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The Concept of Fundamental Breach and Avoidance Under CISG

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The Concept of Fundamental Breach and Avoidance Under CISG The Concept of Fundamental Breach and Avoidance under CISG A thesis submitted for the degree of Doctor of Philosophy By Amir Al-Hajaj School of Law Brunel University 2015 Abstract This study explores the concept of fundamental breach and the remedy of avoidance under the CISG. It examines CISG literature and case law in the area of avoidance and identifies several theoretical and practical issues associated with the current understanding of avoidance as a remedy of last resort. Almost every aspect of the CISG is open to interpretation because there is neither a higher court to ensure its uniform application nor official guidance on disputed provisions. This fact is very clear with regard to the remedy of avoidance and the concept of fundamental breach. This study addresses the legal and practical problems associated with this area of research. This study proposes that the current understanding of the CISG’s remedy of avoidance as a remedy of last resort is not truly reconcilable with the legal practices in this area. Courts and arbitral tribunals have occasionally ruled in favour of avoidance without discussing whether there was still a possibility for the aggrieved party to benefit from the defective performance in some other way. This study shows that in cases where the right to avoid the contract arises, whilst the principle of favor contractus should not be neglected, it plays a far less significant role than other CISG general principles such as protecting trust in international trade, the good faith principle, reasonability, the principle of full compensation and the principle that promises must be observed. By employing the fundamental breach that is based on depriving the promisee of his legitimate expectations as seen from the promisor or a reasonable promisor’s perspective, the CISG provides judges and arbitrators with ample tools to apply their discretion on a case by case basis in order to judge whether avoidance was rightfully declared. There is no single abstract rule that governs the fundamentality of the breach under the CISG. a Declaration This thesis has not been accepted in any previous application for a degree. The work on which the thesis is based has been done entirely by the candidate. b Acknowledgements I gratefully thank my academic advisor, Professor Dr. Holger Sutschet, for his supervision, advice and guidance from the very early stages of this research. I am sincerely grateful to him for sharing his illuminating views on the issues relating to this project whilst allowing me the freedom to work in my own way. My sincere gratitude also goes to Prof. Dr. Muhammed Korotana for his constructive comments on this thesis and offering me valuable advice towards its completion. I also acknowledge Ms. Claire Mazer and Mr. Paul Bracken and the library staff of Brunel University for providing guidance with regard to making the best use of library resources and advice with regard to the writing style and structure of the research. Words fail me to express my appreciation to the examiner committee for providing valuable recommendations that improved this research. Finally, I would like to thank everybody who was important in the successful realization of this thesis as well as expressing my regret that I could not mention each person individually. c Dedication For my father, in memoriam d Cases Acrylic Blankets Case Appellate Court Koblenz, Germany (31 January 1997) Airbag Parts Case Appellate Court Dresden, Germany (11 June 2007) Alain Veyron v Ambrosio Appellate Court Grenoble, France (26 April 1995) Antique Jaguar Sports Car Case Appellate Court Karlruhe, Germany (14 February 2008) Apple Juice Concentrate Case Appellate Court Stuttgart, Germany (12 March 2001) Arens Sondermaschinen GmbH v Smit Draad/Draad Nijmegent BV Netherlands (7 October 2008) Gerechtshof [Appellate Court] Arnhem Australian Raw Wool Case CIETAC Arbitration Proceedings, China (6 January 1999). Auto Case Appellate Court München, Germany (19 October 2006) Automobile Case Appellate Court Naumburg, Germany (27 April 1999) Automobile Case CIETAC Arbitration Proceedings, China (December 2006) Automobile Case District Court Freiburg, Germany (22 August 2002) Bacon Case District Court Bielefeld, Germany (18 January 1991) Banks Hardwoods Florida LLC v Iglesias SA Federal District Court Florida, United States (29 October 2009) Bedial v Müggenburg Appellate Court Argentina (31 October 1995) Beijing Light Automobile Co v Connell Stockholm Chamber of Commerce Arbitration Award (5 June 1998) Bielloni Castello v EGO (Printer Device Case) Appellate Court Milan, Italy (11 December 1998) BRI Production ‘Bonaventure’ v Pan African Export Appellate Court Grenoble, France (22 February 1995) Case 196/1997 Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry (22 October 1998) Case 9978 ICC Arb (March 1999) Case On Apparatus For The Reduction Of Consumption Of Gasoline Appellate Court Castellón, Spain (21 March 2006) e Case Resolution No 7-P Constitutional Court of the Russian Federation (27 April 2001) Catalogue Case Commercial Court Zürich, Switzerland (21 September 1998) Cathode Ray Tube Case District Court Strasbourg, France (22 December 2006) Chemical Fertilizer Case ICC Arb Case No 8128 (1995) Circuit Boards Case Appellate Court Hamburg, Germany (5 October 1998) Clothes Case District Court Kassel, Germany (22 June 1995) Clothes Case District Court Oldenburg, Germany (27 March 1996) Clothes Case Lower Court Ludwigsburg, Germany (21 December 1990) CNC Machine Case Appellate Court Valais, Switzerland (21 February 2005) Cobalt Sulphate Case Supreme Court Germany (3 April 1996) Cocoa Beans Case Appellate Court Lugano, Cantone del Ticino, Switzerland (15 January 1998) Coke Case Appellate Court München, Germany (2 March 1994) Colour Concrete Block Production Line Case CIETAC Arbitration Proceedings, China (30 June 2007) Computer Components Case District Court Heidelberg, Germany (3 July 1992) Computer Motherboard Case Appellate Court Paris, France (7 October 2009) Computer Software and Hardware Case Commercial Court Zürich, Switzerland (17 February 2000) Conservas La Costeña v Lanín Compromex Arbitration Proceeding Mexico (29 April 1996) Copy Paper Case Appellate Court Lugano, Switzerland (12 February 1996) Cutlery Case Commercial Court Switzerland (26 September 1997) CV BV v W Bezirksgericht St Gallen, Präsidium (3 July 1997) Damstahl AS v ATI srl Højesteret (Supreme Court), Denmark (15 Feb 2001) Delchi Carrier v Rotorex Federal Appellate Court (2nd Circuit) United States (6 December 1995) Designer Clothes Case Appellate Court Köln, Germany (14 October 2002) f Diversitel Communications Inc v Glacier Bay, Inc Supreme Court of Justice Ontario, Canada (6 October 2003) Dividing Wall Panels Case Supreme Court Austria (29 June 1999) Downs Investment v Perwaja Steel Supreme Court of Queensland, Australia (17 November 2000) Downs Investments v Perwaja Steel Supreme Court of Queensland, Australia (12 October 2001) Ego Fruits v La Verja Begastri Appellate Court Grenoble, France (4 February 1999) Electrical Appliances Case ICC Arb Case No 8769 (December 1996) Fabric Case Appellate Court Bamberg, Germany (13 January 1999) Fabrics Case Appellate Court Düsseldorf, Germany (10 February 1994) Failure To Open Letter Of Credit And Penalty Clause Case ICC Arb Case No 7197 (1992) Fashion Textiles Case District Court München, Germany (3 July 1989) FCF SA v Adriafil Commerciale Srl Supreme Court Switzerland 4C.105/2000 (15 September 2000) Floor Tiles Case Appellate Court Stuttgart, Germany (28 February 2000) Foamed Board Machinery Case ICC Arb Case No 7585 (1992) Foliopack v Daniplast Court of First Instance Parma, Italy (24 November 1989) Frozen Bacon Case Appellate Court Hamm, Germany (22 September 1992) Frozen Meat Case Appellate Court Braunschweig, Germany (28 October 1999) Frozen Pork Case Appellate Court Frankfurt, Germany (29 January 2004) Frozen Stockfish Case Appellate Court Pontevedra, Spain (3 October 2002) Furniture Case Appellate Court Oldenburg, Germany (1 February 1995) Furniture Case Appellate Court Oldenburg, Germany (28 April 2000) Furniture Leather Case Appellate Court München, Germany (15 September 2004) Garment Case Commercial Court Aargau, Switzerland (19 December 1997) Globes Case District Court München, Germany (27 February 2002) g Hammer Mill Case CIETAC Arbitration Proceedings, China (May 2007) Hartman LLC v Grlic Plus LLC Appellate Court Montenegro (20 February 2007) Ice Cream Parlour Furnishings Case District Court Saarbrücken, Germany (26 March 1996) Implicit Agreement on Price Case Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, Russia 309/1993 (3 March 1995) In-line Skates Case Appellate Court Hamm, Germany (5 November 1997) Industrial Machinery Case District Court Reggio Emilia, Italy (3 July 2000) Internationale Jute Mattschappij v Marín Palomares Supreme Court Spain (28 January 2000) Iron Molybdenum Case Appellate Court Hamburg, Germany (28 February 1997) Italdecor v Yiu’s Industries Appellate Court Milan, Italy (20 March 1998) Jewelry Case Supreme Court Austria (28 April 2000) Knitware Case Lower Court Kehl, Germany (6 October 1995) L v SA C District Court Ieper, Belgium (18 February 2002) Leather Goods Case Appellate Court Munich, Germany (9 July 1997) Lumber Case Federal Supreme Court Switzerland (28 May 2002) Machine for Producing Hygienic Tissues Case Supreme Court Germany (3 November 1999) Machinery Case District Court Busto
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