NATIONAL LAW INSTITUTE

UNIVERSITY
BHOPAL,M.P.

A Project On International Trade Law On The Topic

“UNIDROIT Principles Acting As A Bridge For CISG”

Submitted to, Submitted by,

(Dr) Monica Raje Ajita Nadkarni
Assistant Professor 2012 BA LLB 101

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NLIU Bhopal

Acknowledgement
With my highest gratitude I would take this opportunity to thank all those people who helped
me in making this project.Firstly I would thank my parents who always supported me in all
my endeavours .Then I would thank Monica Raje madam who guided me with the strategy to
make this project successfully.Without the direction of all the above mentioned people ,this
project would have been incomplete.

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 Table Of Contents

Topic Page No:

1.Introduction..................................................................................................................4

2.Interpretation and gap filling of legal instruments.......................................................4-7

3.General principles on which convention is based........................................................7-8

4.Relation between general CISG principles and

UNIDROIT..................................................................................................................8-10

5.Admissibility of supplementing CISG by UNIDROIT...............................................11-15

6.Admissibility of using UNIDROIT as the applicable law............................................15-16

7.UNIDROIT as the applicable law chosen by the parties...............................................16-17

8.Article 10 of UNIDROIT ,2004-Choice of law.............................................................17-20

9.UNIDROIT as the applicable law determined by rules of

Private International law ,as a choice of law.................................................................20-22

10.Conclusion...................................................................................................................22-23

11.Bibliography..................................................................................................................23

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 Introduction

The United Nations Convention on Contracts for the International Sale of Goods referred to
as "CISG" or "Convention",presents the most successful project of worldwide unification of
substantive law in international trade. Its application is inevitably connected to supplementing
its provisions to resolve issues which are not expressly prescribed in its text. As it primarily
lacks regulation of general issues of law of contracts, legal scholars suggest using The
UNIDROIT Principles of International Commercial Contracts for such regulation. The
relationship between the CISG and the UNIDROIT Principles has been a matter of discussion
from the moment of issuing the Principles. Legal scholars present a variety of contradicting
opinions, from supporting their joint usage in order to promote uniform solutions for
international trade relationships to strict denial of such usage justified by their differences and
by the lack of legal force in the case of the UNIDROIT Principles.

Interpretation and Gap-Filling of Legal Instruments

The procedure of gap-filling is expressly prescribed in article 7 part 2 of CISG. It has to be

treated as a legal and admissible form of interpretation .Article 7 CISG prescribes two forms
of ascertaining its legal provisions:

1. Interpretation of CISG provisions:

"In the interpretation of this Convention, 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. " (art. 7 part 1 CISG)

2. Gap-filling of CISG provisions:

"Questions concerning matters governed by this Convention which are not expressly
settled in it are to be settled in conformity with the general principles on which it is
based or, in the absence of such principles, in conformity with the law applicable by
virtue of the rules of private international law." (art. 7 part 2 CISG)

The fact that the CISG will not constitute an entire and exhaustive legal regulation of
international sales contracts was obvious also to the drafters of the Convention and for this
reason they created article 7. Nevertheless, it is not clear why the drafters, bearing in mind
instances of impreciseness of its text, did not try to correct this impreciseness. Professor
Bonell provides an explanation

"Yet the option in favour of uniform legislation inevitably restricted the drafters's
room for manoeuvre. Due to the differences in legal tradition and at times, even more
significantly, in the social and economic structure prevalent in the States
participating in the negotiations, some issues had to be excluded at the outset from

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 the scope of CISG, while with respect to a number of other items the conflicting views
could only be overcome by compromise solutions leaving matters more or less
undecided."

He continues by stating:

"In the provisions laying down not too convincing compromise solutions between
conflicting views, some openly refer the definite answer to the applicable domestic
law. Others use the technique of a main rule immediately followed by an equally
broad exception, thereby leaving the question open as to which of the two alternatives
will ultimately prevail in each single case. Others still hide the lack of any real
consensus by an extremely vague and ambiguous language."

This point of view mitigates the enormous enthusiasm of CISG proponents who consider it to
be a successful unification of international sale of goods. To understand the position of the
drafters, it is necessary to stress that the Convention is a result of long lasting negotiations of
drafting States and it therefore has to be treated as a "maximum that could have been
achieved by an international legislation." Also for this reason, the question of interpretation
and gap-filling is a crucial one for the Convention.

Article 7 part 2 CISG prescribes the manner of "settling questions concerning matters

governed by this Convention which are not expressly settled in it."  This situation is generally
called gap-filling of the CISG. At first, it is necessary to distinguish between the aim of
article 7 part 1 and of article 7 part 2 CISG. As was already mentioned, interpretation intends
to ascertain the meaning of the text expressly prescribed in the legal instrument , this means
that it works "within" the instrument. Interpretation is used for clarifying the text of the
Convention in borders of its express text and therefore it means a less serious intervention
into the legal rules prescribed therein, as it cannot provide solutions which would be in
controversy with the black letter rules, or it would exceed the express regulation prescribed in
the Convention. On the other hand, the term "filling of the gaps present in legal
instrument" presents that this procedure has much stronger effect on the Convention, as it
creates regulation of matters that were omitted in the preparatory stage. Therefore, the gap-
filling effects "outside" the Convention - it does not restrict itself to the matters already
settled in the black letter rules, but it creates a broader regulation of sales contracts that was
intended by the Convention, but was never completed in the text by its drafters. Because of
these distinct effects of both procedures, article 7 part 2 CISG prescribes a special and
separate procedure of gap-filling as opposed to interpretation:

1. Gaps are to be settled in conformity with the general principles on which the
Convention is based;
2. In the absence of such principles, gaps are to be settled in conformity with the law
applicable by virtue of the rules of private international law.

Despite this express autonomous regulation of both procedures, there are scholars who claim
that there should be a single procedure for interpretation and gap-filling. The reason for such
suggestion is a shady borderline between interpretation and gap-filling. Another reason is a
disparity of techniques that are prescribed by these methods - while the interpretation
generally sets out a duty to use a uniform approach, independent from any state-law
approaches of interpretation, gap-filling, though only as a last resort, turns to a particular
State law applicable by virtue of the rules of private international law. In other words, if a

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particular matter is defined as an object of interpretation, it can lead to absolutely different
solutions than in case of defining this matter as an object of gap-filling.

Scholars  are trying to reduce this clear controversy between the two above-mentioned
procedures by suggesting a single basic principle for both procedures. This basic principle
would stress the international nature of the Convention and would only permit courts to use
principles of international trade as opposed to domestic law in order to avoid forum-
shopping. The legal grounds for this approach would be article 31 part 1 of the Vienna
Convention on the Law of Treaties. Nevertheless, since the CISG expressly contains two
separate and distinct regulations of these procedures in article 7 part 1 and part 2, any
discussions about some common basic principle are rather academic.

