international sale of goods. Design/methodology - This paper focuses on analyzing the conditions to meet before getting an exemption under CISG. For such analysis, this paper examined various scholarly writings, cases, and hypothetical examples reflecting a wide variety of economic sanction measures. Findings - The findings of this paper are as follows. The main provision for exemption under CISG is Article 79(1), which provides for an exemption for a party that failed to perform if such failure was caused by an impediment that was uncontrollable, unforeseeable, and unavoidable; either a seller or a buyer may rely on the Article for his non-performance, delay, or defective performance. The Article is applicable not only where the economic sanction caused impossibility of performance but also where it caused hardship. The economic sanction will likely be found to be an uncontrollable impediment; however, it will be relatively more difficult to prove it to be unforeseeable or unavoidable. Originality/value - The subject of this paper is whether a party can be exempted from liability under CISG when he fails to perform his contractual obligations due to economic sanctions. Given that this issue is now actually faced by many involved in international trade, it is expected to provide practical help to practitioners and companies alike.

Keywords

References

  1. Beaucillon, Charlotte (2016), "Practice Makes Perfect, Eventually? Unilateral State Sanctions and the Extraterritorial Effects of National Legislation", in Natalino Ronzitti, Coercive Diplomacy, Sanctions and International Law, Brill Nijhoff. 
  2. Berger, Klaus Peter and Daniel Behn (2019). "Force Majeure and Hardship in the Age of Corona: A Historical and Comparative Study", McGill J. Disp. Resol. 6. 
  3. Brunner, Christoph (2009), Force Majeure and Hardship under General Contract Principles, Exemption for Non-performance in International Arbitration, Wolters Kluwer Law & Business. 
  4. Chung, Hyung-Jin (2017), "Hardship in Article 79 of the CISG", Journal of Business Administration & Law, 28(1). 
  5. CISG-AC Opinion No. 7 (2007), Exemption of Liability for Damages under Article 79 of the CISG, Rapporteur: Professor Alejandro M. Garro, Columbia University School of Law, New York, N.Y., USA. Adopted by the CISG-AC at its 11th meeting in Wuhan, People's Republic of China, on 12 October 2007. 
  6. CISG-AC Opinion No. 20 (2020), Hardship under the CISG, Rapporteur: Prof. Dr. Edgardo Munoz, Universidad Panamericana, Guadalajara, Mexico. Adopted by the CISG Advisory Council following its 27th meeting, in Puerto Vallarta, Mexico on 2 - 5 February 2020. 
  7. Daniel, Drezner (2000), "Bargaining, Enforcement, and Multilateral Sanctions: When is Cooperation Counterproductive?", International Organization 54(1). 
  8. DiMatteo, Larry A. (2015), "Contractual Excuse Under the CISG: Impediment, Hardship, and the Excuse Doctrines." Pace Int'l L. Rev. 27. 
  9. Drezner, Daniel W. (2015), "Targeted sanctions in a world of global finance", International Interactions 41.4. 
  10. Flambouras, Dionysios (2002), "Comparative Remarks on CISG Article 79 & PECL Articles 6: 111, 8: 108", Guide to Article. 
  11. Hakimdavar, Golnoosh (2013), A Strategic Understanding of UN Economic Sanctions: International Relations, Law and Development. Routledge. 
  12. Honnold, John O. (2009), Uniform Law for International Sales under the 1980 United Nations Convention, 4th Edition, Wolters Kluwer. 
  13. Jin, Do-Wang (2015), "The Legal Treatment of the Delivery of Nonconforming Goods under the CISG Article 79", Korean Forum on International Trade and Business Law, 24(1). 
