The most significant agreement prepared to create a uniform universal sales law is United Nations Convention on Contracts for the International Sale of Goods, also referred to as Vienna Convention (“CISG”), dated 11 April 1980. CISG has entered into force on 1 January 19881, has been accepted without any reservation and has become applicable in Turkey as of 1 August 20112. In brief, CISG comprises of provisions regarding the establishment, performance and expiration of agreements relating to the international sale of moveable goods.
Although it has not yet gained adequate recognition in practice, CISG has major significance. Even though it is usually not referred to in agreements between contracting parties, CISG manages to find a field of application automatically. Thus, it is compulsory for all international business corporations to have full knowledge of CISG. In this compendious work, baselines of CISG will be handled (whereas the arrangements concerning the law of sales brought by the Convention will not be included.)
A. SPHERE OF APPLICATION OF CISG
1. Subject Matter of Application
Article 1 explains the subject matter of application of the CISG as follows:
“(1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States:
(a) When the States are Contracting States; or
(b) when the rules of private international law lead to the application of the law of a Contracting State.
(2) The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract.
(3) Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.”
Although CISG does not apply to the framework contracts that oblige parties to conclude series of sales contracts and preliminary contracts on sales contracts subject to CISG3; it applies to the sales contracts concluded as a result of exercising purchase, pre-emption and redemption rights4.
- CISG shall not be applied to the sale-purchase transactions between two companies whose places of business are in the same country.
- CISG shall be applicable if it is understood from the mutual consensus of the parties or from the agreement between the parties showing that the headquarters of both parties are in different countries.
- The application of CISG will not be affected if any or both of the parties are non-merchants; or if the sale-purchase agreement does not have a commercial or noncommercial nature.
- Despite CISG shall not be applicable to preliminary or framework contracts, it shall apply to sales contracts arising from exercising the rights of purchase, pre-emption and redemption.
Sales Contracts and Goods where CISG is not applicable
CISG does not apply to sales:
(a) Of goods for personal, family, or household use;
(b) By auction;
(c) By execution proceedings or otherwise by operation of law;
(d) By investment securities, bills of exchange, or money;
(e) Of ships, vessels, hovercraft or aircraft;
(f) Of electricity.
Though the application of CISG does not depend on whether the parties are tradesman or the nature of the agreement whether commercial or not, it shall not be applied to consumer sales as a rule5. However, there is an exception provided for this type of consumer sales: According to CISG, CISG shall be applied to the sales contracts if the seller does not know or is not obliged to know that the goods are purchased for this type of use, either at the time of execution of the contract or before its execution.
2. Sphere of Application Based on Time
CISG shall not be applicable unless a State, who ratifies any of 1964 Hague Conventions, denounces the former convention6. In these states, CISG will enter into force by the time the legal outcome of such denunciation notification exercises its effect7.
a. Date of Application of CISG to the Sales Contract executed between the Parties
As a rule, for a contract to be subject to the CISG, it is adequate for the contract to be signed after CISG has entered into force8. In other words, CISG applies to the sales contracts signed after the CISG’s date of entry into force. In that case, CISG is non-retroactive9.
3. Sphere of Application Based on Location
In order to apply CISG to international sales agreements; either the place of business of the parties’ must be located at a Contracting State or international private law must require the application of a Contracting Party’s law. Nevertheless, as it is a precondition for the business places of the parties to be located in different countries10, such condition shall be present for the application of CIS11.
Even though the sold goods have never been taken out of the country since their production during sales or even until consumption; CISG may be applied only if places of business of the parties are in different countries.12 However if both business places are located in the same country, CISG will not be applied even if this transaction effects several countries (e.g. goods delivered in another country)13. Yet subsidiary company’s place of business must be considered in an event of a sales contract with a subsidiary company that is associated with a parent company14.