Gaps in Legal Instruments

Before making any statements about filling the gaps in legal instruments, it is necessary to
define the notion "gap" in its legal meaning. Bridge  defines a gap as a legal question, which
is omitted partially or entirely in the regulation expressly settled in the text of a convention,
though it falls into the scope of its regulation, as it is defined in this convention. Additionally,
in order to use the gap-filling procedure, a partial regulation of a certain question has to be so
ambiguous, that it would be impossible to settle it only by means of interpretation, as it is in
case of art. 78 CISG.

After defining the gap in its legal meaning, it is necessary to categorize the gaps into groups
according to their relationship to the express text of the legal instrument.

Gaps intra verba legis

Teichert defines gaps intra verba legis as a situation in which the legislator creates a general
rule in the legal instrument and leaves its application to particular situations for the
consideration of courts. It is therefore not a legal gap in a strict sense, as the court only
ascertains meaning of the general rule for particular situations and does not create a new legal
regulation of relationships. In my opinion, this process is rather a form of interpretation under
article 7 part 1 CISG and forms a borderline between interpretation and gap-filling.

Internal Gaps

Internal gaps concern legal questions which fall into the scope of regulation of a particular
legal instrument, but where this instrument does not expressly prescribe them. This is a type
of gap that is clearly governed by article 7 part 2 CISG. It includes questions that were
intended to be governed by a certain instrument, but drafters of this instrument for certain
reasons omitted to expressly regulate them. The reason for such omission can be either
impossibility to reach a consensus about certain questions or, on the other hand, impossibility
to anticipate all legal issues that may arise in the course of application of this instrument. The
scope of the issues that should have been prescribed in the convention emerges from the
convention's scope as defined in its general provisions. Regarding the CISG, this scope is
defined in article 4 which states, that "This Convention governs only the formation of the
contract of sale and the rights and obligations of the seller and the buyer arising from such a
contract." Examples of issues which fall within this scope are provided by legal theory  but it
is not my intent to analyse them individually.

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External Gaps

It is clear that the general scope of regulation prescribed in article 4 CISG contains also legal
issues that the drafting States did not intend to regulate in a unified manner, but rather to
leave them under direct influence of a sovereign State, i.e., in its national legislation. For this
reason the Convention contains in provisions following after the rule on limits of its scope
generally defined in article 1 part 1 which refer to:

a) parties to the international contract of sale in article 1 part 1 a) b); 

b) subject-matter of the contract in article 2 a) to f); 
c) legal issues emerging from the contract in article 4; 
d) legal issues derived from the contract in article 5.

It is necessary to stress that this list of limits is exhaustive and the limits should be interpreted
in a restrictive manner, in order to ensure uniform solutions in most elements of legal
relationship emerging from the international sale of goods, as the drafters initially intended it.

It is therefore necessary before applying the CISG provisions to examine whether the case
falls under the general rule in article 1 part 1 CISG and article 4 CISG and subsequently to
study whether it is not covered by one of the abovementioned limits. After doing this test, we
can more easily define whether a particular legal question is an internal gap according to
article 7 part 2 CISG or an external gap, where the CISG has no direct effect. These so called
external issues will usually be resolved by provisions of a certain domestic law chosen by the
parties or applicable under provisions of private international law. Applying the CISG also to
these external gaps would be contrary to the Convention, as the Convention itself restricts its
effect in these situations.

General Principles on Which the Convention is Based

Article 7 of CISG provision alone is not sufficient to ensure the fulfilment of the gap filling
requirement of the CISG. UNIDROIT Principles come to the aid in this situation. They can,
however, only operate in the area created by article 7 part 2 CISG.

The Convention does not contain any express enumeration of the general principles as they
are referred to in article 7 part 2 CISG. They can be derived from its express text by using the
method of logical abstraction, as it is used by legal theory. Commentaries on the CISG have
abstracted a number of such principles, but only those principles expressly acknowledged by
the jurisprudence of a certain State can be considered legally binding for other courts in that
jurisdiction.

Furthermore, the text of the Convention alone does not provide all answers for resolving all
matters involved in the application of the CISG. The text also contains several provisions
which are vague or formulated in too general a way to regulate particular situations in
international trade. We can take as an example article 78 CISG which contains the right of a
creditor for a payment of interest in case of default of a debtor to pay a sum of money.
Although this provision grants the right of interest to the creditor, it provides no method for
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calculating its rate in particular cases. We must therefore ask whether it is allowed to search
for precise solutions when there are general principles expressly but not precisely enough
prescribed in the text of CISG. Ferrari answers the question: Yes, but one has to respect
certain conditions.

Respecting the general obligation prescribed in article 7 part 1 to observe the international
character of the Convention and promote its uniform application, external sources of the
CISG's general principles should necessarily have international uniform character.
Furthermore, these "external principles" must be in complete conformity with the general
principles expressly prescribed in the text of the Convention. Ferrari suggests general
principles of international trade law as an example for such external principles, which
correspond to the general part of the contract law in domestic law. These principles can be
used for filling the gaps in the text of the CISG but only as long as they supplement and
ascertain the general principles expressly vested in the text of the Convention. Ferrari
specifically mentions the UNIDROIT Principles as a source of such general principles.

Relationship Between the General Principles of the CISG and the

UNIDROIT Principles-Conflict Or Harmony?

More scholars suggest that the UNIDROIT Principles contain several provisions which
exhibit general principles of the CISG. Professor Kritzer collected these opinions  and
pointed out that several provisions of the UNIDROIT Principles could be of great utility to
help find general principles of the CISG. Because of their systematic composition, which
very much resembles traditional European codes, the UNIDROIT Principles facilitate
orientation on the general principles of CISG and provide a wider legal background of
contract law or law of obligations for them. Therefore, when using the CISG and the
UNIDROIT Principles together, one can create a complex regulation of contractual
relationships in the international sale of goods. These two instruments are construed in a
similar fashion, they often provide similar solutions to certain issues and several provisions
are formulated identically in both instruments.

At first, one has to keep in mind that both instruments were drafted with the same intent - to
unify international rules for international trade. They both synthesised particular models of
domestic commercial law and tried to create a body of law which would be legally certain
and nevertheless would not create tensions among different legal cultures. The less visible
reason for this conformity is also the fact that both instruments were drafted to a large extent
by the same group of experts. Therefore, these two instruments prove that different forms of
legal regulation - a binding international convention and a non-binding set of principles - can
lead to the same outcome. While the CISG was drafted as an international convention binding
on States because of its ratification, the UNIDROIT Principles are generally non-binding and
their legal force in a particular case is derived from their usage. This special character of the
Principles is also usually a reason for critism of the Principles.

