Transnational Commercial Law (TCL) aims to facilitate cross-border business transactions by clarifying and improving rules governing international transactions. TCL draws from national private law, international treaties, and other sources. The document analyzes the legitimacy and scope of various terms used to describe the legal framework for international business, such as "International Commercial Law" and "International Trade Law". It also discusses the status of TCL sources before national courts and arbitral tribunals. National courts apply private international law rules and treaties have the force of applicable national law. Arbitral tribunals have more flexibility and treaties directly have the status of law.

1. i) If you were asked to state the legitimacy of the terminology
“Transnational Commercial Law” in comparison to more
traditional divisions of the law of international business
transactions how would you state it ?
Over the last decades, the rapidly evolving and constantly altering
complex reality of international commerce has intensified the old demand of
the parties involved (merchants, companies, states, national and international
trade organizations and fora) to operate on stable legal ground. According to
a very popular, yet not undisputable, view, “Harmonisation” of Commercial
Law is the key means of promoting and facilitating cross-border business
transactions. This broad term refers to a wide range of activities aiming to
overcome difficulties deriving from the diversity or even contradiction between
relevant national legal rules. 1
States have actively served the needs and practices of the increasingly
globalized business community exercising their authority as national
legislators and as contracting parties in bilateral and multinational treaties.
Their determination to support and facilitate international commercial
relationships has been depicted in national legislation through the wide
adoption of legal texts developed by international organizations and
committees to promote harmonization of law governing international business
transactions, e.g. UNCITRAL model law on International Commercial
Arbitration. In addition to that, states ,acting as members of the international
community, have negotiated and concluded binding uniform legal instruments
concerning disputes arising out of international commercial contracts, aiming
at (a) increasing predictability and certainty in private international law
matters, jurisdiction, determination of applicable law, recognition and
enforcement of foreign judgements and international arbitral awards, e.g. the
Hague Convention and (b) developing uniform substantive law, e.g. the CISG.
Furthermore, the European Union, an institution originally established
to elaborate and strengthen the economic cooperation and commercial
1
Twigg-Flesner, C. (2011) Some Thoughts on the Harmonisantion of Commercial Law and the Impact
on Cross-border Transactions in Boundaries of Commercial and Trade Law, Villalta Puig, G.
(editor),Sellier European Law publishers GmbH, Munich.

2. relationships within Europe, in the last decades has served the same goals
through its legislative processes, “harmonization” of the laws of member
states through Directives and “uniformity” of law through Regulations.
In parallel with the above complex legislative process and the
consequent progress in relevant commercial court litigation and international
commercial arbitration, independent scholars and international organizations
are working on defining and analyzing the legal frame of International
Commerce. Their work has resulted in various divisions of the law of
international business transactions. Not surprisingly, much ambiguity and
controversy exists in matters of terminology and definition of exact scope and
perspective of each division.
Transnational Commercial Law (TCL) is a modern term adopted to
describe the legal framework of business transactions with an international
element. The central aim of TCL is to facilitate a smaller community of
specialized entities, who deals in global markets and govern their
transactions2.
As specified by R. Goode, one of the main objectives of
Transnational Commercial Law is “namely to clarify and improve rules which
in national systems are non- existent , undeveloped, unclear or unsuited to
international transactions, and thereby remove impediments to crossborder
trading which parties cannot resolve by agreement under national law”3
. The
scope of TCL is by default commercial law, but not in its entirety. This field of
law focuses on cross-border transactions. It includes rules deriving from
national private law, international law (mainly international treaties governing
cross-border transactions), as well as a-national sources. TCL is broad in the
sense that includes substantive law governing cross border commercial
transactions, as well as the mechanism that determines jurisdiction,
applicable law, recognition and enforcement of judgments and international
arbitral awards concerning disputes within its scope.
Drawing specific lines between TCL and other more traditional
divisions of the law of international business transactions proves to be a
2
Baasch Andersen C.,(2009) The Interrelation of the CSIG and Other Uniform Sources, CISG
Methodology pp 216-217
3
Goode R., (2005) Rule, Practice and Pragmatism in Transnational Commercial Law, International &
Comparative Law Quarterly, pp 556