In cases where the parties of the sales agreement have more than one place of business in multiple countries, selection of which one to be taken as a basis shall be determined according to article 10 of CISG. Article 10 states that "(a) if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract (b) if a party does not have a place of business, reference is to be made to his habitual residence." so the place of business that has the closest connection with the agreement and its performance shall be taken as a basis. In order to maintain the uniformity in determination of the closest connection, the place of business which ensures the application of CISG must be preferred15.
When the sales agreement is made by an agent; if it is direct representation, the place of business of the represented, if it is indirect representation the place of business of the agent shall be taken into consideration for the determination of whether or not the CISG will be applicabl16. In states that are a party to CISG, rules for the conflict of laws of that country shall not be applied but the CISG shall be applied directl17. Nevertheless this reservation binds only the courts of the countries that are a party to the Convention18. When the case is brought up in a court of a non-party state the judge is not obliged to apply CISG19.
Parties of the sales agreement being the citizen of the same country or a country that is not a member of CISG is not important with regard to the scope of application of the Convention20. Parties being merchants or commercial character of the agreement are only taken into consideration for the determination of the application of the Convention with regard to location21. Parties being merchants can be taken into consideration in other subjects such as the determination of the delivery periods of the seller22.
B. Changes in Turkish Law caused by CISG
With the acceptance of CISG by Turkey, the Turkish sales law became multi-headed. Whilst CISG is applied to international transactions, Turkish Code of Obligations numbered 6098 and Turkish Commercial Code numbered 6102 is applied to internal and commercial sales, with Law on the Protection of the Consumer numbered 6502 which is applied to the sales for consumers.
1. Adoption and Entry into Force of CISG in Turkey
Turkey adopted CISG with the “Approval Code” numbered 5870 and dated 2 April 200923. With the Cabinet Decree dated 11 March 2010, it has been decided to submit instrument of accession24 and Turkey has become a party as of July 2010. According to Article 99/2 of CISG, the Convention enters into force on the first day of the month following the expiration of twelve months after the date of the deposit of its instrument of ratification, acceptance, approval or accession. In accordance with this provision, CISG entered into force on 1 August 2011 in Turkey. Even though Turkey had become a party in 2010, CISG has been directly started to be applied to the international sales contracts with Turkey unless otherwise indicated by the parties. Hence CISG gained importance in Turkish Law.
2. Sphere of Application of CISG in Turkey
In case the parties agree on the law of a Contracting State as the applicable law, their requisition must be determined by using the method of judicial interpretation25 . For example, considering both parties have chosen Turkish law as the applicable law, Turkish law will be applied, although none of these parties have an establishment in Turkey or in any Contracting State, since CISG is a part of Turkish Law26. Nevertheless, in the event that parties agree on a more specific statement such as choosing the “Turkish Law of Obligations” as applicable law, CISG will be inapplicable27.
In case of a dispute over an international sale of goods contract, a Turkish judge shall first decide whether the matter of dispute is within the scope of CISG or not. If CISG is inapplicable then the Judge has to determine the applicable law based on the provisions of “International Private Law and Procedural Law” (law no. 5718). For issues which cannot be resolved under CISG, applicable law is the proper national law which is authorized by the rules of “conflict of laws”28 . In that case, it is possible for judge to refer to “International Private Law and Procedural Law” even if the CISG has been decided as the applicable law by the same judge. Because of the fact that CISG is not comprehensive enough to solve all questions of law, a need shall arise in order determine the applicable law based on the provisions of International Private Law and Procedural Law.
In principle, field of application of the Article 24 of “International Private Law and Procedural Law” (which regulates the applicable law about subjects such as; “basis of international treaties”, “basis of obligations of international treaties”, “formation of the contract, regulations, performance, material validity conditions”, “invalidities of declared intentions”, “risk of loss transfers” and “ breach of the contract”)29 is already extinct. However, it has to be pointed out that; Article 7 (about formation of the international sales contract), Article 32 (about validity of the international sales contract) and Article 21 (about effects of the sales contract to the ownership of the goods) shall still continue to be applied.