Despite their difference in form, both instruments are closely related to each other. With
reference to its date of creation, 1980 in case of the CISG and 1994 in case of the UNIDROIT
Principles, it is clear that the CISG as an already existing document had a strong influence on

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the drafters of the UNIDROIT Principles. This influence has never been denied by these
drafters. On the contrary, they state that the first edition of the UNIDROIT Principles of 1994
contained more precise regulation of issues which were only partially regulated by CISG.
Professor Bonell states:

"To the extent that the two instruments address the same issues, the rules laid down in
the UNIDROIT Principles are normally taken either literally or at least in substance
from the corresponding provisions of CISG; cases where the former depart from the
latter are exceptional."

He afterwards gives an exhaustive list of these exceptional differences. With regards to the
size of both instruments (the UNIDROIT Principles consisting of 185 articles and the CISG
consisting of 101 articles) they present only a minor part of them. In many cases, both
instruments are mutually compatible. What is more, in cases where they are compatible,
provisions of the Principles provide more precise and comprehensible solutions. This is partly
caused by the fact that the drafters of the Principles were not as much dependant on the will
of States as the drafters of CISG. Since the drafters of the Principles were experts from
various States and legal systems, acting as private persons, they were not bound by attitudes
of their States and the Principles are therefore less influenced by the will to particularism, as
it was in case of the CISG. The Principles therefore contain fewer so-called "blind solutions"
- provisions created by a compromise of various positions which actually do not provide any
solution of a certain legal issue.

On the other hand, critics point out the differences between the UNIDROIT Principles and
the CISG. First, as was already mentioned, is their different legal form. They also differ in the
scope of their regulation - while the CISG regulates only international sale of goods, the
Principles intend to regulate all commercial contractual relationships in the area of
international trade.

These two instruments also define differently the international aspect as a basic requirement
for application  of the texts. The CISG defines an international sale of goods in article 1 part
1 as a contract of sale concluded between parties whose places of business are in different
States. The international aspect is connected to the parties to the contract, but only with
respect to their places of business, because the Convention expressly provides in article 1 part
3 that the nationality of the parties will not be taken into consideration when determining the
application of this Convention. Furthermore, the nature of the sale of goods is also of no
importance, so it does not matter whether the goods will be delivered across borders. This
definition of international aspect is very narrow, as it does not cover sales contracts with
international aspect having to do with the place of delivery of the goods, nationality of the
parties, etc. On the contrary, the UNIDROIT Principles state in their Preamble that they set
forth general rules for international commercial contracts. In the commentary to the
Preamble, the notion of "international contract" is defined in a way that

"the concept of "international" contracts should be given the broadest possible

interpretation, so as ultimately to exclude only those situations where no
international element at all is involved, i.e., where all the relevant elements of the
contract in question are connected with one country only."

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This is the widest possible definition of the international aspect and it is clear that the
UNIDROIT Principles will apply to a wider range of international sales contracts than the
CISG.

Another difference between these instruments emerges from their structure. While the CISG
is composed as a traditional international convention consisting of legal rules formulated in
articles, the UNIDROIT Principles include beside this form of text also an extensive
commentary made by its drafters which is an important element of the integral version of the
Principles and it thereby helps assure a better comprehensibility and legal certainty in its
application.

The last important difference is in the degree of flexibility of the two instruments. The CISG
was created in 1980 as an international convention which did not plan any future amendments
and modifications. This naturally does not exclude a possibility of changing its text but it
would necessarily need to follow the procedure prescribed in articles 40 and 41 of the Vienna
Convention on the Law of Treaties. Article 40 part 2 prescribes that any proposal to amend
the CISG must be notified to all of its Contracting States and these States would have to
accept it. And once the amendment is passed, it will only be effective among the States which
have ratified it. Contracting States of the initial Convention which had not ratified its
amendment will still be bound by its initial version, as is prescribed in article 40 part 4 of the
Vienna Convention. This procedure of amending bears a potential threat of creating dual
legal regulation of international sales contracts - one for the Contracting States that ratified
both the original convention and its amendment and another one for the States which ratified
only the original convention but did not adopt the amendment. On the other hand,
development of technology and economy promotes constant development of international
trade. It is therefore presumable that the original text of the CISG created in 1980 does not
precisely reflect the actual situation today in international trade. Although its change may
therefore be needed, it is not highly probable that it will happen soon due to the complexity of
this procedure and also the fact that the text of the Convention expresses the maximum
consensus that could have been achieved in a form of a legally binding international
instrument.

On the contrary, the UNIDROIT Principles present a document issued by an international

organisation which is not directly dependant on activity of States in order to change it. The
Governing Council of UNIDROIT approved its issuance in 1994 and also decided about
initiating works on a new version which led to issuance of the 2004 version. The Foreword to
this version expressly states that the new version is not intended as a revision of the 1994
version. Only few changes were made to the already existing provisions. The main purpose of
the new edition was to cover additional topics of interest to the international legal and
business communities. The preparatory works on the third extended version of the Principles
have already been initiated and it is anticipated that they will be finished in 2010. Because of
their non-binding and private character, the Principles have not had such problems with
approval of these changes by States as in case of the CISG. This ensures greater flexibility
and better response to development in social and economic environment. On the other hand,
the contractual parties are free to choose any version of the Principles by expressly referring
to that version. If they stay silent about determining a particular version, it is presumed that
the actual (last published) version will be applied.

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Admissibility of Supplementing the CISG by the UNIDROIT Principles

As was established in the previous chapter, there is no significant controversy between

provisions of CISG and the UNIDROIT Principles that would disable their joint usage for
regulation of international sale of goods. This fact is approved by a majority of legal scholars.
Nevertheless, such form of their usage is frequently criticized for absence of legal
admissibility of supplementing CISG by the UNIDROIT Principles. A legal ground for such
procedure will always have to be in conformity with article 7 part 2 CISG, which prescribes
the procedure of its gap-filling. As this procedure is composed of two stages, when
examining the admissibility of using the UNIDROIT Principles in this way, one has to
analyse each stage separately. Thereby, two separate issues are raised:

1. Admissibility of using the UNIDROIT Principles as the general principles on which

the CISG is based, to supplement the provisions of the Convention; and
2. Admissibility of using the UNIDROIT Principles to supplement the provisions of the
CISG, as the law applicable by virtue of the rules of private international law.