3. rather challenging task with highly disputable results. The author's attempt is
limited to the legitimacy of the term Transnational Commercial Law in
comparison with other more traditional divisions of law of international
business transactions.
'International' is a term traditionally and broadly used in legal theory.
Not surprisingly, the etymological analysis provides useful information with
regard to the meaning of the term in legal context. The preposition “inter”
which in latin means 'between' is combined, as prefix, with the noun “nation”,
which in legal terms equals to “State”. This results to a rather safe conclusion
that in legal context the adjective “international” refers stricto sensu to legal
situations and relationships between States. In accordance with that,
International Law applies to States (with no limitation), public entities
(exercising public authority), international organizations (within their mandate
which is defined in the treaty that has established them) and derives mostly
from treaties concluded by States and international customary law.
International Economic Law is a very broad law division of public
international law adressing cross- border economic relationships and activities
between states, international organizations and private actors4
. Its material
scope includes ,inter alia, dealings between states and resolution of disputes
between states by organs of the World Trade Center5
. In this term the
adjective “International” accurately reffers to and defines the content of this
“Law” and provides information about its subjects.
Furthermore, the use of the term “International” in the equally well-
established law division “International Trade Law” is succesfull and consistent
with its meaning, when the term encopasses States' relevant activities. The
scope or International Trade Law is narrower than that of International
Economic Law. The former provides only the legal framework for international
trade relationships, not for the entirety of international economic relationships.
The term “International Trade Law” has been formally adopted by major
international organisations. Most significantly, in 1966, “United Nations
4
Herdegen, M., (2013) Principles of International Economic Law, Oxford University Press, UK, p 3
5
Twigg-Flesner, C. (2011) Some Thoughts on the Harmonisantion of Commercial Law and the Impact
on Cross-border Transactions in Boundaries of Commercial and Trade Law, Twigg-Flesner, C.
,Villalta Puig, G. (eds),Sellier European Law Publishers GmbH, Munich.

4. Comission on International Trade Law” (UNCITRAL) was established to
“further the progressive harmonization and modernization of the law of
international trade by preparing and promoting the use and adoption of
legislative and non-legislative instruments in a number of key areas of
commercial law.” 6
, including dispute resolution, international contract
practices, transport, insolvency, electronic commerce, international
payments, secured transactions, procurement and sale of goods. The
term “International Trade Law'' has been also adopted and tradionally used in
connection with the functions of World Trade Organizaton (WTO) and its
predecessor General Agreement on Tariffs and Trade (GATT)7
. In the context
illustrated above, ”International Trade Law” is indeed “International” linked
with state activities within international organisations.
The term “International” is also found in the law division “International
Commercial Law” which describes a considerably broad and open-ended field
of law. It encompasses mostly private law rules governing issues such as
international sales and trade, money-laundering, international privacy laws
and consumer protection, international bribery, intellectual property and
copyright law, international and government contracts8
. From the point of view
priorly stated, this term lacks in legal accuracy and could be characterized as
rather misleading with regard to its scope ratione personae. Private parties,
not States negotiate, conclude and operate in the vast majority of situations
and relationships within its scope.
“Transnational” is the key word that strengthens the legitimacy of the
most recently introduced term “Transnational Commercial Law” in comparison
to the terms “International Trade Law” and “International Commercial Law”,
when used to define more or less the same field of law as TCL. Again,
etymology offers a great support to this view on legal accuracy. The latin
preposition “trans” means “beyond” and also illustrates movement and
change. In a legal context the term “Transnational” defines an area of law
6
UNICITRAL, (2014) A Guide to UNCITRAL, Basic facts about the United Nations Commission on
International Trade Law,2013,http://www.uncitral.org/pdf/english/texts/general/12-57491-Guide-to-
UNCITRAL-e.pdf
7
Herdegen, M., (2013) Principles of International Economic Law, Oxford University Press, UK, p 8
8
Journal of International Commercial Law (2014), http://www.georgemasonjicl.org

5. beyond state functions and relationships. This term is highly suitable for a law
that governs international business transactions, which are the main object of
TCL ratione materiae. The subjects of this legal universe are mostly
companies, merchants and other individuals involved in cross-border
transactions and rarely states, when acting as contracting parties in
international business dealings. In TCL “Transnational” defines “Commercial”
not “Law”. The sources of TCL, as will be presented in detail below under ii)
are open-ended. Although much progress has been made over the last
decades towards “harmonization” and “unification” in this field of law, until now
in legal practice its main source remains national law.
The choice of the term “Commercial” is successful in the term
“International Commercial Law” because it depicts its broad scope. On the
contrary, with regard to the actual scope of TCL, the term “Commercial”
leaves room for some scepticism. That is because “Commercial” is a familiar,
broad legal term that embraces a wide variety of branches of law, that are
excluded from TCL. As stated above, the scope of TCL is narrower and could
be defined more legitimately as “Law of Transnational Commercial Dealings“
or “Transnational Commercial Contract Law”.
The distinction between “international business transactions”,
“international trade law”, and “international economic law” is an issue of great
controversy ,which is not restricted to semantics9
. Greatly interesting, but far
beyond the theme of this essay, is the exploration of the subjective political,
social and economic views from which the diversity in terminology and in
definition of the scope of the law divisions mentioned above originate from.
9
Brand, R.( 1996) Introduction: Semantic Distinctions in an Age of Legal Convergence, University of
Pennsylvania Journal of International Economic Law., pg 3

