Article 7(2) of the CISG and the Gap-Filling Exercise

In the earlier posts (Overview of CISG, Issues of Interpretation in the CISG, Good Faith, International Trade and Article 7 (1) of the CISG and International Character and the Need to Promote Uniformity in the Application of the CISG), we talked about Article 7 (1) of the CISG. We discussed the meaning of “good faith”, “international character” and “need to promote uniformity” mentioned in Article 7 (1) of the CISG. Let us now understand Article 7 (2). Article 7 (2) of the CISG states that:

“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.”

Article 7 (2) is a potent tool in the hands of the arbitrators, the judges and the counsels to fill the gaps present in the text of the CISG. It provides a simple formula by stating that the questions that are governed by the convention but are not expressly settled by it can be settled by using the general principles on which the CISG is based. There is no need for the interpreters to resort to the domestic law principles if the general principles of the CISG are capable of settling the question at hand.[1]

The important point to remember is that only those questions and matters are to be interpreted using Article 7 (2) that are not expressly settled by the convention but are the subject-matter of it. Article 7 (2) also provides a backup plan. It says that if the general principles of the CISG are incapable of sorting out the issue, then the domestic law principles can be used to settle the relevant questions. It simply states that such questions must be settled 'in conformity with the substantive law applicable by virtue of the rules of private international law'. Thus the rules of private international law will act as a guiding light in determining the relevant domestic law provision that is to be applied. Sometimes the applicable substantive rule may prove to be an international rule.[2]

Article 7 (2) is quite tricky in nature as it is difficult to determine where the gap-filling exercise is needed and where the simple interpretative exercise would do the job. Usage of rules of private international law has been accorded a secondary status under Article 7 (2). The primary focus is on using the general principles on which the CISG is based.

Such general principles are present in plenty in the CISG convention. A good example is that of Article 6 that provides for freedom of contract and party autonomy. What is important to remember is that only those questions are to be settled using Article 7 (2) that are governed by the CISG. Questions that are not the subject-matter of CISG are to be excluded from the application of the said article. Thus Article 7 (2) provides us three important principles of interpretation.

1. The first part of Article 7 (2) is in conformity with Article 31 (1) of the Vienna Convention on the Law of Treaties. Article 31 reads as under:

“A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”

Article 7 (2) is in spirit with Article 31 as it provides that general principles of the CISG shall be used for settling the unresolved questions. Article 7 (2) must be read with Article 7 (1) that provides for observance of good faith in the context of international trade.

2. The Gap-filling exercise is to be resorted to only in cases involving “Questions concerning matters governed by this Convention which are not expressly settled in it.”

3. Article 7 (2) also explains when the rules of private international law or the domestic law principles are to be used.

These three principles of interpretation are inter-woven with each other and explain that the interpretation of the CISG should be autonomous in nature meaning thereby that minimum dependence on the domestic law principles should be there.[3] In the next post, we shall conclude the discussion on Article 7 of the CISG.

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[1] Mark N. Rosenberg, The Vienna Convention: Uniformity in Interpretation for Gap-filling - An Analysis and Application, 20 Australian Business Law Review (1992) 442-460.

[2] Ibid.

[3] Ibid.