1.Admissibility of Using the UNIDROIT Principles as General Principles of the

CISG

Since the general principles on which the CISG is based, as they are referred to in article 7
part 2 CISG, are not expressly enumerated in the text of the Convention, they have to be
derived from it by methods of logical abstraction. This method nevertheless means that more
persons can achieve different results when using it - they can create a different list of these
general principles. Equally, more persons can resolve a particular issue with different
outcomes by referring to a single principle. As it was presented, the procedure prescribed in
article 7 part 2 CISG should at first ensure a uniform application of the Convention in
analogous situations. But the text of the Convention itself does not provide sufficient
conditions for such uniformity when applying article 7 part 2 CISG. I have already proved
that under certain circumstances that will be described in this chapter we can use external
sources to find the general principles on which the CISG is based. It was also pointed out that
the UNIDROIT Principles is an instrument which closely corresponds with the CISG. Can we
therefore use them in this way?

The most frequently used justification for a denial of such usage  is the different character of
the two instruments. At first, this refers to their mode of creation. While the CISG was
drafted by UNCITRAL and subsequently ratified by the Contracting States, whereby it
acquired its legal force, the UNIDROIT Principles were drafted by a group of experts who,
though being citizens of various States from all major legal cultures, were not acting as
representatives of their States and therefore their opinions cannot be identified with official
viewpoints of States and the UNIDROIT Principles cannot be considered to be created by
States, as is case with the CISG. Two questions emerge from this analysis:

1. If we treat the UNIDROIT Principles as a source of law, did their drafters possess
legislative power when creating it?

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 2. Can this legal instrument be legally binding for States and can courts apply it, though
it has never been approved by States and its text has never been incorporated into the
legal order of these States through ratification?

Trade Usages and General Principles of Law

The first question requires at least a short excursus into legal theory. The source of law can be
defined as a source where one can find general rules of behaviour and which has been
approved by a State as having legal force, because of its internal integrity, normative quality
and state-approved form. European legal tradition used to prefer the
socalled etatist conception of legislation which considered the State to be the only legislator.
This theory is based on the assumption that "the ability to prescribe behaviour of its society
is a significant part of the authority of the State. For this reason, the legislation as well as
jurisdiction is one of the most important features of sovereignty of a State." When applying
this doctrine to international law, we can conclude that the State is only bound by the
international conventions that it has ratified and thereby incorporated them into its legal
order. According to this strict positivistic doctrine, one can hardly qualify the UNIDROIT
Principles as a source of law. We must nevertheless bear in mind that international law is
independent of any particular State or legal culture and therefore this doctrine is not the only
and common philosophy of legislation respected in all States and we therefore need not
strictly observe it at all costs. On the other hand, the UNIDROIT Principles could comply
with the definition of a source of law in common law systems  where the law is created by a
society and should always respect just settlement of disputes. Interests of a state or policies
are examined only by comparing these new rules with already existing law. In this manner,
the UNIDROIT Principles could be treated as a source of law, once the court would find
them as a binding source of regulation of a relationship. According to this concept, it seems
that the Principles would be acknowledged as a legal source in common law countries but
never in civil law countries. This is, however, not true.

The strict etatist doctrine was supported in the 19th and 20th century and cannot suffice the
economic and social environment needs of the present age. A State is withdrawing from its
traditional role of a sole and absolute legislator and starts to prescribe conditions under which
it is prepared to accept external sources of law. A good example for this tendency is
recognition and enforcement of trade usages both in domestic law  and even more in
international law. Other such external sources of law are general principles of international
trade which are not created by any particular legislative activity but present a basis for such
legislation. These principles create a unifying network for all sources of international trade
law and ensure their consistent application.

Where does this normative force of such legal sources come from, if they are not created by
the legislative power of a certain State? Trade usages can be generally defined as "practices
or patterns of behaviour among merchants established by repetition which have in some
degree acquired normative force."  They are created by a constant repeated behaviour of
merchants in a certain way. The merchants nevertheless do not possess legislative power and,
being aware of this, they observe the rules they created not because of their normative force
but because these rules are helpful for them and for trade itself. The merchants therefore
establish between themselves only rules of behaviour which are practical and profitable for
both parties. The law protects these models of behaviour because it was proved by a long-
term observation of these rules that they create just and fair solutions for certain situations
and this thereby protects the legal certainty of merchants when conducting their business.

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This feature appears more important in international trade where States tend to admit that
they could not be the sole and best legislator but confer these rights to create rules of
behaviour on merchants, believing that long-term practice will always examine the rationale
of these rules. The only limitation of this form of self-government of trade is a statutory
framework which always has to be observed, as it is created by mandatory rules which seek
to ensure that the basic interests of a State will always be ensured. Law respects and supports
trade usages created not by a State with its legislative power but by merchants in a way that it
protects and enforces these rules by a judicial power.

There is a similar situation in case of general principles of trade law, although no empirical
research can be made to find them, as they are determined by a method of logical abstraction
from existing trade usages and legal rules in international trade.

Relationship between the UNIDROIT Principles and Trade Usages and General

Principles of International Trade Law

If we admit that international trade usages and general principles of international trade law
can be a source of law also in civil law countries, what relevance does this statement have in
relation to the UNIDROIT Principles? The UNIDROIT Principles are sometimes considered
to be lex mercatoria, i.e., a collection of trade usages observed in international trade.
Nevertheless, analyses show that although most of the provisions of the Principles reflect
actual international trade usages, there are certain provisions which depart from these usages
and suggest new solutions which could provide more just and practical results, known also as
a better law approach. The first group of provisions that reflect international trade usages, can
be deemed to be a collection of lex mercatoria made in a written, systematic and legally
precise form. The other group of provisions, representing the so called "better law approach,"
is not yet a part of lex mercatoria, since these rules were created "outside" the market. They
can nevertheless become a part of lex mercatoria in the future, when these provisions will be
accepted by merchants who will use them as a directive to create new usages. If this happens
in this way they will become trade usages and an integral part of the lex mercatoria, or even a
foundation stone for a new, more precise, certain and publicly known lex mercatoria. In the
present state, though, it is up to a particular judge to determine whether a certain provision of
the UNIDROIT Principles actually reflects an existing international trade usage and if the
judge will prove this, he has a right, or even a duty to apply this provision of the Principles to
resolve a particular dispute referring to a normative force of an international trade usage.