  14. Kim, Kyujin (2019), "Legal issues on Inter-Korean Economic Cooperation under the US Sanctions on North Korea - focusing on the "Otto Warmbier" Act, etc.-", Korean Forum on International Trade and Business Law 28(2). 
  15. Kim, Kyujin (2021), "CISG Article 79 and Hardship :Focusing on the CISG AC Opinion No. 20", Korean Forum on International Trade and Business Law, 30(1). 
  16. Kim, Son Guk (2015), "Several Issues regarding Article 79 (Exemption) of the U.N. Convention on Contracts for the International sale of Goods(CISG)", The International Commerce & Law Review, 67 
  17. Kruisinga, Sonja (2004), "(Non-) conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?". Vol. 46. Intersentia nv. 
  18. Lauro, Angelo De (2019), The UN Sanctions Regime-Striking a balance between the maintenance of international security and the protection of individual rights. 
  19. Lee, Cheonsoo (2010), "A Study on the Requirements and Effects of the Exemption in CISG Article 79", JITC, 6(1). 
  20. Lindstrom, Niklas (2006), "Changed Circumstances and Hardship in the International Sale of Goods", Nordic Journal of Commercial Law, Issue 1. 
  21. Lookofsky, Joseph (2008), Understanding the CISG, 3rd Edition, Wolters Kluwer. 
  22. Martin, Daniel (2021), "Chapter 2, International Trade Sanctions", in Andrew Chamberlain, Holly Colaco and Richard Neylon, eds., The Shipping Law Review, 8th ed., Law Business Research Ltd. 
  23. Mazzacano, Peter J. (2011), "Force Majeure, Impossibility, Frustration & the Like: Excuses for Non-Performance; the Historical Origins and Development of an Autonomous Commercial Norm in the CISG", Nordic Journal of Commercial Law. 
  24. Meyer, Jeffrey A. (2008), "Second thoughts on secondary sanctions", University of Pennsylvania Journal of International Law, vol. 30. 
  25. Miers, Anne C. and Morgan T. Clifton (2002), "Multilateral Sanctions and Foreign Policy Success: Can Too Many Cooks Spoil the Broth?", International Interactions 28(2). 
  26. Oh, Won-Suck (1998), "Study on Shortcomings of Force Majeure clause(Art. 79) Under CISG", Korea International Commercial Review, 13(3). 
  27. Perillo, Joseph M (1997), "Force majeure and hardship under the UNIDROIT principles of international commercial contracts", Tul. J. Int'l & Comp. L. 5. 
  28. Schwenzer, Ingeborg (2008), "Force majeure and hardship in international sales contracts", Victoria U. Wellington L. Rev. 39. 
  29. Silveira, Dr. Mercedeh Azeredo da (2019), "Chapter 7. Economic Sanctions, Force Majeure and Hardship" in Fabio Bortolotti and Dorothy Ufot, eds. Hardship and Force Majeure in International Commercial Contracts: Dealing with Unforeseen Events in a Changing World. Kluwer Law International BV. 
  30. Silveira, Azeredo da (2017), "Economic Sanctions and Contractual Disputes Between Private Operator" in Larissa van den Herick (ed), Research Handbook on UN Sanctions and International Law, Edward Elgar Publishing. 
  31. Song, Young-Min (2016), "The Legal Principles of Impediment in CISG Article 79", Wonkwang Law Review, 28(4) (2012); Choi Sung Soo, "Trends in national case law on the Exemption under Article 79 of the CISG", CAUJLS, 40(1). 
  32. Stoll, Hans and George Gruber (2005), Art. 79 para 6. In Schlechtriem & Schwenzer, CISG Commentary, 2nd Ed. 
  33. Stoll, Hans (1998), in Peter Schlechtriem (ed), Commentary on the UN Convention on the International Sale of Goods, 2nd ed, Clarendon Press. 
  34. Sur, Jimin and June Sun Choi (2012), "A Study on the Cases concerning Impediment concept under the CISG Article 79", SungKyunKwan Law Review, 24(2). 
  35. Szasz, Paul (1998), "The law of economic sanctions", International Law Studies, 71.1. 
  36. Uriber, Rodrigo Momberg (2011), The Effect of a Change of Circumstances on the Binding Force of Contracts Comparative perspectives, Utrecht University Doctoral dissertation.