6. ii) Illustrate the status of the different sources of Transnational
Commercial Law before national courts and arbitral tribunals
In the term “Transnational Commercial Law” the adjective
“Transnational” defines “Commercial”, which in this context equals to
“commercial dealings”. This observation simultaneously leads to two basic
conclusions (a) the material scope of TCL is cross-border commercial
dealings and (b) the noun “Law” remains undefined. The latter conclusion is in
accordance with the fact that the sources of TCL are open-ended. TCL rules
derive mostly from national and international law, EU Regulations and private
codifications concluded by international organizations. In addition to that, a
grand theoretical debate exists on whether the so called new lex mercatoria
and a variety of forms of soft law10
shall be included in the sources of TCL,
with the arguments of those against this view being more stable and
persuasive.
Furthermore, the status of the different sources of TCL before national
courts and arbitral tribunals diverges due to the clear distinction between the
nature and orientation of court litigation and arbitration. Both court litigation
and arbitration serve as jurisdictional mechanisms. In other words, both
national courts and arbitral tribunals have the power to determine what is the
applicable law between the parties with regard to a certain dispute. Both
judges and arbitrators examine the concrete facts of the dispute presented
before them by the parties and their legal representatives using the legal
instruments applicable11
. The conclusion of this work is a decision that is
binding for the parties according to law. When a dispute arises out of cross
border commercial transactions, national courts -by default- or international
tribunals -on the basis of valid arbitration agreement between the contracting
parties- have jurisdiction to settle it. Both organs decide in concreto according
to substantive relevant rules of TCL that apply to the dispute. The parties can
also make a binding- if valid- choice on the applicable law to the dispute. If the
10
Goode R., (2005) Rule, Practice and Pragmatism in Transnational Commercial Law, International &
Comparative Law Quarterly, p 541
11
With the exception of the judge or the arbitral tribunal asked to decide pro aeqo e bono

7. parties fail to reach an agreement, the competent court or arbitral tribunal
determines lex cause, applies it and renders its decision.
Unlike international arbitral tribunals, national courts are state organs
offering a public service of great importance. Key interest of states, especially
in civil law traditions, is legal predictability and certainty. Therefore, court
litigation is rooted in Private International Law (PIL), which is national law that,
inter alia, governs the applicable law according to conflict of law rules. As the
german pioneer of Private Law Theory, Friedrich Carl Savigny suggested, the
Rule of Conflict of Laws relies on two elements, the category of the
relationship and the connecting factor between the relationship and the legal
system that will provide the applicable law. The categories of legal
relationships have been universally adopted. On the contrary the criterion of
the connecting factor varies from legal system to legal system. In the
European Union the Rome Convention of 1980 and the relatively recent
Regulation (EC) No 593/2008 of the European Parliament and the European
Council (Rome I) have unified PIL on the law applicable to disputes arising
from transnational contracts based on Savigny’s traditional theory.
In general terms, in disputes arising out of international contracts
before national courts the need for legal certainty and predictability limits the
highly appreciated and respected, in a Transnational Commercial Law
context, principle of Party Autonomy. On the other hand, arbitration provides
an alternative to court litigation, a jurisdictional mechanism that has been
designed primarily to accommodate merchants. Although, each state has its
own legislation on arbitration, most oftenly national legislators take into
consideration that business people are capable of taking risks, even risks
concerning law. The above commonplace results to greater legal flexibility (in
comparison to court litigation) allowed when a commercial dispute with
international element is submitted before international arbitral tribunals. The
characteristics of court litigation and international arbitration illustrated above
attach consequences to the status of sources of TCL before them. Although,
jurisdiction per jurisdiction and forum per forum analysis ,or even case per
case analysis in fact and in law, are essential to draw safe conclusions, a
general overview of the issue remains interesting and useful.

8. The main origin of law governing cross-border transactions remains
national, either determined by the choice of the parties or by a relevant
decision of the national court or arbitral tribunal that has assumed jurisdiction
to settle the dispute. National law includes, firstly, rules produced through
national legislative procedures. Those rules, when applicable, govern the
dispute before both national courts and arbitrational tribunals with the power
each type of legal instrument has in the hierarchy of the national legal system
to which it belongs. Apart from that, when a certain national legal order
governs a commercial dispute with an international element, also national
customary law -if any rules exist concerning the certain dispute- is binding
with the status it holds within that legal system. Generally, in commercial court
litigation as well as in arbitration, anything that is perceived as law in the
applicable legal system is binding and has the status of governing law,
irrespectively of whether the dispute is brought before national court or
international arbitral tribunal.
From the entirety of International Law, only treaties that fall within its
material scope serve as sources of TCL. Due to diversity and lack of
continuity in business practices in matters of time and space, international
customary law is almost impossible to be created in transnational business
transaction and, moreover, to be proven in existence and scope. On the
contrary, the rules deriving from international treaties are crystal clear and
attempt to unify the law governing disputes on cross border transactions.
Prominent (among many) examples of successful uniform law treaties that are
sources of TCL are a) the Hague Convention of 15 June 1955 on the Law
Applicable to International Sales of Goods that unifies conflict of law rules on
international sales contracts b) the United Nation Convention on International
Sales of Goods (the CISG) that unifies substantive law on international sales
and c) the Cape Town Convention on Security Interests in Mobile Equipment
2001 (Cape Town Convention) that aims to facilitate lending for the
acquisition of certain mobile equipment by giving lenders greater confidence
in the enforceability of their security arrangements. Before national courts a
uniform law treaty is applicable with the force it has within the chosen by the
parties or determined by the court on PIL applicable legal system. Before
arbitral tribunals multinational or bilateral treaties have the status of law. In the