Another possibility for the court to apply the UNIDROIT Principles as a source of law, is to
qualify them as general principles of international trade law. The Principles were indeed
created by a method of comparison of national commercial codes and international unified
instruments, i.e., by analysis and synthesis of sources of international trade law and therefore
express its general grounds. If a judge will try to determine such general principle of
international trade law to resolve particular problem, he would have to undertake the same
procedure as the drafters of the Principles did in order to determine them. Because this
process requires an enormous amount of time and research, it is clearly more favourable for a
judge to rely on such research already performed by the drafters of the UNIDROIT
Principles. Does this favourability also justify admissibility of such usage? This problem will
be analysed in the next chapter. At this moment, we can at least conclude that the Principles
present an express written record of principles of international trade law, as they have been
determined by a sophisticated, systematic and objective method. Clearly, a judge would not
use any different or more precise method of determining the general principles, as the one

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used by the Working Groups on the Principles (the drafters of the Principles) and therefore he
has no reason not to accept the outcome of this method as a legitimate source of legal
principles. This acceptance can be construed as a rebuttable presumption where the judge
would be bound to apply the UNIDROIT Principles as a source of the general principles of
CISG, or more expressly a particular provision of the Principles, as long as he does not find
out that this provision is in conflict with provisions of the CISG. Therefore, if the judge
chooses not to use the UNIDROIT Principles for this purpose, he should provide the reasons
why it is not possible to apply its particular provisions.

Non-State and Non-binding Nature of the UNIDROIT Principles?

Let us move back to the legal nature of the UNIDROIT Principles, since this feature seems to
be a primary reason why not to apply these Principles as a source for gap-filling of the CISG.
It was mentioned that the drafters of the Principles, being private persons, do not possess
legislative power according to the etatist conception of law and the Principles as a legal
instrument have not been ratified by the States and therefore it is not admissible to apply
them as a source of law. At first, it is necessary to point out that the whole procedure of their
creation was managed by UNIDROIT - an international organisation formed by sixty-one
member States. As is prescribed in article 1 of the Statute of UNIDROIT:

"The purposes of the International Institute for the Unification of Private Law are to
examine ways of harmonising and coordinating the private law of States and of
groups of States, and to prepare gradually for the adoption by the various States of
uniform rules of private law."

Since the member States ratified this statute, they granted to the UNIDROIT the powers to
accomplish these aims. Creation of the Principles clearly falls into the scope of article 1 of
the Statute and it was therefore approved by the member States, thereby constituting not a
purely private initiative, as it is often presented.

Another popular misconception is that the States did not take part in drafting of the Principles
and did not approve its text, which cannot therefore be legally binding on them. The General
Assembly of UNIDROIT consisting of representatives of all member States expressly
approved the text of the Work Programme of 1971 which contained the intention to elaborate
the UNIDROIT Principles. Member States thereby approved preparatory works on the text of
the Principles. Furthermore, though the Working Groups consisted of experts independent
from the will of their home countries, the member States were engaged in drafting of the
Principles by filling of the forms sent to them together with several preparatory versions of
the Principles and these States had also opportunities to comment on the final version of the
Principles. UNIDROIT regularly informed the member States about the course of the
preparatory works, organized international workshops and conferences, where the draft
versions have been analysed by representatives of the member States. The whole procedure
of preparatory works was conducted in conformity with article 14 of the Statute which
defines participation of member States in the creation of the UNIDROIT documents. For this
reason, as Oser states, the legal nature of the UNIDROIT Principles has quite a resemblance
to classical international treaties regarding their method of creation and the participation of
States. We can therefore conclude that at least the courts of the UNIDROIT member States
should treat the Principles as a legitimate source of law which should be used whenever it is
necessary or useful.

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Another difference between the Principles and a traditional international source of law such
as the CISG is their degree of binding force. If a court should apply the Principles for gap-
filling of the CISG, it will surely analyse the fifth sentence of the Preamble to the Principles
which states that they "may" be used to interpret or supplement international uniform law
instruments. This provision prescribes a right, but not a duty to use the Principles for this
purpose. This provision should nevertheless be interpreted in connection with relevant
provisions of the CISG. As is prescribed in article 7 part 1 CISG, when the court is
interpreting the Convention, it is obliged to observe its international character and to promote
its uniform application. As was already mentioned, this obligation should be applied to the
activity of courts under both article 7 part 1 and part 2 CISG, as both procedures are created
for the same purpose - to ensure uniform solutions for international sales contracts. Since a
court is obliged to achieve this aim in all methods of application of the CISG, it should
primarily use uniform tools for such procedures, as they present the only tools to guarantee
this aim. Only if these uniform tools do not provide solutions for a specific case and therefore
it is not objectively possible to achieve the goal set in article 7 part 1 CISG, the court can
resort to the use of internal law.

For this reason, a judge has to apply the fifth sentence of the Preamble of the Principles in
connection with article 7 part 1 and part 2 CISG and he is obliged to use the UNIDROIT
Principles in order to supplement the provisions of the CISG because if he will not do so, he
will not only breach the "soft" obligation under the fifth sentence of the Principles' Preamble,
but he will also breach the "strict" obligation under article 7 CISG which is undoubtedly a
classical source of law which the court is always obliged to observe. For this reason, at least
the courts of the UNIDROIT member States can be obliged to regard the UNIDROIT
Principles as a means for determining the general principles of the CISG and thereby
supplementing the provisions of CISG in conformity with article 7 part 2 CISG. We have
thereby found the answer to the second question at the beginning of this chapter - whether the
UNIDROIT Principles can be binding on the States and whether the courts should apply
them, although they were neither created by States nor ratified by them and thereby
transposed to their national legal systems.

With reference to the abovementioned, Slovak courts should also primarily use all methods of
gap-filling in a uniform way. Since the Slovak Republic is a member State of UNIDROIT,
the UNIDROIT Principles should be treated as a legal instrument created with assent of the
Slovak Republic and there is therefore no reason why a Slovak court should not accept the
Principles as a legitimate source for gap-filling of the CISG. Nevertheless, there is not yet
any judgement dealing with the UNIDROIT Principles in Slovakia and we can therefore not
predict how a Slovak judge would qualify and use them. But since a Slovak judge, when
applying the CISG, is also bound to promote a uniform application and gap-filling of the
Convention by all means, the Principles could be of a great help to him, particularly in case
he is not very experienced in applying the Convention.

Admissibility of Using of the UNIDROIT Principles as an Applicable Law

While in the previous chapter we have analysed a possibility of using the UNIDROIT
Principles as the general principles on which the CISG is based, this chapter will be dedicated
to usage of the Principles in situations where the legal issue cannot be resolved by reference
to the general principles of the CISG, since the Convention does not regulate this issue by

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any of its principles. To make it absolutely clear, a court can conclude that the general
principles of the CISG do not regulate this specific legal issue also if it has used the
UNIDROIT Principles for this purpose. The court can even find a provision of the Principles
which regulates the issue concerned, but since the court found that this provision does not
express any of the general principles on which the CISG is based it could not apply it by
means of supplementing the CISG with reference to its general principles. We therefore reach
a point of controversy where the court in accordance with article 7 CISG tried to determine
the general principles of the CISG and found the provision of the UNIDROIT Principles
which is suitable to resolve the legal issue in question, but it cannot use this provision with
reference to the CISG's general principles, since the CISG does not contain any such general
principle. Despite this controversy, a court can still use the UNIDROIT Principles to resolve
this particular issue by supplementing the provisions of the CISG in accordance with article 7
part 2 CISG.