CISG does not apply to the liability of the seller for death or personal injury caused by the goods to any person according to Article 5. Consequently, the proper national law which is pointed out by the rules of private international law will be applied to this area of liability. If a lawsuit for such liability is filed in Turkey, governing law shall be the law of the habitual residence of the seller (or the workplace of the seller in case the contract is concluded as a result of commercial and professional activities) which is also the most connected law to the contract according to Article 24 of “International Private Law and Procedural Law”. Nevertheless, all other liability issues of seller (arising from sold goods) excluding the abovementioned ones are covered by CISG30. It should be noted that, if a lawsuit is filed not for a contractual liability issue but for a tort in Turkey, inherently, the governing law will be determined in compliance with Article 34 of “International Private Law and Procedural Law”.
3. Review of CISG from the Standpoint of Turkish Law
On interpretation of intentions of the parties, CISG has the same point of view with the “principle of trust” concept as also provided under Article 19 of “Turkish Code of Obligations numbered 6098” which has a predominant place in Turkish legal system31. It is conceivable to conclude that CISG cannot be applied to the contracts which contain a third party other than the “seller” and the “buyer” by taking Article 4 of the Convention into consideration. Nevertheless, if the contract of sale between parties is a “third party beneficiary contract”, for example if the “seller” and the “buyer” both agreed on delivering the goods to a third party because of the importance of parties’ mutual intention, CISG shall be applied to the contractual relationship between the third party too32.
Practitioners shall have to take into consideration the uniform application of the contract abiding by its international nature and retain the “policy of trust” in the course of interpretation of contract. Any rules or notions of a national law cannot be used as a source in the interpretation process of an international contract, even if that very contract has a role in that nation’s legal system. It is mandatory to consider the international nature of international contracts while performing the obligations of such contract by reason of the fact that international conventions take place in the international regulations of a national legal system. Otherwise, the law of the international sale of goods deviate from its “protecting the benefits of multinational parties on the international stage” aim and become estranged to legal relations consisting of international components. Likewise, it is already not very well known that CISG can be applied to the disputes between international parties. For this reason, the Convention instructs practitioners to interpret the Convention in a particular way other than the way that they interpret their domestic law. Therefore, practitioners should not take guidance of the regulations of national law and should construe the Convention within its distinctive borders.
As example, by the Article 4 of CISG; content of the conception and scope of issues such as “formation of a contract”, “the rights and obligations of the seller and buyer arising from the contract”, “validity of the contract” and “effects of the sale contract to the ownership on sold goods” can only be determined by interpreting the convention, but definitely not by applying the domestic law33.
Unification effort for the “international sales law” started in the current century and gets intensified since then. It made great progress in a period of more than 30 years since the acceptance and application of CISG. Even if it does not regulate the sale contracts in every aspect, it is beyond any doubt that the CISG has a great success on gathering the “international sales law” under a single understanding. The convention applies to most of the international sales at the present time, though in Turkey practitioners avoid to apply the convention by the reason of their lack of information about the convention. In fact, practitioners in Turkey have to be highly informed with respect to the regulations of CISG and should not choose to refuse its existence automatically. Otherwise, “international sales law” will become estranged to legal relations consisting of international elements and lose its purpose. Yet, the applicability of CISG shall be determined “ratione materiae” anyway.
By Bilge Binay Kanat, Senior Associate, Moral Law Firm
- ATAMER, Uluslararası Uygulama Alanı, s. 552; ERDEM, Uygulama Alanı, s. 21; TOKER, s. 136; MISTELIS, s. 10; ERDEM, Viyana Satım Sözleşmesi, s. 48.
- Resmi Gazete: T. 07.04.2010, Sa. 27545.
