Arbitration Agreements and the CISG: An Overview

When conducting international business, it is important to consider the potential for disputes to arise. In order to address these potential disputes, parties may include arbitration clauses in their agreements. Additionally, parties may need to consider the applicability of the United Nations Convention on Contracts for the International Sale of Goods (CISG) when drafting their agreements.

Arbitration agreements are contracts in which the parties agree to resolve any disputes through arbitration rather than traditional litigation. Arbitration is a form of alternative dispute resolution in which an impartial third party or panel makes a final decision on the matter. The decision reached in arbitration is typically binding and enforceable, and the process can be faster and less expensive than traditional litigation.

One of the advantages of including an arbitration clause in an agreement is that it allows the parties to choose the law that will govern the dispute. For example, parties may choose to apply the laws of a specific country or state, or they may choose to apply international law.

When drafting an arbitration agreement, it is important to consider the applicability of the CISG. The CISG is a multilateral treaty that governs contracts for the international sale of goods between businesses from different countries. The CISG applies to contracts for the sale of goods between parties whose places of business are in different countries that have ratified the treaty.

If the parties to an agreement are from countries that have ratified the CISG, the CISG may automatically apply to the agreement unless the parties specifically exclude it. In such cases, the parties may still choose to apply the laws of a specific country or state to the arbitration process.

The CISG provides a uniform set of rules for the sales contract, including the formation of the contract, the obligations of the buyer and seller, the delivery of goods, and the remedies available to the parties in case of breach. The CISG also includes provisions on the interpretation of the agreement, the effect of a party`s failure to perform its obligations, and the calculation of damages.

When including an arbitration clause in an agreement governed by the CISG, it is important to ensure that the clause is drafted in accordance with the requirements of the CISG. For example, the arbitration clause should include clear language outlining the scope of the arbitration and the procedural rules that will apply. The clause should also be included in the contract in a manner that complies with the formal requirements of the CISG.

In conclusion, including an arbitration clause in an agreement can provide parties with a faster and less expensive method of resolving disputes. However, when drafting an arbitration agreement, it is important to consider the applicability of the CISG and ensure that the clause is drafted in accordance with the requirements of the treaty. With careful consideration and drafting, parties can enter into agreements that effectively address the potential for disputes and provide a clear framework for resolving them.