Beside the primary rule referring to the general principles of the CISG, Article 7 part 2 CISG
prescribes a second rule granting a duty to resolve the legal issue in question by rules of an
applicable law determined by virtue of private international law. It was already pointed out
that this method provides insufficient outcomes, as it lacks uniformity, is often unpredictable
and thereby restrains legal certainty of merchants. If the court nevertheless comes to
this ultima ratio stage, is there a possibility that an applicable law determined by rules of
private international law would ensure uniform application of the Convention? Yes, but only
if the law determined as applicable would be a uniform legal instrument, as it is in case of the
UNIDROIT Principles. There are basically three ways by which the Principles could be used
under rules of private international law:

1. The Principles as an applicable law chosen by the parties to an international contract

of sale;
2. The Principles as representative of the lex mercatoria which is determined as an
applicable law; and
3. The Principles as an applicable law under conflict-of-laws rules.

UNIDROIT Principles as an Applicable Law Chosen by Parties

Nowadays, most of the codifications of choice-of-law rules are based on absolute priority
of lex electa in contractual matters.

The legal theory of lex electa states that parties can choose any form of "law", including the
law of a country, a single legal instrument or a set of rules not created by a State legislator. In
international trade, there emerges a special need to ensure a fair arrangement of mutual rights
and duties arising from the parties' contract and therefore to try to eliminate effects of any
particular legal order on it. Parties try to refer in their contract to some basic principles of
natural justice, international trade or to lex mercatoria. Parties to a contract may choose any
document containing binding rules of behaviour which are precise and stable enough to be
used by a court to resolve particular disputes. The UNIDROIT Principles possess these
qualities and parties can choose them by any form of declaration of will that is determinable
by the court.

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The UNIDROIT Principles expressly prescribe in the second sentence of the Preamble
that "they shall be applied when the parties have agreed that their contract be governed by
them." It is the only manner of usage where the Principles prescribe a strict obligation to the
court to apply them, if the parties have chosen this in their contract. The Principles
themselves provide a formulation for such choice  but this formulation is not sufficient to
regulate the situation that we analyse. One must remember that the law chosen by the parties
to the contract shall not be used to govern the relationship created by an international contract
of sale, but to supplement legal provisions of CISG already governing this relationship. Is the
abovementioned formulation sufficient for this purpose? It depends on the conception of
choice-of-law that is recognized by a certain legal system. If a court respects choice of law as
an absolute method of determination of the applicable law, this choice-of-law clause causes
that the sales relationship will be governed solely by the UNIDROIT Principles and all other
legal rules, including CISG, will be excluded from its regulation. This conception is respected
also by Bonell and is often upheld by arbitrators who are not bound to apply certain domestic
law and therefore they treat choice of law made by the contractual parties in its absolute
nature. On the contrary, the relative conception of the choice of law incorporates the
UNIDROIT Principles into the text of the contract as a form of general commercial terms or
interpretational rules and beside them it still applies the applicable law determined by choice
of law rules and primarily CISG. This conception is enforced by the domestic courts.

Nevertheless, as it is prescribed in the first sentence of the UNIDOROIT Principles'

Preamble, these Principles set out rules for international commercial contracts in general and
contain no special rules for international sales contracts. For this reason their exclusive usage
for regulation of international sales contracts would not provide expected benefits. Therefore,
a special choice-of-law clause has been created in order to use jointly CISG and the
UNIDROIT Principles, as it is included in article 14 of the Model Contract for the
International Commercial Sale of Perishable Goods. This clause can nevertheless be
formulated also this way:

Article X 
Choice of Law

      1.   Parties to the Contract have agreed that all matters emerging from this Contract and
connected thereto will be governed by the CISG. Any matters governed by the CISG,
which are not expressly settled therein, are to be settled in accordance with the
UNIDROIT Principles of International Commercial Contracts (2004).

This clause unequivocally prescribes a primary usage of the CISG and secondary, supporting
or subsidiary usage of the UNIDROIT Principles for filling the gaps in the text of the
Convention. It nevertheless limits the usage of the UNIDROIT Principles only for filling of
the internal gaps in the CISG, i.e., matters governed but not expressly prescribed in the
Convention. Other matters expressly excluded from the regulation of the Convention would
be regulated, with regards to this formulation, in accordance with the applicable law
determined by the rules of private international law, most probably by particular domestic
law. If our intention is to ensure application of the UNIDROIT Principles to all matters not
expressly governed by CISG, even matters expressly excluded from regulation of the
Convention, it would be necessary to add to the abovementioned section 1 also a section 2
with this formulation:
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      2.   Parties to the Contract have agreed that all matters not included under Art. X sec. 1,
i.e., matters excluded from the application of the CISG, will be governed by the
UNIDROIT Principles of International Commercial Contracts (2004).

This form of choice of law precisely ensures exclusive application of the CISG and the
UNIDROIT Principles without any interference of domestic law. There is also no need to be
worried about a situation when neither the CISG nor the UNIDROIT Principles would
provide a solution for a particular issue, since the UNIDROIT Principles in article 1.6 contain
rules for interpretation and gap-filling of its provisions.

The procedure of determination of the applicable law in Slovakia is regulated by two legal
instruments - the Slovak Act on PIL and the Convention Rome I which will be soon replaced
by the Regulation Rome I. Since the Rome Convention and subsequently the Rome I
Regulation contain a complex set of conflict-of-law provisions for contractual obligations, as
is prescribed in article 1 part 1 of the Rome Convention and the Rome I Regulation,
respectively, they will be always applied by courts of their member States when determining
applicable law for contractual obligations, regardless of the domicile or place of business of
the parties to the dispute.

Thereby the application of Slovak Act on PIL is absolutely restricted in these matters. The
abovementioned European instruments are directly applicable and have priority over national
statutes. What is the reason to analyse admissibility of application of the UNIDROIT
Principles under the Act on PIL if there is no possibility to use it? We must take into
consideration article 17 of the Rome Convention which states that its provisions "shall apply
in a Contracting State to contracts made after the date on which this Convention has entered
into force with respect to that State." With respect to the Slovak Republic, this date is 1
August 2006. For all contracts concluded before this date, Slovak courts will have to apply
section 9 and the next subsequent provisions of the Act on PIL regardless of when the judicial
proceedings were initiated. Since many contracts which are still in operation were concluded
before the abovementioned date, it is necessary to analyse also the provisions of the Act on
PIL, even more if this analysis leads to conclusions different from ones achieved in case of
the Rome Convention and Rome I Regulation.