9. EU the rule is that treaties have positive legal effect within the legal reality of a
contracting state and prevail over contradictory domestic provisions. However,
in practice, the interpretation and application of a legal instrument concluded
for multiple jurisdictions may produce fresh divergences.
The special nature and characteristics of EU law make comparisons
and assimilations between EU law and international law problematic. EU
Regulations and Directives enjoy their status as law before national courts
and arbitral tribunals. Regulations, when applicable, govern the dispute with
their own high force, prevailing over rules of national origin. Directives on the
over hand apply with the force the national legislator has chosen for them
during the implementation process in an EU member state legal system.
The status of a- national law rules as sources of TCL before national
courts and arbitral tribunals is a more complex and controversial issue. In
addition to that, the status of a-national rules depends on their origin, clarity
and the legal predictability they offer. However, even the choice of accessible,
clear and codified rules, such as UNIDROIT Principles on International
Commercial Contracts, as governing law of a contract ,by rule, is not valid
before national courts. Despite the declared aim of UNIDROIT Principles,
which according to the preamble is to “represent a system of principles and
rules of contract law which are common to existing national legal systems or
best adapted to the special requirements of international commercial
transactions”12
, national courts do not accept them as law directly governing a
dispute on cross-border commercial transactions.
The European Union took a stance on the status of a-national rules
before EU member states courts in the Regulation (EC) No 593/2008 of the
European Parliament and of the Council on the law applicable to contractual
obligations (Rome I). During the negotiations that preceded the conclusion of
the Rome I, the proposal to allow the parties to choose a-national law rules
with some predictability as applicable law, was rejected. Under article 3 of the
Regulation, party autonomy is limited to the choice of a national system of law
and its substantive provisions including international and (in the case of EU
member states) EU law in force in that national legal order13
. Therefore,
12
UNIDROIT Principles on International Commercial Contracts( 2010), p 3
13
Carducci, G. (2011) The impact of the EU 'Rome I' Regulation on International Litigation and
Arbitration, A-National Law, Mandatory and Overriding Rules, ICC International Court of Arbitration

10. national courts of EU member states shall disregard an agreement of the
parties that the contract is governed by a-national law, e.g by the UNIDROIT
Principles, and determine the applicable law according to article 4 of Rome I
Regulation. Nevertheless, the a-national law on cross-border commercial
dealings may apply to a dispute brought before EU member state courts, if its
content happens to correspond to existing customary law within the national
legal system applicable. The possibility for the parties to incorporate a-
national rules, e.g. ICC Commercial Rules, to their contract is always open,
but it does constitute a choice of law. In that case, a- national rules have the
status of terms of the contract and apply only in the absence of a relevant
contradictory provision in the applicable law.14
The answer to the question whether a-national rules could govern a
dispute arising out of cross border business transaction before international
arbitral tribunals is significantly different. The UNCITRAL Model Law on
International Arbitration is not a binding international treaty, but is a very
useful legal instrument, the provisions of which have been broadly adopted by
national legislators. In article 28 (1), the UNCITRAL Model law grants the
parties the freedom to choose the applicable substantive law to their contract
in accordance with the principle of party autonomy. The referral to “rules of
law” instead of “law” is significant, because this choice of wording leaves room
for the direct choice of a- national rules of law by the parties as governing law
for the contract. This power, though, is not extended by article 28 (2) to the
tribunal. In the absence of a choice on the applicable law made the parties,
the tribunal shall use the conflict of law rules it considers applicable to
designate a national legal order15
. Section 23 of DIS Arbitration Rules (1998)
is based on the same logic regarding this matter. It sets unlimited choice,
including a-national rules, for the parties, in the absence of which tribunal
“shall apply the law of the State with which the subject-matter of the
proceedings is most closely connected”. Taking a step further, in article 21 (1)
of the ICC Rules of Arbitration in force from 1 January 2012, the term “rules of
Bulletin ,vol 22/No 2,p 36
14
Fentiman R., (2010), International Commercial Litigation, Oxford University Press, New York, pp
193-194
15
UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration,
(2012) United Nations, New York, p 121

