ANALYSIS OF THE CULTURAL HOMEWARD TREND IN INTERNATIONAL SALES LAW

Article 7 of the Vienna Convention on Contracts for the International Sale of Goods (‘ CIsG ’) mandates that the convention must be interpreted uniformly without recurse to domestic principles. This article demonstrates that the homeward trend – the tendency to project domestic laws onto the international provisions of a Convention is breach of art 7(1). However, art 7(2) alerts the reader that some matters are not expressly settled but must be settled by recourse to general principles within the CIsG and again no recourse to domestic laws can be sought even if the terms track domestic laws. This article argues that a distinction must be draws if vague terms vague terms such as reasonable time must be interpreted. These terms are not governed by laws but are subject to factual events such as customs or universal understanding.


I Introduction
The term 'homeward trend' has been coined to describe the introduction of domestic principles in the application of the Vienna Convention on Contracts for the International Sale of Goods ( ' CISG ' ): 'a behavioural bias in favour of domestic law'.1 The fact that it is of consequence is exhibited in the discussion of the term in at least 72 articles,2 and that in Australia this trend is unfortunately pronounced.However, in principle, the 'uniform interpretation of the CISG functions satisfactorily already'.3Hence, a revisit of the homeward trend is appropriate to establish what is truly a homeward trend.Ferrari and others have attempted to define the homeward trend.He noted that it compares to the natural tendency of those interpreting the CISG to project the domestic laws in which the interpreter was trained onto the international provisions of the Convention.4 To put it differently, Gillette and Scott have argued that the homeward trend 'induces tribunals both to ignore non-domestic law and assume that 'international' interpretations reflect domestic ones '.5 It is not difficult to understand that an instrument that is international in character can have variations due to the homeward trend.6This is mainly due to the drafting of the CISG as it is not a complete statement.The CISG in effect is a compromise among all the participating states during the drafting process.Hence some issues are purposefully left out as noted in art 7(2) -either expressly such as the validity of the contract in art 4, or as an undefined term such as private international law in art 1.It is left to the courts of the forum to determine this issue and cannot be classed as a homeward trend.7 Article 7(2), however, also addresses internal gaps which are to be addressed with the aid of general principles and cannot be left to domestic law solutions as it contributes to the homeward trend.
A distinction needs to be drawn when applying vague terms of universal character such as 'good faith', 'fitness for purpose' and 'reasonableness' just to mention a few.These terms are found in the CISG as well as in domestic systems.The issue isas Professor Ferrari pointed out -these expressions are 'concepts that are independent and different from national concepts'.8They need to be given meaning within the four corners of the CISG.The problem, however, is when a term is regarded as being controversial within the CISG.An example of this is art 39, and the determination of what a 'reasonable time' to give notice actually is.The answer has been given by Professor Andersen who noted: 'a number of commentators as well as the CISG Advisory Council distanced themselves from the notion of any benchmark for determining reasonable time'.9Hence whether it is shorter or longer in days does not constitute a homeward trend in the true sense.It merely reflects a point of opinion or a reflection of trade specific customs, but does not vary the crucial principle of 'reasonable time' and substitute it with another principle based on domestic law.Simply put, the CISG is silent on an exact time -despite the coining of the 'noble month' -and hence as long as the time is reasonable it will not trigger the definition of homeward trend, as the determination does not violate art 7(1).After all the drafters left 'certain questions of interpretation to be decided by judges '.10 To avoid a homeward trend, courts need to take into consideration CISG decisions and academic commentary.11It is obvious that 'foreign' CISG decisions cannot be binding.After all, the CISG is part of the relevant domestic legal system and any decisions outside the system are normally considered to be foreign.Hence the betterreasoned position is that the decisions should have a highly persuasive character but not binding authority.12Article 7(1) uses the term 'regard has to be had', hence the question is: 'what is the appropriate level of regard in order to fulfil the mandate of art 7'? Lookofsky and Flechtner have argued that for a CISG decision to be accorded a persuasive character, it must 'itself [comport] with the mandate of CISG art 7(1)'.13 As seen so far, the purpose of the CISG is to create international uniformity, which is the very aim of the inclusion of art 7 into the convention.Equally important is to recognise that there is a difference between applying principles and provisions incorrectly and merely varying practical execution of a principle.This paper will argue that a true homeward trend is associated with a lack of understanding of the mandate of art 7.This is so because the interpretation and application of the CISG can only be accomplished within the four corners of the CISG.