2.3.3.1 Admissibility of Choice of the UNIDROIT Principles under Act on PIL

The Slovak Act on PIL contains regulation of determination of applicable law of contracts (as
the CISG refers to it in art. 7 part 2 CISG) in sections 9 to 15 under the heading Law of
Obligations. Sec. 9 part 1 prescribes a general right of the parties to the contract to "choose
the law which will regulate their mutual proprietary matters." The only limitation of such
right is included in sec. 9 part 3, but it only refers to consumers' protection and the CISG in
its art. 2 letter a) expressly excludes such contracts from its scope of regulation. Sec. 9 part 1
creates a broad conception of the choice of law, as it respects choice of any form of "law" and
not only the choice of State law. Furthermore, such choice has absolute priority over other
forms of determining the applicable law, since sec. 10 of the Act prescribes that the choice-
of-law rules contained in it can only be used if no choice of law was made by the parties. The
express text of the Act on PIL therefore provides no restriction on the usage of the
UNIDROIT Principles as an applicable law determined by the choice of law.

2.3.3.2 Admissibility of Choice of the UNIDROIT Principles under the Rome Convention and
Rome I Regulation

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The Rome Convention was created in 1980 in a traditional form of international convention
which was ratified by all member States of the European Union. From its enactment, it was
considered to be formed in a traditional line. Its choice-of-law provisions mostly refer to the
usage of the "law of the country." It seems that there would be no place for using the
UNIDROIT Principles under this Convention. However, we must analyse strictly article 3 of
the Convention which regulates the choice of law in contractual relationships and which
states:

"A contract shall be governed by the law chosen by the parties. The choice must be
expressed or demonstrated with reasonable certainty by the terms of the contract or
the circumstances of the case. By their choice the parties can select the law
applicable to the whole or a part only of the contract."

It is clear that the Rome Convention does not use term "law of the country" with respect to
choice of law, as it does so in case of determination of the applicable law in absence of such
choice. Using the grammatical and systematical method of interpretation, we can conclude
that the legislator did not restrict the right of the contractual parties to choose any form of
law, because if he intended to do so, he would have used the same term when referring to the
chosen law, as is done in case of other choice-of-law provisions.

This theory is nevertheless strongly opposed by a group of legal scholars  who argue that the
Rome Convention does not in any form refer to usage of non-state legal instruments and,
therefore, taking into consideration the Convention's traditional line, it did not even anticipate
a hypothetical usage of non-State law for such purposes. There is also another group of legal
scholars who claim that such absence of strict denial of using non-State law for these
purposes (as its usage is not prescribed in one way or another) empowers contractual parties
to choose such law. Furthermore, it is clear that if the Rome Convention intends to present a
viable legal rule governing determination of applicable law in contractual matter also 25
years after its enactment which would still be useful in changing social and economic
circumstances, its interpretation has to be performed in conformity with actual concepts of
law, rather than with the concepts valid at the time of its creation, in order to achieve at least
a partial flexibility. As Oser states 

"Notably, the great codifications of private substantive law have survived the strain of
time precisely because they have remained open to new developments and exigencies
not yet existing at the time of their enactment. The same must be valid for
codifications of private international law."

With reference to the abovementioned, the Rome Convention does not limit the freedom of
the parties to use non-State law such as the UNIDROIT Principles as the applicable law of
their contracts by means of choice of law.

Twenty eight years after enactment of the Rome Convention, on 17 June 2008 a new legal
instrument for determining the law applicable to contractual matters was created as the Rome
I Regulation. Though the major part of its provisions correspond to the existing provisions of
the Rome Convention, including the controversial art. 3 part 1, the Regulation nevertheless
provides a clearer answer to the problem of using non-State law as an applicable law chosen
by the parties to the contract. The first argument in favour of such usage is that at the time of
drafting of the Regulation, the legislators were aware of the discussions proceeding about the
usage of term "the law" as opposed to "the law of a country." Despite knowing that this

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distinction is used as an argument for admitting usage of non-State law, the legislators did not
change the wording of this article and thereby tacitly agreed with this argument. This intent
of the legislators is supported by further express statements made in the initial recitals to the
Regulation which states in paragraph 11:

"The parties' freedom to choose the applicable law should be one of the cornerstones
of the system of conflict-of-law rules in matters of contractual obligations."

Furthermore, in paragraph 13 of the recitals it is written:

"This Regulation does not preclude parties from incorporating by reference into their
contract a non-State body of law or an international convention."

This provision clearly facilitates usage of the UNIDROIT Principles or other form of non-
State law for this purpose. The Regulation thereby casts away all doubts about admissibility
of using such forms of law under this instrument.

UNIDROIT Principles as an Applicable Law Determined by Rules of

Private International Law As A Choice Of Law

It is clear from the jurisprudence on international business that most of the sales contracts do
not contain a special choice-of-law clause for gap-filling of the CISG, as this clause was
suggested previously. On the contrary, contractual parties usually leave this issue unsettled
and thereby rely on the rules of private international law, as they are mentioned in article 7
part 2 CISG.

Admissibility of using the UNIDROIT Principles for this purpose will depend on the
formulation of the choice-of-law rules in a particular legal system. If we take an example of a
broad conception of such rule, as it is formulated in section 10 part 1 of the Slovak Act on
PIL, supplementing of gaps in CISG will be performed by "the body of law which assures
reasonable solution of the case." Since the Act does not define the notion "body of law," it
must be interpreted in a broad way and therefore it must include also the UNIDROIT
Principles. We must also take into consideration the character of relationships emerging from
an international contract of sale. These relationships have a different character in comparison
with purely internal relationships and therefore they should not be automatically governed by
domestic law which would be used to govern purely domestic relationships. As Oser
states, although it at first seems that a domestic statute provides sufficient solutions for
international sales relationships, this statute is primarily created to govern internal
relationships. This aim is visible from the legislator's purpose to react on social, economic
and cultural circumstances of the particular country and to regulate relationships emerging
from them. For this reason, there is no internal statute that would reflect particularities of
international trade relationships and would be created for their regulation. On the other hand,
the UNIDROIT Principles were deliberately created to reflect the needs of international trade
and this aim influenced its entire creation and conception. If a law such as section 10 part 1 of
the Slovak Act on PIL determines as a law applicable to international sale of goods, the law
which "assures reasonable solution of the case," it could be the UNIDROIT Principles or
another internationally unified body of law, rather than any domestic law. For this reason,
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even if the parties did not choose the UNIDROIT Principles to supplement provisions of the
CISG, the Principles ought to be applied in this manner, if the lex fori prescribes such broad
determination of the applicable law, as it is in case with section 10 part 1 of the Slovak Act
on PIL.