11. law”, which includes a-national rules, is used equally when referring to the
choice made by the parties and, failing any designation by the parties, to the
choice made by the tribunal.16
Within the boarders of EU the Regulation Rome
I obliges only national courts of member states. Unless the parties have
expressly agreed upon its application, international arbitral tribunals seated in
EU or abroad are not obliged by it or any other set of conflict of law rules to
define the applicable law17
. Nevertheless, the competent arbitral tribunal to
settle a dispute in connection with a business contract with an international
element may considers to apply Rome I, because it offers very sophisticated,
fine tuned conflict of law rules to substantiate its choice.
Apart from the threshold, whether a rule shall govern a dispute as law
or not, the actual application of a rule relies on its position in the hierarchy of
the relevant applicable rules, which is determined by their typical force wihtin
a certain legal system. In court litigation the hierarchy of the applicable legal
instruments is relatively clear and in many aspects uniform worldwide. The
mandatory provisions of the applicable national law prevail over contract
clauses. The latter govern the contract in the absence of contradictory
mandatory provisions of the applicable law. International treaties and EU
Regulations normally prevail over domestic law provisions and regulate the
hierarchy between them by special provisions, e.g. article 90 of the CSIG18
.
The existence of overriding mandatory provisions of lex fori is significant
before national courts because these provisions -at least within EU- shall
prevail over simple mandatory as well as over overriding mandatory
provisions of the applicable law. 19
Public policy of the forum (national court) is
also an legal element that could exclude ex post the application the law
16
Article 21(1) provides that “The parties shall be free to agree upon the rules of law to be applied by
the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral
tribunal shall apply the rules of law which it determines to be appropriate.”
17
Kessedjian C. (2006), Determination and Application of Relevant National and International Law
and Rules on Pervasive Problems in International Arbitration, Mistelis, L. and Lew J. (eds),
Kluwerlaw International, Netherlands
18
“This Convention does not prevail over any international agreement which has already been or may
be entered into which contains provisions concerning the matters governed by this Convention,
provided that the parties have their places of business in States parties to such agreement.”
19
Regulation (EC) No 593/2008 of the European Parliament and of the Council on the law applicable
to contractual obligations (Rome I), article 9 (2)

12. chosen by the parties or by court on PIL with regard to a dispute arising out of
cross-border commercial transactions.20
International arbitral tribunals have no lex fori and only exceptionally
the law of the seat of the tribunal affects the dispute. This widely accepted
view, has the consequence that -unlike before national courts- before arbitral
tribunal no set of rules can be characterized as overriding mandatory
provisions of lex fori and therefore prevail over overriding mandatory
provisions of a different legal system.21
Apart from that, in arbitration the
respect of the agreement of the parties and the need to render an enforceable
award play the most crucial role, even in the hierarchy of the rules governing
the dispute. The well established trend of “denationalization of arbitration”
adds additional complexity and uncertainty in the task of designating the
hierarchy of sources of TCL before national tribunals. Even the actual
existence of a need for a priory hierarchy is debated and some argue that the
arbitral tribunals shall decide according to a case per case determined
hierarchy of rules. 22
20
Carducci, G., The impact of the EU 'Rome I' Regulation on International Litigation and Arbitration,
A-National Law, Mandatory and Overriding Rules, ICC International Court of Arbitration Bulletin ,vol
22/No 2 pp34-39
21
Carducci, G., see supra note 20
22
Kessedjian, C, see supra note 17

13. iii) Does the CISG:
a) fully replace private international law ?
b) increase the volume of international sales and effectively their legal
predictability ? How ?
c) govern directly the validity of sale contracts and the transfer of
ownership on goods?
d) govern trade usages and practices ?
e) combine the Civil law and the Common law traditions ? Provide
examples
a) The application of private international law remains the key legal
factor when a dispute with an international element arises in civil or
commercial matters. Private international law provides the answers on the
determination of jurisdiction, the applicable substantive law to the dispute and
the recognition and enforcement of foreign judgements. The CISG is an
international treaty that encompasses substantive uniform law provisions
within its limited scope. Its sphere of application is illustrated mainly in the
provisions of articles 1-6. Summarizing, the CSIG applies to the formation as
well as to the rights and obligations arising out of contracts for sale of goods
between parties seated in contracting states23
or when the application of
conflict of law rules designates the legal system of a contracting state as
applicable 24
.
It has been argued that Article 1 (1) (b) of the Convention should be
treated as a conventional rule of private international law25
. This view is highly
disputable, because article 1 (1) (b) does not provide a conflict of law
mechanism for the determination of the applicable law, that should have
included category and connecting factor. In the EU legal environment, failing
the parties to reach an agreement, the applicable law to the merits of a
dispute on a cross-border contract for the sales of goods is determined under
article 4 of the Rome I Regulation. If the requirements of article 1 (1) (a) are
not met, the CISG shall apply under article 1 (1) (b), if the outcome of the
23
The CISG, Article 1 (1)(a)
24
The CISG, Article 1 (1)(b)
25
Bridge M. (2013) International Sale of Goods, third edition, Oxford University Press, p 476