The key role of art 7(1) of the CISG has already been noted by Professor Eorsi in 1984 when he noted: The elements of regard to the international character of the Convention and uniformity in its application were well chosen.The first, as we have seen, was devised to check the homeward trend, and the second is an admonition to follow precedents on the international plane.14Professor Ferrari was equally adamant, stating that art 7 must be understood 'to mean that the CISG is to be interpreted "autonomously", not "nationalistically", i.e. not in the light of domestic law, as difficult as this may be'.15 The reason for this is that the CISG is a neutral law not subject to domestic variations.This is, as Ferrari stated, only possible if the CISG is interpreted with art 7 in mind -that is, 'moving towards a CISG perspective that transcends domestic ideology'.16 The lack of understanding is not unique to the CISG as an internationally drafted document.It is a sign of courts and the legal profession persisting to remain in the domestic paddock as explained in Scruttons Ltd. v Midland Silicones Ltd,17 where the court noted: 'it would be deplorable if the nations, after protracted negotiations, reach agreement … and that their several courts should then disagree as to the meaning of what they appeared to do'.18 In the CISG the problem is that art 7 has not been understood or has been overlooked.The result has been that jurisdictions have used ambiguous methodologies regarding the provision's application.19 The argument can be made that the single most important source of non-uniformity in the CISG is the different background assumptions and conceptions that those charged with interpreting and applying the Convention bring to the task.20 Simply put, the misunderstanding of the mandate of art 7 contributes significantly to courts and tribunals seeking 'refuge' in known principles.
As already noted above, the question is which deviations are severe enough to constitute a homeward trend, and which ones are merely flexible application of a principle based on the facts of the case (such as determining a 'reasonable time' to give notice pursuant to art 39).It is obvious that perfection in the interpretation of the CISG was never envisaged as it is also not possible in any legal system.In addition, as already noted, the CISG is not a complete statement of sales laws as it contains gaps.
To minimise variations, art 7(2) instructs the interpreter on how to fill the gaps in the CISG.Only if the CISG presents an external gap -as explained in art 7(2)can recourse to the otherwise applicable law be allowed.Unfortunately, some commentators have been arguing that art 7 only provides minimal theoretical guidance as to its interpretation, resulting in inconsistencies in the application of the CISG.21These views are contrary to the intentions of the drafters.The Secretariat Commentary to art 7 noted that the article was included to avoid the implications of diverse domestic principles that courts might apply (what is now called the homeward trend).22Sheafer, in response, argues that the reasons to do so are 'rooted' in different approaches.He notes: While civil law systems commonly apply general principles to fill 'gaps', common law jurisdictions typically opt for a more definitive approach, choosing to fill 'gaps' with legislative history and legal precedent.Such conflicting ideologies have resulted in discrepancies as to which approach should be used, contributing to further inconsistent judgments as courts refuse to break from domestic tradition.23However, importantly the question must be asked whether the term 'homeward trend' hides other issues.First -at the basic level -the obvious one is that the court did not understand the mandate of the CISG and ostensibly applied the CISG while reverting to and using domestic laws.Lookofky and Flechtner view the homeward trend as '[a] reasoning [which] is completely unpersuasive because the court completely ignores, and even aggressively violates, the mandate of Art.7(1) CISG'.24 Arguably -more sophisticated -there are instances where art 7(1) has been applied, giving the impression of a full understanding reverting to domestic 'escapes' where the court was not comfortable with the outcome due to controversies in application.Taking a broad brushstroke approach all the above probabilities can be termed 'homeward trend'.However, as the CISG is maturing, a more sophisticated approach is warranted as a purely dogmatic view can be detrimental to the application of the CISG (which, after all, fulfils the mandate of a flexible instrument).This paper will now analyse the two possibilities by reviewing academic opinions and importantly jurisprudence which is the ultimate judge on any application of legislation in pts II-III followed in pt IV by a discussion.This paper in pt V concludes the arguments.

II Lack of Understanding of Article 7
It is appropriate to understand the term homeward trend in context.Professor Cross has argued that 'categorical condemnation of the homeward trend is unwarranted'.25This is only correct insofar as variations in interpreting and applying the CISG are not due to the homeward trend -but it is wrong to argue that 'the homeward trend may enhance the legitimacy and acceptability of the CISG over the long term'.26Such a statement encourages the undisciplined and incorrect application of transnational law which is to be condemned as certainty in the application of transnational laws is of paramount importance.This paper argues that the term has been misused -that it has been too readily used in labelling variations in the application of the CISG.The first point to note is that a homeward trend must have at its source the application of the CISG; that is, the court must recognise that the CISG governs the contract.Therefore, simply ignoring the application of the CISG does not constitute a homeward trend as such an incident is simply applying the wrong law (and arguably should give rise to an appeal).27A homeward trend generally implies that the CISG was not viewed as an exhaustive regulation, but simply as a complementary law.
