Q 81-1
(a) Which general rule does Article 81 CISG establish consequent upon the avoidance of the contract?
(b) How is the statement that avoidance does not entirely annul the contract to be understood? See C 81-1.
(a) Article 81 CISG states that, upon declaration of avoidance, any unperformed original obligation is cancelled.
(b) Damages claims that may have existed prior to the avoidance of the contract or that arise in connection with it persist, as do dispute settlement clauses. As is shown in C 81-1, avoidance triggers also the obligation to make concurrent restitution of what had been supplied or paid under the contract. Accordingly, avoidance changes the contract into a winding-up relationship.
Q 81-2
What are the legal consequences if no effective avoidance is made?
If no effective avoidance is made, the contract continues to exist.
Q 81-3
Most arbitration laws and institutional arbitration rules state that the arbitration agreement is to be regarded as an agreement separate from the contract and thus capable of remaining in force independently of the contract (‘separability doctrine’). See, for example, Article 16(1) UNCITRAL Model Law on International Commercial Arbitration 1985 (amended in 2006): ‘The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.’
Discuss whether, in light of this, it was necessary to mention in Article 81(1) CISG that dispute settlement clauses remain unaffected by the avoidance of the contract.
With regard to arbitration clauses, such a provision was probably not necessary. However, the term employed in Article 81(1) CISG is broad enough to encompass any dispute settlement arrangement and is therefore not superfluous.
Q 81-4
What is, according to C 81-1 and the CISG Advisory Council, the place of making restitution of the goods and the price, respectively? Could there be other solutions?
In C 81-1, the view was adopted that the place of performance for the obligations concerning restitution should mirror the place of performance for the primary contractual obligations. The Advisory Council holds that, as a principle, restitution of the goods and repayment of the purchase price should be made at the buyer’s premises. Other solutions suggest relying on the applicable domestic law, because it would not be possible to infer from the definition of the seller’s place of business as the place of performance whether it was intended to specify the principle of performance at the seller’s place of business or rather the general principle of payment at the creditor’s place of business, and that therefore gap-filling according to Article 7(2) should not be possible. It has also been argued that all restitutionary obligations should be fulfilled at the innocent party’s place of business. This view is less persuasive, as the Convention does not support a ‘punishing’ of the party in breach.