14. application of article 4 of Rome I is that the applicable law to the dispute is the
legal order of a contracting state.
Although the CISG does not define explicitly the term “contract for sale
of goods”, it is apparent that it is not applied in tort claims that are connected
with a contract within the scope of Convention. Furthermore, most consumers
sales and all sales or, more accurately, transfers of property by auction or
execution or otherwise by authority of law as well as sales of stocks, shares,
investment securities, negotiable instruments or money, ships, vessels,
hovercrafts or aircrafts and electricity are excluded explicitly from the scope of
the CSIG. Under the provision of article 4, the CSIG does not govern the
validity of the contract or of its provisions or of any usages nor the transfer of
property of the goods sold.
In the light of the above exceptions, a judge (or an arbitral tribunal)
settling a dispute arising out of an international contract for sale of goods
shall first decide under article 1 if the relevant concrete facts meet either the
criteria set out by the provisions of article 1(1) (a) or article 1(1) (b). If they do,
the judge shall then decide ,under articles 2 and 3, if the dispute falls within
the categories excluded from the scope of the CSIG. Finally, if under articles
1, 2 and 3 the CSIG is applicable, it shall be applied to the merits of the
dispute with the exception for matters of validity and transfer of property, as
defined in article 4 (a) and (b). The validity of the contract or of any of its
provisions or of any usage and the transfer of property are excluded and
,thus, not governed by the CSIG. On these specific matters, the judge shall
decide based on the relevant specific provisions of the applicable national law
that he or she will determine using the conflict of law rules of lex fori.
Under article 6 of the CSIG, the parties can also exclude its application
as a whole. In that case too, private international law rules shall indicate the
law that will govern disputes arising out of the contract. Despite the major
impact the Convention has on scholarship, in practice exclusion clauses
based on article 6 are not rare and prevent the application of the Convention
to transactions to which it would otherwise apply.26
The same article
26 Twigg-Flesner, C. (2011) Some Thoughts on the Harmonisantion of Commercial Law and the Impact on Cross-border
Transactions in Boundaries of Commercial and Trade Law, Twigg-Flesner, C.,Villalta Puig, G. (ed.),Sellier European Law
Publishers GmbH, Munich., pp 108

15. empowers the parties to derogate from not only the entirety, but also certain
provisions of the CSIG. In that event, in matters covered by the provisions
excluded, again a judge shall return to the general rule, which is applying
conflict of law rules to determine the applicable law.27
Finally, Article 7 (1) sets the guidelines on interpretation of the CSIG
and requires that “regard is to be had to its international character and to the
need to promote uniformity in its application and the observance of good faith
in international trade”. Nevertheless, in questions concerning matters within
the mandate of the Convention, which are not expressly settled in it, article
7(2) does not exclude the application of private international law. The
“internal gap” filling mechanism of the CSIG, relies on the general principles
on which the Convention is based. In the absence of such principles or if the
principles exist but fail to provide a satisfactory answer, according the
“external gap” filling mechanism of the CISG, the answer shall be based on
the law applicable according to private international law of the forum.28
As a concluding thought, the CSIG does not fully replace private
international law, nor has the potential to do so with regard to its nature as
substantial law and its limited scope. In addition to that even in matters within
its scope, private international law remains “the last refuge” in the resolution of
disputes within its mandate.
b. Law governing the contract for the sales of goods exists and,
moreover, is well elaborated and highly sophisticated in most national
legislations. Nevertheless, domestic law could prove to be unsuitable to
govern transnational commercial transactions or even to create new
impediments to their conclusion and function. The three basic arguments for
substituting various national rules with uniform substantive law are (a) the cost
for legal advice on the law the party is not familiar with, (b) the fact that
27
Bergsten, E.,(2009) Methodological Problems in the Drafting of the CISG in CISG
METHODOLOGY, Janssen, A., Meyer, O., (eds), Sellier European Law Publishers, pp 21-31
28
Magnus, U.,(2009)Tracing Methodology in CISG: Dogmatic Foundations in CISG
METHODOLOGY, Janssen, A., Meyer, O., (eds), Sellier European Law Publishers, pp 34-39

