Exclusion on Whose Terms?: The Harm of Upholding Implied Exclusions Under Article 6 of the Convention on the International Sale of Goods

Madilynn O'Hara February, 2025

Share with:

Often hailed as a “worldwide success,” the Convention on the International Sale of Goods (CISG) is among the most widely accepted treaties in international law, with 97 states party to the Agreement.[1] Despite its widespread adoption, contracting parties are not as keen on the treaty, with many choosing to frequently opt to exclude its application in international sales agreements.[2] Although the CISG guidance is clear—courts should “generally tip in favor of non-exclusion where the facts do not support an inference of a clear intent to exclude”[3] —in practice, courts and tribunals have failed to apply exclusions uniformly.

Pursuant to Article 6 of the CISG, parties may exclude the Convention’s application. Article 6 of the CISG expressly provides that “the parties may exclude the application of this Convention or. . . derogate from or vary the effect of any of its provisions.”[4] To establish an exclusion, the parties must express a clear, affirmative, and mutual intent.[5] This intent is assessed under the “reasonable person standard” outlined in Article 8, which directs that “statements made by…a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had under the circumstances.”[6] Accordingly, any intent to exclude the CISG must be determined from the perspective of a reasonable person evaluating the contracting context. If a reasonable person would interpret the parties as wanting to exclude the CISG, then the Convention should not apply.

In practice, parties may exclude the CISG either explicitly or impliedly.[7] Explicit exclusion usually appears in a choice-of-law clause, where the parties expressly state that the CISG will not apply. Implied exclusions require “concrete indications that the parties wished their legal relationship to be governed by a specific (domestic) law, in full knowledge that the CISG would in principle be applicable.”[8] Such exclusion must reflect the actual, rather than hypothetical, intent of the parties.[9] This means that both parties must demonstrate and mutually agree on an intent to exclude the CISG; one party may not unilaterally exclude the CISG.[10]

Implied exclusions have been controversial since their conception.[11] In practice, courts have applied implied exclusions inconsistently. Some proponents of implied exclusions argue that pursuant to Article 8(3), tribunals should be allowed to consider all “relevant circumstances” to fully determine the parties’ intent.[12] This means that some courts have looked beyond the four corners of the contract to ascertain the parties’ subjective intent, considering factors such as negotiations, prior dealings, and the parties’ conduct.[13] Other proponents, however, contend that implied exclusions only exist in very specific and limited circumstances— either through a choice-of-law clause that selects a non-contracting state, or when it specifies a particular specific domestic legal framework (e.g., the contract law of a state).[14] While others reject the notion of implicit exclusions altogether.[15]

To best uphold the power of the parties and reduce confusion, Article 6 should be rewritten to apply only to explicit exclusions. The current practice allows courts to individually decide just how far to look when determining party intent—whether to stay within the governing law clause, extend to the whole contract, or to look to external evidence. This could lead to arbitrary interpretations that effectively undermine the intent of the parties.[16] As a consequence, the determination of implied exclusions depends less on the parties’ intent and more on the tribunal’s interpretation of the surrounding circumstances. Doing away with implicit exclusions altogether through a rewrite of Article 6 best solves this problem.

Moreover, the uncertainty and uneven applicability of implied exclusions undermine the goal of the CISG. The CISG was created to develop international trade “on the basis of equality and mutual benefit” and to “contribute to the removal of legal barriers in international trade and promote the development of international trade.”[17] By refusing to stick to specific standard to determine exclusions, judges and arbitrators discourage international trade. The uneven system could make international traders less willing to apply the CISG, given that the wording of the governing law clause in their contract could be disregarded based on alternative evidence found by a court. As such, the differing standards in applying implied exclusions undermine the uniformity and equality in international contracting law that the CISG seeks to create.

Explicit exclusions provide a clear path to party intent that implied exclusions do not. Explicit exclusions cut out the middle-man by directly stating whether the parties wanted the CISG to apply, thus preventing courts from relying on alternative evidence to discern whether the CISG applies. This, in turn, preserves power autonomy—ensuring that what is said in the contract directly determines the governing law. Eliminating implied exclusions would also resolve uncertainty and inconsistent application, thereby best promoting fairness and uniformity in international trade, supporting the goal of the CISG. By requiring parties to state their intent, explicit exclusions provide a clear alternative to the uncertainty that implied exclusions appear to encourage.

