REGULATION (EC) NO 593/2008 (ROME I) AND THE UN CONVENTION ON CONTRACTS FOR INTERNATIONAL SALE OF GOODS (VIENNA CONVENTION OR CISG) – BRIEF ANALYSIS OF THEIR SCOPE OF APPLICATION

Contractual relationships with an international element (that part of the relationship which links it with the legal systems of two or more countries) are a means for the implementation of the civil and commercial turnover that itself has long outgrown the boundaries of individual countries. The cross-border nature of these relationships poses the question of the applicable law – i.e. the legal rules of which country are to govern these relationships. It is best if the answer to that question is agreed upon by the contracting parties themselves, thereby bringing predictability and certainty to the contractual relationship. In the event this has not happened, the open question as to the applicable law is resolved with the resources and methods of the private international law. Important in this respect is the role played by Regulation (EC) No 593/2008 of the European Parliament and the Council on the applicable law on contractual obligations (Rome I) and by the UN Convention on Contracts for the International Sale of Goods (Vienna Convention or CISG). The following exposition will address the issue of their scope of application and especially the existing competition between them, given the similarity of the relationships they govern, on the one hand, and the difference in their legal nature, on the other.
The Vienna Convention is elaborated within the United Nations and is a multilateral international treaty. Its provisions are part of the internal law of the contracting states. It is characterized by direct rules which govern the relationship in essence without making reference to the individual country’s jurisdiction at all. These direct rules are not mandatory in nature, i.e. the parties may negotiate otherwise or exclude the implementation of the convention altogether. The Rome I Regulation, for its part, is a source of the European Union law (an independent legal order) directly applicable by the Member States, but containing rules of conflict – that is, rules that are not direct rules of conduct but refer to the specific country’s law whose legal rules are to be applied in the specific legal relationship. It is important to note that these rules of conflict are universal by nature and the law referred to will apply even if it does not fall within a Member State’s jurisdiction. Both sources of the private international law prioritize the autonomy of will – i.e. their provisions apply only if the contracting parties have not decided by themselves on the applicable law. In this connection there arises the question of whether when choosing the law of a country – a contracting state of the Vienna Convention – this does not amount to actually choosing the application of the Convention itself in as much as it is part of the internal legislation of the contracting states. The answer should be negative as it is assumed that the parties tacitly exclude the application of the Convention, since the choice of applicable law makes sense only if the law objectively applicable in the specific case is excluded. That said, however, the court will have to find out the actual intention of the parties – they may not have meant for the Convention not to apply.
What relationships do the two sources apply to and how much does their scope of application overlap? The provisions of Regulation No 593/08 refer to obligations arising from civil or commercial law contracts – whichever type of contract is irrelevant. Explicitly excluded from the contract’s scope are issues relating to the legal status or capacity of natural persons or issues arising from family relationships and duties to provide maintenance. Moreover, the Regulation doesn’t apply to taxes, customs, and administrative matters, as well as matters relating to the law of companies, associations and corporate bodies. The question of the pre-contractual liability is also outside the material scope of the Regulation and is settled by another source of EU law – Regulation No 864/2007 on the law applicable to non-contractual obligations (Rome II). On the other hand, the Vienna Convention applies to contracts for the sale of goods between parties whose places of business are in different Contracting States or when the rules of the Private International Law lead to the application of the law of a country – contracting party. The criterion “place of business” has been preferred over “place of registration” of a legal entity or “the address” of a physical person. In case a party to the contract has more than one place of business, the relevant place of business is the one with the closest relationship to the bilateral transaction. The habitual residence would be relevant only when a party does not have a place of business, i.e. the actual state of affairs is being taken into account. Thus, for example, the Vienna Convention would be applicable to a contract concluded between two legal entities registered in one and the same state, with one of them however having a place of business in another contracting state. What is more – the goods could still be on the territory of one of the states, since that is not a criterion for the application of the Convention. On the other hand, the Convention stipulates that if the place of business of the parties is located in different states, this fact would be of no relevance unless the fact was evident from the contract or from some other information disclosed by the parties. However, should the parties have been aware of said fact which may not have been evidenced in the transaction, then applicable will be the Vienna Convention since essential for the legal consequences of the contract is the true will, respectively the knowledge of certain facts that influenced the constitution of that will. Expressly excluded from the Convention’s scope of application is the sale of goods for personal, family, or household use – a fact which essentially confines the application to contracts of commercial sale. The Vienna Convention doesn’t apply to sales by auction, sales of stocks and shares in a company, as well as to contracts in which the predominant part of the obligations of the party furnishing the goods is the supply of labor or a service.
The inference to draw from the thus described areas of application of the two sources is that the scope of application of the Vienna Convention is narrower than that of the Regulation. What if a contract meets the application criteria of both acts – which of the two acts should apply? In this hypothesis, the Convention should be given priority because it is part of the domestic legislation of the contracting states and provides a clear answer as to the applicable law; its provisions are substantive, which means that there is no need to make reference to a particular national legislation. If the issues that are excluded from its substantive scope fall within the scope of Regulation – Rome I – they will be governed by the latter, and should that be not applicable, then the issue will have to be resolved in accordance with the provisions of the Private International Law.
The advantages of the Convention over the Regulation may be substantiated with other arguments as well. By virtue of Art.25, para 1 and 2 of Regulation 593/2008, the same takes precedence over the provisions of international treaties that bind solely and exclusively Member States of the Community. In case, however, one or more non-EU Member states is/are a party to an international treaty, the latter will be unaffected by Regulation 593/2008, which means that in the event of a discrepancy between the Treaty provisions and those of the Regulation, the Treaty provisions will prevail in respect of the issues concerned. Parties to the Vienna Convention are a number of states which are not EU members, which excludes the Convention from the scope of application of Art.25, para 2 of Regulation 593/2008. Another fact that should also be accounted for is that the Convention contains substantive rules – in contrast to the rules of conflict; Moreover, the Convention has a specific scope of application related to the regulation of a very limited class of relationships – those in connection with the international sale of goods, and the Convention determines independently the situations of the Private International Law in which it will apply – therefore, it is a special law which prevails over Regulation 593/2008.