16. national law is developed with regard to the domestic commercial
environment, while transnational contracts may raise issues that cannot be
addressed by these rules and require a special set of rules and (c) domestic
law cannot be neutral for the parties, while uniform law specially intended for
transnational contracts can.29
The CISG contains uniform substantial law provisions and constitutes
an international law source of TCL. The sole fact that it has been ratified so
far by 83 states30
, indicates that its value as a legal instrument has been
commonly acknowledged. Indeed, the CISG is orientated towards the
resolution of an identified problem, which derives from the clear distinction
between a domestic sales contract and an international sales contract, which
greatly affects the conclusion and performance of the latter. Contracts for
international sales of goods are often concluded between parties that are
seated in different states and have been formulated their legal considerations
on matters relevant to the contract on the basis of diverse or, even, in some
aspects, contradictory legal traditions. Those parties and ,subsequently, their
transactions are facilitated by a special set of rules that combines diverge
legal and business traditions and addresses the special needs of contracts for
the international sales of goods.
The CISG provides “hard law” with indisputable authoritative quality
and neutrality. The choice of the CISG as applicable law, also eliminates the
question of “prestige” that is linked to this choice. Apart from that, the CISG
was negotiated and drafted by experts from all over the world. Their
collaboration and determination to overcome difficulties resulted to a legal
instrument of high quality with flexible and functional provisions.31
Taking into
consideration the above, it can be argued that this balanced and solid legal
ground offered by the CISG facilitates businesses operating worldwide and,
consequently, this may result in an increase of the volume of international
sales.
29
Twigg-Flesner, C. (2011) Some Thoughts on the Harmonisantion of Commercial Law and the
Impact on Cross-border Transactions in Boundaries of Commercial and Trade Law, Twigg-Flesner, C.,
Villalta Puig G.(eds), Sellier European Law Publishers, pp 103-125
30
http://www.cisg.law.pace.edu/cisg/countries/cntries.html (9.12.2014)
31
Fountoulakis C.,(2005) The Parties’ Choice of “Neutral Law” in International Sales Contracts,
European Journal of Law Reform, Vol. VII, no.3, pp 303-329

17. Furthermore, it is a rather common view that economy, including
international sales of goods, is affected by the “psychological” status of the
“players”, e.g. businesses, chambers of commerce etc. Predictability and
practicability are appreciated virtues in business transactions, so, accepting
the argument that the CISG increases the legal predictability and practicability
in the contracts included in its material scope and governed by its provisions,
this may affect positively the psychological status of the parties and, thus, the
volume of international sales. Despite the reasoning and the legitimacy of this
argument, one should not overstate it.
Businesses take into consideration various criteria when negotiating,
concluding and performing in international contracts. The legal criteria, in
most cases are not of critical importance, because the need to maximize profit
prevails on the business decision making process. However, an economic
analysis of the Convention adds that by regulating the formation of contracts,
legal warranties and expectation of damages, the CISG ”balances incentives
and optimal risk allocation, to maximize value of transactions to prospective
traders”32
.
c. Article 4 of the CISG expressly states that the Convention does not
govern “(a) the validity of the contract or of any of its provisions or of any
usages and (b) the effect which the contract may have on the property in the
goods sold.” This limitation in scope creates a demand for determination of
the law that will govern only these specific matters of a dispute, to which the
CSIG shall apply concerning any other matter.
Thus, the validity of the whole contract, any of its provisions or of any
usages shall be governed by the law determined by the court or arbitral
tribunal. In court litigation conflict of law rules of the forum shall apply and
provide the applicable law under the light of which matters of validity shall be
examined by the judge. Arbitral tribunals, as well, need to proceed and
exceptionally determine the applicable law to matters of validity of a contract
for international sales of goods that is otherwise governed by the CSIG. The
32
Cenini M. and Parisi M., (2009) An Economic Analysis of the CISG in CISG METHODOLOGY,
Janssen, A., Meyer, O., (eds), Sellier European Law Publishers, pp 170

18. tribunal should use conflict of law rules it considers applicable due to their
connection to the dispute or their force as general principles or choose the
applicable law directly without evident recourse to private international law.
Furthermore, for aspects of the dispute in connection with the transfer
of property based on the contract, again the answer shall be sought through
the conflict of law mechanism. In that case the property private international
law rules of the lex fori shall apply and determine the applicable law. In
arbitration, the applicable law in matters of transfer of property shall be
determined by the tribunal following the same course of actions illustrated
above.
d. Trade usages and practices are not disregarded by the CISG. Article
9(1) of the Convention does not give their definitions, but refers to the two
terms, making a clear distinction between them. It is mentioned that parties
are bound by any usage to which they have agreed and by any practices
which they have established between themselves.
Practices are established between parties in an individual business
relationship. Based on a continuous over time conduct of certain manner and
characteristics, the parties justifiably expect that in future cases the conduct
will not significantly alter, given the circumstances. When a practice is well
established, automatically both parties are bound to respect it.
Usages are binding for the parties, if they have agreed to them. The
consent for a usage can be both expressed and silent. In case that the
agreement on a usage has been made expressly, its application under the
CISG cannot be disputed. When parties consent to a usage under article 6, it
becomes binding as any other part of their agreement. In the absence of an
express agreement on the application of a usage, the assumption of a silent
agreement could provoke controversy. The existence of a silent agreement on
a usage can be based on the conduct of the parties during negotiations in
accordance to that usage or on some other solid argument connected with the
actual conduct of the parties.
In the absence of an express or silent agreement of the parties to a
usage, article 9 (2) CISG expands the application of a usage to a contract
between parties stating that “ the parties are considered, unless otherwise