  1. Ingeborg Schwenzer & Pascal Hachem, The CISG—Successes and Pitfalls, 57 Am. J. Comp. L., 457, 457 (2009); United National Treaty Collection, United Nations Convention on Contracts for the International Sale of Goods (last accessed Feb. 4, 2025) https://treaties.un.org/Pages/ViewDetails.aspx?src=TREATY&mtdsg_no=X-10&chapter=10&clang=_en.↑

  2. Schwenzer & Hachem, supra note 1, at 464.↑

  3. CISG Advisory Council Opinion No. 16, Exclusion of the CISG under Article 6, Beijing, China, Oct. 3, 2014 [hereinafter Advisory Council Opinion No. 16].↑

  4. United Nations Convention on Contracts for the International Sale of Goods art. 6, Apr. 11, 1980, 1489 U.N.T.S. 3.↑

  5. U.N. Commission on International Trade Law, UNCITRAL Digest of Case Law on the United Nations Convention on Contracts for the International Sale of Goods, 33 (2016) [hereinafter UNCITRAL Digest].↑

  6. United Nations Convention on Contracts for the International Sale of Goods art. 8, Apr. 11, 1980, 1489 U.N.T.S. 3; see also Advisory Council Opinion No. 16 (finding that any exclusion must be “clearly manifested”).↑

  7. Simon Cornelius Manner & Moritz Schmitt, Article 6 (The Contract and the Convention), in COMMENTARY ON THE UN SALES LAW 77, 77-82 (Christoph Brunner & Benjamin Gottlieb eds. 2019). Explicit exclusions are also sometimes referred to as “express exclusions.” Advisory Council Opinion No. 16. Implied exclusions are also sometimes known as “implicit exclusions.” Advisory Council Opinion No. 16.↑

  8. Id. at 77.↑

  9. Id.↑

  10. Lisa Lundgren, The United Nation’s Convention on Contracts for the International Sale of Goods: Why Is It Being Excluded from International Sales Contracts?, 22 (Master’s thesis, Jönköping Univ., 2014) (Diva Portal).↑

  11. For a discussion over the issue of including implied exclusions (and why the Drafters of the CISG ultimately decided against referencing implied exclusions in the official text of Article 6), see Summary Records of Meetings of the First Committee, 4th mtg., U.N. Conference on Contracts for the Int’l Sale of Goods, Mar. 13, 1980, U.N. Doc. A/CONF.97/C.1/SR.4.↑

  12. United Nations Convention on Contracts for the International Sale of Goods art. 8, Apr. 11, 1980, 1489 U.N.T.S. 3; William P. Johnson, Understanding Exclusions of the CISG: A New Paradigm of Determining Party Intent, 59 Buff. L. Rev. 213, 265 (2011).↑

  13. Johnson, supra note 11, at 267. See also Ethyl Acetate, [plaintiff] v. [defendant], 2 U 2723/99 (Dec. 1999) (looking at the whole record before deciding that there was no exclusion of the CISG).↑

  14. UNCITRAL Digest, Article 6. See also Asante Technologies, Inc. v. PMC-Sierra, Inc., 164 F. Supp. 2d 1142 (N.D. Cal. 2001) (“…selection of a particular choice of law, such as «the California U.S.DistrictCourtfortheSouthernDistrictofNewYork,UnitedStates,21July1997,CLOUTcaseNo.187(d/b/a Fiona Waterstreet Hats, 1997 U.S. Dist. LEXIS 10630); Commercial Code» or the «Uniform Commercial Code» could amount to implied exclusion of the CISG…” (emphasis in original); Chongqing Loncin Engine Parts Co., Ltd. v. New Monarch Machine Tool, Inc., China International Economic and Trade Arbitration Commission (2021) (“…only when both parties concerned clearly agree in the contract to select a specific domestic law of some contracting state as the governing law for the contract, may CISG be deemed as excluded by implication).↑

  15. See e.g., Orbisphere Corp. v. United States of America, 726 F. Supp.1344 (1990)).↑

  16. This was one stated concern during the drafting stage of Article 6. One Drafter hesitated to include a reference to implied exclusions, “lest the special reference… encourage courts to conclude, on insufficient grounds, that the [CISG] had been wholly excluded.” Summary Records of Meetings of the First Committee, 4th mtg., U.N. Conference on Contracts for the Int’l Sale of Goods, Mar. 13, 1980, U.N. Doc. A/CONF.97/C.1/SR.4.↑

  17. United Nations Convention on Contracts for the International Sale of Goods Preamble, Apr. 11, 1980, 1489 U.N.T.S. 3.↑