Running head: VIENNA CONVENTION, UNIDROIT & HAMBURG RULES 1

International Trade Law – Vienna Convention, UNIDROIT and Hamburg Rules

Pooja Jobanputra

Northern College at Pures

Abstract

In the current situation, on account of the cross-border trade, contracting parties versed in

business commonly stipulate which national law oversees the legal relationship between the

parties. In any case, within the extent of their decision of the law that would govern their

contract, they normally neglect to all the more explicitly state which national laws and treaties

are planned to be secured or prohibited by their choice of law. The parties are then under the

impression that they are secured by the national code of obligations that they know of.

This paper throws light upon the various organizations and conventions that regulate treaties

between states and also establish comprehensive rules, procedures, and guidelines. They also

draw a uniform set of rules governing the sale of goods across borders. The following

information includes the meaning, scope, legal framework and business implications of the

Vienna Sales Convention, UNIDROIT and Hamburg Rules.

International Trade Law – Vienna Convention, UNIDROIT and Hamburg Rules

I. Vienna Convention (CISG)

The Vienna Sales Convention - formally, the “United Nations Convention on Contracts

for the International Sale of Goods” or, “CISG” is an international treaty on the determinative

law governing the sale of goods globally. It was finished up on 11 April 1980 in Vienna.

Meanwhile, 85 nations - including Switzerland and most Western exchanging countries - have

endorsed the CISG and have also pronounced the CISG to comprise some portion of their

national law, with the end goal that the Vienna Sales Convention has become one of the most

significant State treaties. It plans to harmonize international laws in the cross-border sale of

goods. The Vienna Sales Convention does not administer which nation's law applies to a specific

legitimate relationship. Rather, it sets out arrangements that directly govern the rights and

commitments of the contracting parties. (Stussi & Varel, 2007)

The Vienna Sales Convention shall apply to contracts for the international sale of goods,

provided that the seller and the purchaser have their place of business or habitual residence in the

different Contracting States. Similarly, the Vienna Sales Convention shall apply to contracts for

the international sale of goods, provided that the rules of private international law of the court or

its State referred to by one of the parties require the application of the laws of another State

which has ratified the Vienna Sales Convention. Consequently, the Vienna Sales Convention

may apply even if only one party has its place of business in a Contracting State or none of the

parties.

For example, if a vendor residing in Liechtenstein and a buyer residing in India declares

that Swiss law applies to an agreement based on the choice of Swiss law, then the Vienna Sales

Convention also applies automatically to a contractual relationship. This applies even though the
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Vienna Sales Convention has not been ratified by either Liechtenstein or India and the

Contracting Parties are not domiciled in a Wien Sales Convention Contracting State.

In an international context, the Vienna Sales Convention only refers to sales and supply

contracts to the degree that the arrangement involved includes transporting goods. This does not

apply to purchases by consumers, i.e. the sale of goods for personal use. On the other hand,

whether or not the goods already exist or still have to be manufactured is irrelevant. The Vienna

Sales Convention also does not apply in the following areas: sale via auction, sale via execution,

sale of securities or means of payment, sale of seagoing vessels and aircraft and sale of

electricity. (Varel & Stussi, 2007)

The CISG governs contracts between private organizations for the international sale of

goods, barring direct customer sales and service sales, including sales of specific predefined

kinds of products. It applies to contracts between parties with different Contracting States, or

where private international law guidelines result in the application of a Contracting State's law. It

could also be enforced by way of resolution of the parties. Some matters relating to the

international sale of goods fall outside the scope of the Convention. For example, the validity of

the agreement and the effect on the goods sold by the agreement. The second part of the CISG

manages the formation of the agreement, which is concluded by the trading of the offer and

recognition. The third part of the CISG administers the agreements ' obligations. The sellers '

commitments include delivery of goods, by confirming the quantity and quality of the goods and

the related documents and by transferring the goods to the goods. The purchaser's obligations

include the payment and distribution of the items. Besides, this section provides guidance on

solutions for contract violations. The aggrieved party can demand results, claim damages or

withdraw from the contract if there is a fundamental violation to occur. Specific guidelines for
VIENNA CONVENTION, UNIDROIT & HAMBURG RULES 5

the direct transfer of risk, anticipatory breach of contract, damages, and exemption from the

execution of the contract. At the end of the day, while the CISG allows freedom of the type of

contract, States may require a composite structure.