In most reported cases the courts did recognise that the CISG applied but when interpreting provisions of the CISG court reverted to the application of domestic law instead of the applicable principles of the Convention.28In Italedcor SAS v Yiu Industries the court -in brief -only consulted domestic case law,29 despite the fact that the court did note that the CISG was applicable.Another earlier case is Delchi Carrier SpA v Rotorex Corp,30 where the court erroneously noted 'In the absence of a specific provision in the CISG for calculating lost profits, the District Court was correct to use the standard formula employed by most American courts',31 hence ignoring in effect the application of art 74.In addition, the court also stated that [case law] interpreting analogous provisions of Article 2 of the Uniform Commercial Code … may also inform a court where the language of the relevant CISG provisions tracks that of the uCC.32 Arguably, such an observation is a classical homeward trend situation as it indicates a lack of understanding of art 7.
In the same manner in Australia, the court followed the homeward trend due to the lack of understanding of art 7.33 Ginza Pte Ltd v Vista Corporation Pty Ltd set a precedent followed by subsequent courts in applying the homeward trend.34Counsel for the defendant attempted to rely both on the provisions of 'the Sale of Goods Act 1895 (WA) ('SOG Act') or the CISG' to be echoed by the court, noting that fitness for purpose and merchantability -both terms to be found in common law -find expression both in the SOG Act and the CISG.This is certainly not correct, as merchant ability is not a feature of art 35.Ginza was followed by Playcorp Pty Ltd v Taiyo Kogyo Ltd persisting with the homeward trend.35The court again noted in a similar manner: It was not suggested that there was any material difference or inconsistency between the provisions of art 35 and s 19(a) and (b) [of the SOG Act] and because of that and the way the case was conducted, it is unnecessary to consider whether there is.Counsel proceeded on the basis that there was no material difference or inconsistency.36 In addition, the court relied exclusively on domestic case law and did not refer to academic comments.Unfortunately, Playcorp was used as a precedent again and the same mistakes were repeated.Comments by the claimant are noteworthy; namely, they 'invoked, further or alternatively, the warranties of fitness for purpose and merchantable quality implied by s19(a) and (b) of the Goods Act 1958 (Vic) ("Goods Act")'.37The court responded by stating again: Those provisions have been treated by Australian courts as imposing, effectively, the same obligations as the implied warranties of merchantable quality and fitness for purpose arising under s 19 of the Goods Act.38 Australian courts are not on their own in repeating the misunderstanding of the application of the CISG.In the 2008 decision in Hilaturas Miel, SL v Republic of Iraq,39 the court noted similarly: Courts also often look to analogous provisions of the UCC, to inform decisions under the CISG.See, e.g., Delchi Carrier, 71 F.3d at 1028 ('Caselaw interpreting analogous provisions of Article 2 of the Uniform Commercial Code … may also inform a court where the language of the relevant CISG provisions tracks that of the uCC.
In addition, the relevant academic writing was not consulted.This is indicated by the fact that the court relied on Raw Materials Inc. v Manfred Forberich GmbH & Co., KG and Delchi both cases having been criticised for their homeward trend.In effect, the mistakes were perpetuated.40 The case of Manfred Forberich also requires examination.Lookofsky and Flechtner nominated this decision for the worst-case award as 'it seems to represent the very worst example of the 'homeward trend'.41 Their argument was that the 'reasoning is completely unpersuasive because the court completely ignores, and even aggressively violates, the mandate of Art.7(1) CISG'.42 The issue was that steel rails had to be shipped out of St Petersburg, but adverse weather conditions froze the port and stopped shipping.Forberich claimed an art 79 protection.As with other patently homeward trend decisions, the court noted that domestic law could be used 'where the relevant CISG provisions track that [sic] of the UCC'.43 As Flechtner commented: Not one word of this discussion would have to be changed if UCC Article 2 had actually been the applicable law.A more flagrant and depressing example of a court ignoring its obligations under CISG article 7(1) and indulging -nay, wallowing in -the homeward trend is hard to imagine.The court's methodology should mean that its analysis will properly be ignored by other courts -both us and foreign -that are called upon to apply CISG article 79. … The only good that could come of the Manfred Forberich decision, in this author's view, is if it became an example of what to avoid when interpreting the CISG.44 The very point is that the courts have interpreted and applied the CISG by looking through the preconceived domestic lenses, ignoring art 7(1).The excuse -if any -is that art 35 is particularly susceptible to the pernicious influence of the 'homeward trend'.45 Another principle that has been misunderstood is the foreseeability requirement.Many courts in common law countries noted that foreseeability is identical to the well-known rule of Hadley v Baxendale.46In TeeVee Toons,47 the District Court of New York specifically stated: 'The foreseeability requirement, the Second Circuit has explained, is identical to the well-known rule of Hadley v Baxendale, such that relevant interpretations of that rule can guide the Court's reasoning regarding proper damages'.Professor Murray commented that the statement is nothing more than 'a consummate illustration of a court unwittingly seeing provisions of the Connection through the domestic lens'.48 The difference between the two principles, in brief, is that the CISG only considers what damages were foreseeable not what had to be in the contemplation of the parties as explained in Hadley v Baxendale.