- ATAMER, Satıcının Yükümlülükleri, s. 37; ZEYTİN, s. 54; Zeytin, ön sözleşme ile asıl sözleşme arasındaki yakın ilişki sebebiyle ön sözleşmeye de Viyana Satım Sözleşmesinin uygulanabileceği görüşündedir, ZEYTİN, s. 52.
- ATAMER, Satıcının Yükümlülükleri, s. 37; ZEYTİN, s. 52.
- ATAMER, Uluslararası Uygulama Alanı, s. 554-555; ATAMER, Satıcının Yükümlülükleri, s. 54; ERDEM, Uygulama Alanı, s. 16; ERDEM, Viyana Satım Sözleşmesi, s. 42; ZEYTİN, s. 54.
- TOKER, s. 139.
- TOKER, s. 139.
- TOKER, s. 140-141; ATAMER, Uluslararası Uygulama Alanı, s. 559.
- TOKER, s. 140.
- Article 10 regulates cases such as one of the parties having more than one place of business. According to that, if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known or contemplated by the parties at any time before or at the conclusion of the contract. According to the very same article, if a party does not have a place of business, reference is to be made to his habitual residence. (Please refer to Honnold, s. 30–34 for examples and possibilities).
- Tiryakioğlu, BM Sözleşmesi, s. 194.
- ERDEM, , s. 33.
- ZEYTİN, s. 42; TOKER, s. 33-34; ERDEM, Viyana Satım Sözleşmesi, s. 33.
- ZEYTİN, s. 43.
- TOKER, s. 40.
- ZEYTİN, s. 42.
- MISTELIS, s. 16; ATAMER, Satıcının Yükümlülükleri, s. 51; TOKER, s. 42.
- TİRYAKİOĞLU, s. 195; ATAMER, Satıcının Yükümlülükleri, s. 51; TOKER, s. 42.
- TİRYAKİOĞLU, s. 195; TOKER, s. 42; ATAMER, Satıcının Yükümlülükleri, s. 51
- ATAMER, Uluslararası Uygulama Alanı, s. 557; TOKER, s. 55; ATAMER, Satıcının Yükümlülükleri, s. 54; MISTELIS, s. 13.
- ERDEM, Uygulama Alanı, s. 9; TOKER, s. 56; ERDEM, Viyana Satım Sözleşmesi, s. 38.
- ERDEM, Uygulama Alanı, s. 9; ERDEM, Viyana Satım Sözleşmesi, s. 38.
- Resmi Gazete: T. 14.04.2009, Sa. 27200.
- Resmi Gazete: T. 07.04.2010, Sa. 27545.
- TAMER, Uluslararası Uygulama Alanı, s. 566.
- BIANCA/BONELL, s. 32; ATAMER, Uluslararası Uygulama Alanı, s. 566; ATAMER, Satıcının Yükümlülükleri, s. 63; MISTELIS, s. 15; DEMİRELLİ, s. 58; ÖZSUNAY, s. 955.
- ATAMER, Uluslararası Uygulama Alanı, s. 566; MISTELIS, s. 15; ÖZSUNAY, s. 955.
- ATAMER, Satıcının Yükümlülükleri, s. 59, 62; TOKER, s. 116; ATAMER, Uluslararası Uygulama Alanı, s. 556, 560; ZEYTİN, s. 60.
- Aybay, R./Dardağan, E.: Uluslararası Düzeyde Yasaların Çatışması (Kanunlar İhtilafı), İstanbul Bilgi Üniversitesi Yayınları, B. 2, İstanbul 2008, s. 269.
- Schlechtriem, Commentary, s. 76-77, para. 3.
- The New Turkish Code of Obligations numbered 6098 has been published on the 04.02.2011dated and 27836 numbered Official Gazette and has entered into force on 01.07.2012. The principle of trust is regulated under Article 18 of the former Turkish Code of Obligations numbered 818.
- Schlechtriem, Commentary, s. 64, para. 3.
- Schlechtriem, Commentary, s. 64, para. 3.