CISG applies only to international trade and transactions and does not comply with the

rules of private international law for those contracts which fall within its scope of application.

International contracts which fall outside the scope of application of the CISG would not be

affected by the CISG. Domestic sales contracts are not regulated by the CISG and are controlled

by domestic law. (“United Nations”)

II. UNIDROIT

UNIDROIT is an international intergovernmental body with its headquarters in Rome. Its

primary goal is to study the requirements and build techniques for modernizing, harmonizing and

integrating private and commercial law among States and groups of States, and to draw up

common legal instruments, principles, and rules for achieving those goals. It was established in

1926 as an auxiliary body of the League of Nations, the Institute was re-established in 1940,

following the death of the League, based on a multilateral agreement, the UNIDROIT Statute.

The UNIDROIT Principles comprise of a non-binding restructuring of the overall portion of

international contract legislation. (“Model Clauses”, 2019).

The PICC Preamble states that the Principles provide for general rules for international

trade contracts. The Preamble of the Principles ' Commentary section states that international

contracts include only those cases in which there is no international element whatsoever, for

example when all relevant components of the contract in question relate to only one country.

One of PICC's main concepts is that the parties may indicate more exactly, during

contract implementation or in cases of dispute, how they wish to use the UNIDROIT Principles.
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The PICC is implemented by four principal methods in a contract. The parties should choose

one of the following, in line with their ultimate aim:

i. The Parties shall be entitled to choose the UNIDROIT Principles as contract law rules.

ii. The contractual terms of the Parties may be included in UNIDROIT Principles.

iii. When parties select the latter CISG, they can refer to the UNIDROIT Principles, which are to

be read and supplemented.

iv. The parties may refer to UNIDROIT Principles for interpretation and supplementation of the

applicable domestic law, including any uniform instrument of international law incorporated into

that law.

In order to decide which method is more appropriate for the parties, the parties should

have extensive knowledge of the advantages and disadvantages of each of the above.

Apart from the method of implementing the UNIDROIT principles, the parties should

specify the timing of implementation. Per their objective, the parties may choose one of two

different moments for execution, one for inclusion and one for use after the occurrence of a

dispute. (Guzeloglu & Kurban, 2017).

III. Hamburg Rules

The Hamburg Rules of Procedure were adopted in Hamburg on 31 March 1978 and

entered into force on 1 November 1992. The UN Sea Transport Agreement was adopted by the

Hamburg Rules. They were drafted largely as a response to developing nations ' concerns that, in

some respects, the Hague rules were unfair. These concerns stem primarily from the fact that

they were seen as being drawn up by the mainly' colonial maritime nations' and were intended to

protect and propagate their interests at the expense of other nations. The UN has responded to

this concern by drafting the Rules of Hamburg. These rules go way beyond a simple amendment
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of the Hague-Visby regime, and the approach to liability has been significantly different.

(“Hamburg Rules”, 2018).

The provisions of this Convention shall apply to all sea carriage contracts between two

separate States, if:

i. The loading port as provided for in the sea shipping contract is situated in a Contracting State.

ii. The discharge port as provided for in the sea shipping contract is located in a Contracting

State.

iii. One of the optional discharge ports provided for in the sea shipping contract is the actual

discharge port and that port is located in a Contracting State.

iv. A bill of lading or other document attesting to the contract of carriage by sea is issued in a

Contracting State.

v. A bill of lading or other document attesting to the contract of carriage by sea provides that the

provisions of this Convention or the laws of any State giving effect to them shall govern the

contract.

The provisions of this Convention shall apply without reference to the ship's nationality,

the carrier, the actual carrier, the shipper, the consignee or any other person concerned.

Charter-parties are not subject to the provisions of this Convention. However, where a

lading bill is issued according to a charter party, the Convention's provisions apply to such a

lading bill if it governs the relationship between the carrier and the lading bill holder, not the

charterer.

If during the agreed period, a contract provides for the future transport of goods in a

series of shipments, the provisions of this Convention shall apply to each shipment. However,
VIENNA CONVENTION, UNIDROIT & HAMBURG RULES 8

where a shipment is made under a charter party, the provisions of paragraph 3 of this Article

shall apply. (“Hamburg Rules”).