19. agreed, to have impliedly made applicable to their contract or its formation a
usage of which the parties knew or ought to have known and which in
international trade is widely known to, and regularly observed by , parties to
contracts of the type involved in the particular trade concerned.”. Some argue
that article 9(2) of the CISG provides clarification setting requirements for the
implied silent agreement from article 9 (1).
Another view on article 9(2) is that it sets the extra conditions under
which parties are bound to usages they haven’t agreed on. Under article 9(2)
CISG , despite the fact that the parties have not expressly or silently agreed to
a certain usage, it still applies to their contract based on exceptional
circumstances. The decisive factor in article 9(2) is not the will of the parties,
but the normative power of the usages. If a certain usages meets the two
requirements set on article 9 (2) cumulatively, it shall apply to the contract. 33
The language used in the provision is restrictive aiming to limit its
application only when a usage has been widely known and also regularly
observed and the parties knew or ought to have known of the usage. The
particular trade in which parties are involved and the type of contract will
determine the objective applicability of such usages.
e. Common law is considered to be the ideal legal system for
merchants because is underlined by a philosophy of no interference with the
contracting parties’ will. It provides them with ample space to determine their
rights and obligations according to their special commercial needs and
wishes. Not surprisingly, the majority of transnational commercial contracts
between leading companies are governed by English or American Law on the
basis of a mutual agreement of the parties. In civil legal traditions the law
intervenes to the formation and function of the contract. As presented
previously under ii), the mandatory provisions of the applicable law, overriding
mandatory provisions or public policy of lex fori are desicive factors that
prevail over the wording or will of the parties depicted in the contract
safeguarding, inter alia, weak parties or public interests.
33
Bout, P.(1998) Trade Usages: Article 9 of the Convention on Contracts for the International Sale of
Goods, available at http://www.cisg.law.pace.edu/cisg/biblio/bout.html

20. The preparation, negotiations and drafting of the CISG lasted for many
years and went through various stages until it was concluded in April 1980. 8
international organisations and 62 states participated in the final drafting a
Convention hosted in Vienna. 34
Finding the balance in the combination of
those two leading legal traditions was one of the main objectives. The
success of the CISG indicates that this difficult goal was achieved.
Article 19 is an interesting example of common law and civil law
considerations on offer, counter-offer and acceptance of an offer combined to
produce a functional provision. Article 19 (1) sets the rule and is consistent to
the civil law approach according to which a reply to an offer that is positive but
contains additions, limitations or other modifications equals to a rejection and
counter offer. Article 19 (2) is closer to common law which is more flexible and
targeted to the conclusion of the commercial deal. Thus, this provision sets
an exception to the rule of 19 (1) setting standards for the additions,limitations
and other modifications made to the original offer to be considered counter
offer. It mentions that if they do not materially alter the offer and the offeror
does not object to them without undue delay, the contract is concluded. The
content of the contract is in that case the offer with the additions or
modifications made with the acceptance. The term “materially alters” remains
vague, although it is the heart of 19 (2). The last paragraph of the article
provides the balance between the previous two with a clear and broad
definition of which terms “materially alter” an offer including all important
aspects of a sales contract, price, payment, quality and quantity of the goods,
place and time of delivery, extent of one’s party liability to the other or the
settlement of disputes. In the end the “problematic” from a civil law point of
view exception is confined in minor alterations the original offer and the total
answer of the CISG can be accepted or tolerated be both common and civil
law scholars and practitioners.
Apart from that, the whole section II of the Convention on Damages,
but particularly article 74 illustrates the effort made to create uniform law that
can be applied in multiple jurisdictions. The principle of full compensation,
equal to the loss including loss of profit, has been, not expressly but clearly,
34
Φλαμπουρας, Δ. (2012), Η διεθνης πωληση στο ΔΙΚΑΙΟ ΤΩΝ ΔΙΕΘΝΩΝ ΣΥΝΑΛΛΑΓΩΝ,
Παμπουκης (επ.), Νομικη Βιβλιοθηκη, σελ. 295

21. adopted as the general rule and derives from the protective civil law
tradition.35
Nevertheless, the principle of mitigation of the loss which is part of
the common law tradition has influenced the provision. Thus, compensation
for damages is limited to the loss the party in breach forsaw or should have
foreseen.
Summarizing, the CSIG is a unique example of a binding legal
instrument providing uniform law for contracts for international sales of goods,
yet a result of compromise made concerning views on politics, economy and
law.36
35
Bridge, M.(2013) International Sale of Goods, third edition, Oxford University Press, p 607
36
Φλαμπουρα, Δ. (2012) supra note 34

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