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The UNIDROIT Principles and CISG - Sources of Inspiration for English Courts?

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The UNIDROIT Principles and CISG - Sources of Inspiration for English Courts? Pace International Law Review Volume 19 Issue 1 Spring 2007 Article 2 April 2007 The UNIDROIT Principles and CISG - Sources of Inspiration for English Courts? Michael Joachim Bonell Follow this and additional works at: https://digitalcommons.pace.edu/pilr Recommended Citation Michael Joachim Bonell, The UNIDROIT Principles and CISG - Sources of Inspiration for English Courts?, 19 Pace Int'l L. Rev. 9 (2007) Available at: https://digitalcommons.pace.edu/pilr/vol19/iss1/2 This Article is brought to you for free and open access by the School of Law at DigitalCommons@Pace. It has been accepted for inclusion in Pace International Law Review by an authorized administrator of DigitalCommons@Pace. For more information, please contact dheller2@law.pace.edu. ARTICLES THE UNIDROIT PRINCIPLES AND CISG - SOURCES OF INSPIRATION FOR ENGLISH COURTS? Michael Joachim Bonell* I. Introduction ....................................... 9 II. ProForceRecruit Ltd. v. The Rugby Group Ltd.: Facts and Rulings ...................... .......... 11 III. Admissibility Of Extrinsic Evidence To Interpret A Written Agreement Under English Law ........... 15 IV. Admissibility Of Extrinsic Evidence To Interpret A Written Agreement According To The UNIDROIT Principles And CISG .............................. 19 V. Appendix: Admissibility Of Extrinsic Evidence In The Presence Of An "Entire Agreement Clause"... 25 V I. Conclusion ......................................... 26 I. INTRODUCTION Courts all over the world are notoriously rather reluctant to turn to foreign or international sources, whether statutes, court decisions, or writings, for inspiration when interpreting their domestic laws.1 In the rare cases where courts do so, they nor- mally refer only to legal systems linguistically and culturally close to their own.2 Even when applying international conven- * Professor of Law, University of Rome I "La Sapienza"; Chairman of the Working Group for the Preparation of Principles of International Commercial Contracts. 1 For a comprehensive overview, see Ulrich Drobnig, General Report: The Use of Comparative Law by Courts, in THE USE OF COMPARATIVE LAW BY COURTS: XIVTH INTERNATIONAL CONGRESS OF COMPARATIVE LAW 3-21 (Ulrich Drobnig & Sjef Van Erp eds., Kiuwer Law Int'l 1999). 2 This is particularly true of Anglo-American courts which traditionally refer mainly, if not exclusively, to decisions rendered in other common law jurisdictions 1 PACE INT'L L. REV. [Vol. 19:9 tions incorporated in their own legal systems, more often than not, they interpret and supplement them on the basis of princi- ples and rules of the law of the forum despite the indication con- tained in most of these conventions that "[i]n [their] interpretation of this Convention, regard is to be had to [their] international character and to the need to promote uniformity in [their] application" and that "[q]uestions concerning matters governed by [them] which are not expressly settled in [them] are to be settled in conformity with the general principles on which [they are] based."3 A significant exception to this general attitude is repre- sented by a recent decision of the English Court of Appeals. In ProForceRecruit Ltd. v. The Rugby Group Ltd.,4 Lady Justice Arden, in obiter dictum, criticized some of the traditional rules on contract interpretation in English law and suggested a possi- ble change in approach. In support of it, she made express ref- erence to the UNIDROIT Principles of International Commercial Contracts ("UNIDROIT Principles") 5 as well as to the United Nations Convention on Contracts for the Interna- (English decisions). Thus, with respect, in particular to Australian courts, see for example, Jianfu Chen, The Use of Comparative Law by Courts: Australian Courts at the Crossroads, in THE USE OF COMPARATIVE LAW BY COURTS: XJVTH INTERNA- TIONAL CONGRESS OF COMPARATIVE LAW, supra note 1, at 25-57. With respect to Canadian courts, see for example, H. Patrick Glenn, The Use of ComparativeLaw by Common Law Courts in Canada, in THE USE OF COMPARATIVE LAW BY COURTS: XIVTH INTERNATIONAL CONGRESS OF COMPARATIVE LAW, supra note 1, at 59-78. In addition, civil law courts normally restrict their comparative references to coun- tries with a common linguistic and legal background. See, e.g., Marc Elvinger, The Use of Comparative Law by Common Law Courts in Canada, in THE USE OF COM- PARATIVE LAW BY COURTS: XIVTH INTERNATIONAL CONGRESS OF COMPARATIVE LAW, supra note 1, at 231-34 (highlighting the fact that the courts in Luxembourg regu- larly refer to French and Belgian decisions). 3 See, e.g., United Nations Convention on Contracts for the International Sale of Goods, art. 7, April 11, 1980, 1489 U.N.T.S. 3, 19 I.L.M. 671, available at http://www.cisg.law.pace.edulcisg/text/treaty.html [hereinafter CISGI. For a criti- cal analysis of the different approaches taken by domestic courts in interpreting and supplementing CISG, see F. Ferrari, Gap-filling and Interpretation of the CISG: Overview of InternationalCase Law, in REVUE DE DROIT DES AFFAIRES IN- TERNATIONALES 221-30 (2003). 