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The United Nations Convention on Contracts for the International Sale of Goods(the “CISG”) is limitedly applied to contracts for the international sale of goods. A contract for the sale of goods is deemed to be international when the parties’ places of business are in different states, which is called ‘CISG’s internationality’ or ‘CISG’s international character’. CISG can be also applied when the rules of private international law lead to the laws of a contracting state.
As CISG does not define the concept of “place of business”, we need to refer to court decisions or arbitral awards to clearly understand its concept. UNCITRAL has established a reporting system for case law on UNCITRAL texts(“CLOUT”). CLOUT was established in order to assist judges, arbitrators, lawyers, and parties to business transactions, by making available decisions of courts and arbitral tribunals interpreting UNCITRAL texts.
According to CLOUT cases, the nationality of the parties is not considered in determining the application of CISG, and the parties’ civil or commercial character is irrelevant. Korea’s Foreign Trade Act, however, distinguish between foreign trade and domestic trade by means of movement of goods. As the criteria of Korea’s Foreign Trade Act for foreign trade is different from those of CISG, careful attention is required.
The basic principle of contractual freedom(“party autonomy”) is recognized in CISG by permitting the parties to exclude the application of CISG or derogate from or vary the effect of any its provision. In addition, CISG may be also applied as the law applicable to the contract if so chosen by the parties.