Another important issue in the homeward trend is the inability of some courts to recognise the influence of art 6 to exclude the CISG.The issue hinges on the fact that not only an express but also implied exclusion is possible, which has been confirmed by many courts applying the CISG correctly.49 The point to make is that an implied exclusion must be based on regulations contained within the CISG (such as under art 8), against which an implied exclusion must be measured that is the parties did contemplate to exclude the CISG.50 A mere term such as 'the contract is governed by Italian law' is not an express or implied exclusion of the CISG.As the law of Italy is not only subject to domestic sales laws but also the CISG, recourse to art 1 will show that an international sale between parties is subject to the CISG if both states are contracting states or the conflict of laws rule points to the application of the law of a contracting state.51 In sum, this part has demonstrated that the inability of courts to understand the mandate of art 7(1) is a recurring issue in the practice of a homeward trend.
Interestingly, this appears more frequently in common law jurisdictions and very rarely in civil law countries.
It is therefore important to demonstrate how art 7 should be applied.A very good example can be found in RJ & AM Smallmon v Transport Sales Limited and Grant Alan Miller.The New Zealand court observed: Art 7 is generally accepted as establishing what has been called a principle of autonomous interpretation.That means the Convention must be applied and interpreted exclusively on its own terms, having regard to the principles of the Convention and Convention-related decisions in overseas jurisdictions.Recourse to domestic case law is to be avoided.52 The conclusion is that the 'classical homeward trend' is where the CISG was only applied in name but not in fact, expressed by the use of domestic literature and case law.In sum, the above cases illustrate the true homeward trend where counsel and the courts did not know or understand the mandate of art 7 even though the CISG did apply which was acknowledged by the courts.

III The Impression of Full Understanding
The homeward trend can also be detected where a court or tribunal has applied the CISG correctly but finds that the outcome is not in conformity with the result which could be achieved under domestic laws; hence the homeward trend is used to achieve the desired result.Scafom International BV v Lorraine Tubes SAS clearly illustrates this issue.53In this case, there was a 70% price increase between the formation of the contract and the delivery of the steel.As there was no price adjustment clause in the contract, the buyer refused to pay a higher price.
The judgments -both in the first instance and in the Belgian Supreme Court -expressed a high degree of competence in the application of the CISG as all the relevant articles were consulted.The issue, however, was the application of art 79 and whether hardship cases fall under the sphere of the CISG.
The court of Tongeren in the first instance was aware of the controversy over the inclusion of hardship in art 79.54 The court noted that '[a]ccording to J. Herbots,55 this is the definition [as noted in art 79] the Supreme Court gives to "force majeure"'.56However, the court noted that 'Often the performance of a contract is rendered much more difficult due to certain circumstances, even though one cannot speak of force majeure which renders the performance impossible'.57 The question, therefore, is whether the contract can be modified under the principle of hardship.The court noted that 'this issue is not expressly settled in Article 79 CISG, or in any other Article of the CISG'.58 Despite the fact that the court agreed that art 79 only covers issues of force majeure, the court allowed a price adjustment -that is, the contract was still to be executed but under conditions of hardship and 'equity according to the domestic article 1135 BW a source of supplementary law for contracts'.59 The Supreme Court saw the issue differently.It noted that there was a gap in the CISG relating to art 79 to be filled by 'general principles which govern the law of international trade',60 namely the UNIDROIT Principles of International Commercial Contracts ( ' UPICC ' ).The court required the parties to renegotiate the contract in good faith, relying on art 6.2.3 of the UPICC, dealing with hardship, but ignoring art 7.1.7,dealing with force majeure.There is no doubt that the court was not ignorant of the CISG and applied UPICC to come to the desired conclusion.