4 ProForce Recruit Ltd. v. The Rugby Group Ltd., [2006] EWCA (Civ) 69 (ap- peal taken from Eng.). 5 See UNIDROIT Principles of International Commercial Contracts with Official Commentary (1994), available at http://www.jus.uio.no/lm/unidroit. international.commercial.contracts.principles. 1994.commented/ [hereinafter UNIDROIT]. https://digitalcommons.pace.edu/pilr/vol19/iss1/2 2 20071 THE UNIDROIT PRINCIPLESAND CISG tional Sale of Goods ("CISG"). 6 The case is all the more remark- able not only because English courts are known for being particularly parsimonious in using foreign sources other than those of other common law jurisdictions, 7 but also, and most im- portantly, because the dispute was a purely domestic one with no international connotations. The case referred to two interna- tional instruments, one of which - the UNIDROIT Principles - has no binding force at all, while the other - the CISG - is not in force in the United Kingdom. In this note - which I dedicate to the memory E. Allan Farnsworth, a highly esteemed scholar and personal friend who played a decisive role in the preparation of both the UNIDROIT Principles and CISG - I shall provide a summary of the ProForceRecruit Ltd. v. The Rugby Group Ltd. case (Section II) followed by a brief description of the relevant English rules on contract interpretation under consideration (Section III) as compared to those reflected in both the UNIDROIT Principles and CISG (Section IV). II. PROFORCE RECRUIT LTD. V. THE RUGBY GROUP LTD.: FACTS AND RULINGS ProForce Recruit Ltd. ("ProForce"), an employment and re- cruitment agency, entered into a contract with the Rugby Group Ltd. ("Rugby Cement"), a cement manufacturer, for the supply of labor, personnel, and cleaning equipment for a period of time of two years.8 The written contract provided that during this two year period ProForce would hold "preferred supplier status" and contained a clause stating "[t]his Agreement... constitutes the entire contract between the parties and supersedes all prior representations, agreements, negotiations or understandings 6 See CISG, supra note 3. 7 This is because - to quote a particularly eminent English judge - in the past, "it was an almost universal article of faith that English law and legal institu- tions were without peer in the world, with very little to be usefully learned from others." T. H. Bingham, "There is a World Elsewhere?". The Changing Perspectives of English Law, 41 INT'L & COMP. L.Q. 513, 514 (1992). On the recent increasing change in the attitude of English courts in this respect, see Esin Oricu, Compara- tive Law in British Courts, in THE USE OF COMPARATIVE LAW BY COURTS: X1VTH INTERNATIONAL CONGRESS OF CoMPARATIVE LAW, supra note 1, at 252-87. 8 ProForce, [2006] EWCA (Civ) 69, [6]-[11] (Eng.). 3 PACE INT'L L. REV. [Vol. 19:9 whether oral or in writing."9 A few months after the conclusion of the contract Rugby Cement began to use other employment agencies to satisfy requirements exceeding those provide for in its contract with ProForce. ProForce then accused Rugby Ce- ment of breach of contract and claimed that, under the terms of their agreement, Rugby Cement should have first asked ProForce to provide its additional personnel requirements before looking elsewhere. 10 Rugby Cement objected that the term "preferred supplier status" in its natural and ordinary meaning only conferred on ProForce the commercial advantage of being a supplier of labor approved by Rugby Cement and with whom Rugby Cement could choose to place business though without any obligation to do so." ProForce insisted that, ac- cording to the meaning ascribed to the term by the parties through the individuals who conducted the negotiations and/or the representation made as to its meaning by Rugby Cement, Rugby Cement was obliged to offer ProForce the opportunity to: 1) supply contract labor and hire equipment in preference to other suppliers and 2) not engage other suppliers of contract la- bor and hire equipment without first having offered ProForce a reasonable opportunity to satisfy Rugby Cement's requirements 2 in such respects.' A decision by the Senior Master to dismiss Rugby Cement's application to have the case determined summarily was over- 3 turned by the English High Court (Queen's Bench Division).' Justice Field, relying on a series of precedential cases, including Lord Wilberfors' Prenn v. Simmonds' 4 and Lord Hoffmann's In- vestors Compensation Scheme Ltd. v. West Bromwich Building Society,' 5 which excluded the admissibility of evidence of pre- contractual negotiations for the purpose of interpreting a writ- ten contract, held that ProForce was not entitled to adduce evi- dence of the negotiations between the parties and their subjective declarations of intent in support of the meaning it 9 Id. [11]. 10 Id. [14]. 11 Id. 12 Id. [19]. 13 Rugby Group Ltd. v. ProForce Ltd., [2005] EWHC 70 (Q.B.) (Eng.). 14 Prenn v.
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