Q 61-1
Explain the operation of Article 61 CISG.
Article 61 CISG sets out the remedies that are available to the seller when the buyer does not perform any of its obligations under the contract or the CISG. It clarifies that the right to claim damages can be exercised concurrently with other remedies and that a court or arbitral cannot grant an extension of time for performance.
Q 61-2
(a) What was the reason for including Article 61(3) CISG?
(b) Which situations does Article 61(3) CISG currently deal with?
(a) It was included as a clarification to ensure uniformity of interpretation in light of differences in approach to this issue under domestic laws.
(b) Predominantly situations under domestic bankruptcy and insolvency laws, where statutory extensions of time for performance of obligations may be granted.
Q 61-3
(a) How did the US District Court in C 61-1 solve the conflict between Article 58(3) CISG and the US bankruptcy provisions?
(b) Keeping Article 7 CISG in mind, could you visualise an approach different from the one the court took in this case?
(a) It held in obiter that the US bankruptcy provisions would prevail over the CISG.
(b) Yes, it would be in line with the uniformity of interpretation that the CISG could be held to prevail regardless of the provisions in local bankruptcy laws.
Q 61-4
How does Article 6 CISG interact with Article 61, and what was the arbitral tribunal’s approach in C 61-2?
Article 6 lets parties derogate and add remedies; Article 61 then enforces those agreed rights upon breach. In C 61 2, the tribunal upheld a contractual penalty under Art 6 and, under Art 61, ordered payment of price and penalty.
Q 61-5
What was the reasoning of the court in C 61-3 for applying domestic law and reducing the penalty?
The contract referred to the applicable laws of the Republic of Uzbekistan (Clause 7.7), which in turn meant that the conflict of laws principle under of Article 1158 of Part Four (Private International Law) of the Civil Code of the Republic of Uzbekistan was applicable. Article 1158 applies to civil legal relations involving foreign citizens, foreign legal entities, or other foreign elements. Based on Article 1158, the court found that in this case Article 32 of the Law of the Republic of Uzbekistan on Contracts and Legal Basis of Activity Of Business Entities was applicable. This is because the case related to a contractual penalty. Contractual penalties are not explicitly dealt with in the CISG, while Article 32 addresses not only the possibility of a contractual penalty, but constitutes such a penalty in the amount of 0.4% on the overdue payment per day, capped at 50% of the total overdue payment. The court considered this cap applicable to the contractual penalty.
Q 61-6
If domestic law had not supported this reasoning, would there be a principle that could have been applied instead? Why or why not would reducing the penalty be acceptable in that situation?
The CISG does not reinterpret party agreements. Absent supportive domestic rules, reduction would rest only on mandatory public policy. Otherwise, the agreed penalty stands; CISG damages regime (Arts 74–77, 78) cannot unilaterally rewrite a valid penalty clause.