The question here is whether the Belgian Supreme Court followed the homeward trend.The court was not driven by ignorance and the homeward trend; if anything, it was the fact that the court saw a gap in the CISG where there is none.The point is that the academic view on art 79 is divided because the question of hardship versus force majeure is still debated.Currently, the opinion of courts is that art 79 only covers force majeure -hence, if a court decided that the issue of hardship fell within the rules of the CISG, arguably this would not be termed a homeward trend because the decision is made within the rules of the CISG indeed following the suggestion of the Advisory Council.61If a court, however, notes that the issue is not settled and hence looks at the otherwise governing law for assistance -in effect assistance to make up its mind -can this be termed a homeward trend?
This paper argues that it is not a homeward trend as the court is fully aware of the mandate of art 7. It can be argued that the assistance of domestic law by the court in the first instance was merely a guide to come to a decision which is still based on the CISG.Reliance on domestic law to arrive at a solution -as opinions are divided on this issue -is not a homeward trend as it is in tune with the underlying system of the CISG.

IV Discussion
Arguably a 'conceptual goal of functional uniformity in a body of international commercial law' is the ultimate aim but the issue of the homeward trend does not appear to be a simple test of a lack of functional conformity in the application of the CISG.62As with any law, certain applications of specific issues are not clear, resulting in variations between decisions within and between states.This is especially so as internationally; linguistic nuances will also play a role in CISG interpretation.As an example, Kruisinga pointed out that the Dutch version of the CISG (which is not an official version) in art 35(3), where the phrase relying on 'could not have been unaware' in translation required the buyer to erroneously perform a pro-contractual inspection.63Does this lead to a homeward trend?Two views could be taken.First, this is not a homeward trend as the CISG has been properly applied following the relevant language of the text at the disposal of the courts.The second view and arguably the better one is that it is a homeward trend as the court ought to have been aware that in the end, only the texts in the official languages are to be applied.The Witness Clause to the CISG specifies what the authentic language versions of the Convention are.Only if art 7 is totally ignored or wrongly applied is the term homeward trend appropriately used.In addition, it appears that only certain articles in the CISG are constantly referred to as being subject to the homeward trend -arts 79 and 35 being the most frequent topics of discussion here.
Article 79 has been the subject of an academic debate whether it includes only force majeure or also hardship.If judicial deference to international case law and scholarly opinion is the yardstick to measure conformity, variations are inevitable as opinions are divided.As already noted, the Advisory Council in its opinion suggests that cases of hardship will also trigger the application of art 79,64 whereas jurisprudence and several academics have rejected this notion.65This fact alone speaks against labelling variations as a homeward trend.In essence, art 7 has been properly applied.
In this regard, Mazzacano noted that the application of art 79 in Germany bucks the homeward trend and this is an important step as it 'stands alone as an autonomous international doctrine under the CISG'.66Arguably, this is too narrow a view to take and is not supported in this paper.There will always be some variations in the application of isolated articles within and between countries.As long as art 7(1) has been properly applied, variations should not be labelled a 'homeward trend'.

V Conclusion
The problem is that the CISG incorporated vague standards which 'facilitated recourse to domestic standards for interpretive purposes much more than a text that is more specific and contains itself a number of definitions'.67Arguably, therefore, the 'gravitational pull of the homeward trend' has resulted in the assumption of courts that international interpretations track or even reflect domestic ones.68With the 'coming of age' of the CISG, this trend has been declining.Therefore, this paper has argued that the term 'homeward trend' should only be used to describe a situation where a court or tribunal -instead of applying art 7(1) -reverted to domestic law.This is so as a 'proper' CISG decision must be based on a sound understanding of the mandate of the CISG as mandated in art 7, and that international jurisprudence and academic opinions have also been consulted.
The fact that in cases of controversial issues domestic law has been chosen is not a homeward trend as long as it does not replace the clear solution found within the CISG.As an example, as noted above, art 79 is controversial insofar as opinions diverge on the issue of whether only force majeure or also hardship is covered by the term 'impediment'.Hence if a choice has been made which is in line with domestic understanding, it is not a homeward trend as it does not display a lack of knowledge of the CISG.
However the preferred alternative -requiring a sound grasp of transnational laws -is where the courts, instead of reverting to domestic laws, resort to the application of UPICC to fill the gap and hence achieve in essence a solution based on transnational law.Arguably this trend can be observed as so far 61 decided CISG cases have resorted to UPICC.69