The formulation prescribed in sec. 10 part 1 provides a broad autonomy to a judge when
determining the applicable law. The judge is not bound by strictly formulated connecting
factors but it is his duty to investigate the relationship in question in order to find out and
prove which aspects of this relationship are the most important and which law can be the
most suitable to provide solutions with respect to the character of this relationship. This
method of determining the applicable law would in my opinion stand ground towards Anglo-
American critics of the traditional civil-law conception of choice of law, which is said to be
too narrow and not respecting particularities of each case.

UNIDROIT Principles as an Applicable Law Determined by the Rome Convention and the
Rome I Regulation

As it was already mentioned, both the Rome Convention and the Rome I Regulation are
construed in a traditional manner and refer solely to application of "the law of a country"
(besides the abovementioned case of choice of law) and thereby follow the etatist conception.
Article 4 part 1 of the Rome Convention clearly prescribes:

"To the extent that the law applicable to the contract has not been chosen in
accordance with article 3, the contract shall be governed by the law of the country
with which it is most closely connected."

Although this provision does grant to some extent discretion to choose the "proper law," this
discretion is restricted to choosing of the law of one of the States. This provision clearly
excludes any possibility of using non-State law as an applicable law and this fact is approved,
though being criticized at the same time, by legal theory. Such procedure of determining the
applicable law does not respect the international character of legal relationships in question
and categorizes them into one or another domestic law relationship.

Article 4 part 1 governing determination of the applicable law in case of absence of choice
was changed substantially in the course of creating the Regulation. Instead of the general
clause, separate choice-of-law clauses were created for particular types of contracts and with
respect to a contract of sale the letter a) of this provision prescribes:

"a contract for the sale of goods shall be governed by the law of the country where
the seller has his habitual residence."

At the same time, article 4 constrains the so-called escape clause in part 3 which states:

"Where it is clear from all the circumstances of the case that the contract is
manifestly more closely connected with a country other than that indicated in
paragraphs 1 or 2, the law of that other country shall apply."

Thereby, a kind of relic of the original general clause remained in the text of the Regulation
but it still refers only to the law of a State. Also, the abovementioned provisions no. 11 and
13 of the Regulation recitals are of no effect here.

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It is clear that in absence of the choice of the UNIDROIT Principles, it is impossible to
determine them as an applicable law under the Rome Convention or the Rome I. Regulation.
The only way to use them in such a case is to investigate their possible usage under the
applicable domestic law as a form of interpretational rules or general contract terms.

Usefulness of the UNIDROIT Principles for Supplementing Gaps in the

CISG/Conclusion

While in the entire previous text I tried to justify the admissibility of using the UNIDROIT
Principles for filling gaps in the CISG, as it is a matter most criticized by the opponents of
such usage, there is no substantial disagreement among the scholars with respect to the
usefulness of such joint usage. It is generally acknowledged that international trade law lacks
written legal instruments regulating its relationships. The CISG itself is only a regulation of a
specific type of contract - a sales contract - and lacks regulation of general legal issues which
after all play an important role in each dispute. For this reason, the court is usually forced to
search for abstract principles of international trade law that are not expressly enumerated in
any existing instrument and it therefore often chooses the easier way to apply domestic law in
order to regulate these issues, while in its most favourable situation it applies the lex
fori. There is a tendency of judges all over the world  to apply lex fori in such cases, as they
are most familiar with it, but this tendency is often criticized by legal scholars who point out
that the CISG (as well as other international uniform rules) should be "free from any
influences ... which are purely domestic." Besides the criticism from legal theory, by
applying lex fori to an inappropriate extent, the court risks breaching its duty prescribed in
article 7 part 1 CISG because it clearly does not observe the international character of the
Convention and the need for its uniform application. This duty is breached in such a way
every time a general principle of CISG actually exists and therefore the provisions of the
Convention could have been supplemented in this manner.

The UNIDROIT Principles, on the other hand, provide the court with an express formulation
of such general principles of international trade law and can thereby facilitate a court's efforts
to determine the general principles of CISG. The Principles are construed in a form of civil
law code, i.e., they form a systematic and comprehensible set of legal rules. By adding a
commentary to these provisions the Principles facilitate the judge's orientation in the text and
its application to particular issues.

The usage of the Principles is also profitable for the parties to the dispute as they are from
different States and often from different legal cultures. The Principles intentionally use
neutral legal terminology which provides no advantage for any legal culture but also make it
possible to qualify these neutral legal terms under legal institutes existing in certain domestic
law. This method helps the parties to understand legal issues concerned in their dispute. On
the contrary, usage of particular domestic law provides advantage to one party in a dispute,
particularly if this law is the party's "own" law. This inequality of experience is eliminated in
case of using of the UNIDROIT Principles. Furthermore, its usage eliminates also the
language barrier which is usual in disputes with international aspect. Domestic law is usually
not available in other language forms than the official language of this country, which makes
it harder for the "foreign" party to understand it. On the other hand, the Principles (more

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precisely its 2004 version) besides its official language versions were also translated to other
languages as Chinese, Farsi, Japanese, Korean, Romanian, Russian, Portuguese, Serbian,
Turk and Vietnamese and the number of versions is gradually increasing. Therefore the
Principles are better adjusted for international usage than is the case with domestic law.

Furthermore, the majority of scholars underline the balance and fairness of the Principles:
they do not provide a more favourable position to either of the contractual parties but provide
equal protection to both sides. This is not the case in various domestic laws which, with
regards to special social or political circumstances, favour one contractual party over another.

Last but not least, the Principles, being systematic and precise in their formulation and
accompanied by a comprehensive commentary, create a useful tool for the judge in
application of the CISG, as they are compatible with the Convention. In this manner the
Principles can be treated as advice from "wise men" to the court on how to interpret and
apply the Convention. The most accurate review of usefulness of supplementing the CISG by
the UNIDROIT Principles is provided by Bridge, who states that if the resolution of
particular issues is left unsettled in the CISG and the UNIDROIT Principles can help to settle
such resolution, there is no reason why the UNIDROIT Principles could not promote
development of the CISG at least to the same extent as legal theory and jurisprudence.

Bibliography

1.www.cisg.law.pace.edu

2.www.unidroit.org

3.www.unilex.info

4.www.victoria.ac.nz

5.www.lawweb2009.law.villainova.edu

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