The following problems in the existing rules were identified and specifically flagged up

by UNCTAD before the drafting and negotiation of the Hamburg convention.

i. Vague and ambiguous wording in the rules of the Hague and Hague / Visby complicating the

allocation of liability for loss or damage to cargo; This is a complaint from both carriers and

cargo owners who would both benefit from clearer regulatory wording.

ii. Continued use in bills of exemption and limitation of liability by an invalid carrier or of

dubious validity following the rules of Hague and Hague / Visby.

iii. The rules on ocean transport exemptions in Lake / Visby for losses that are within the control

of the carrier and should, therefore, take the carrier into account, as excluded from liability.

These include exemption from liability for negligence on the part of servants and agents in the

navigation and management of the vessel, exemption from losses due to marine hazards, etc.

iv. Use of undetermined and uncertain terms in the Hague / Visby rules, such as' reasonable

deviation,'' due diligence,'' due diligence,'' in any event,'' loaded on' and' discharge.'

v. Uncertainty regarding the seaworthiness requirements of the vessel.

vi. The low limit of monetary liability for loss of the Hague Rules, which was admittedly

addressed and improved in the current set of Hague / Visby Rules.

vii. The unfairness of jurisdiction and arbitration clauses in the manner in which they operate

between carriers and shippers in weekly bargaining positions.

viii. I Lack of clarity and protection for cargoes requiring special towage, adequate ventilation or

deck shipment, etc.

ix. Clauses intended to allow carriers to divert and transit cargo or land it in alternative ports at

the expense and risk of the shipper.

The developing countries were able to persuade the other members of UCTAD to review

and improve the adequacy of the current Hague / Visby rules as a result of these concerns, and it

was this review and examination that led to the drafting of the Hamburg text. The main concerns

that were put together to address the Hamburg Convention were:

i. The establishment of a fair balance of risk allocation between carriers and shippers in the

formulation of liability rules;

ii. Rectify the loopholes, uncertainties and other ambiguities set out in the Hague / Visby

Regulations.

iii. That the burden of proof is established with certainty.

iv. The following areas should be revised and extended:

1. Responsibility for loss or damage to cargo for the entire period under the control of the carrier.

2. The Scheme of Responsibilities, Liabilities, Rights and Immunities' in the Rules of Hague /

Visby and their exclusion shall be reviewed in full.

3. Jurisdiction, and choice thereof.

4. Deck cargo, live animals and transshipment responsibilities.

5. Extensions of the limitation period.

6. Definitions.

7. Elimination of invalid clauses in lading bills 8) Deviation, Seaworthiness and Unit Liability

Limitation.

Therefore, UNCITRAL and UNCTAD were very concerned with the above-mentioned

issues when the Hamburg Convention was first drafted. What came out of this process was a new
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set of rules that sought to clarify their scope and application, something that up to that point had

been a major problem with the Hague / Visby Rules.

References

Stussi, J. and Varel, Y. (2007). Attention! Vienna Sales Convention. Staiger.

United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980)

(CISG). https://uncitral.un.org/en/texts/salegoods/conventions/sale_of_goods/cisg

Vienna Convention on the Law of Treaties.

https://en.wikipedia.org/wiki/Vienna_Convention_on_the_Law_of_Treaties

United Nations Convention on Contracts for the International Sale of Goods.

https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/19-

09951_e_ebook.pdf

Model Clauses for the use of UNIDROIT Principles of International Commercial Contracts

(2019). https://www.unidroit.org/instruments/commercial-contracts/upicc-model-clauses

Guzeloglu, A. and Kurban, T. (2017). A brief overview of UNIDROIT Principles of

International Commercial Contracts (PICC). Mondaq.

UNIDROIT. https://en.wikipedia.org/wiki/UNIDROIT

UNCITRAL, Hague Conference and UNIDROIT texts on Security Interests.

https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/uncitral-

hcch-unidroit-e.pdf

Hamburg Rules for International Carrier (2018). https://www.lawteacher.net/free-law-

essays/international-law/hamburg-rules-for-international-carriage.php

Hamburg Rules. https://en.wikipedia.org/wiki/Hamburg_Rules

United Nations Convention on the Carriage of Goods by Sea, 1978 (Hamburg Rules).

https://uncitral.un.org/sites/uncitral.un.org/files/media-

documents/uncitral/en/xi_d_3_e.pdf
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Hamburg Rules – United Nations Convention on the Carriage of Goods by Sea, 1978.

http://www.admiraltylaw.com/statutes/hamburg.php