Bij een internationale koop mag je als Belgische koper of verkoper er niet automatisch van uitgaan dat het Belgisch recht toepasselijk is. De kans bestaat even goed dat het recht van de Staat waar de andere partij gevestigd is, toepasselijk is of zelfs het recht van een ander, “derde” land.
Partijen hebben een grote vrijheid bij de keuze van het toepasselijk recht. In de praktijk is deze keuze niet altijd gemakkelijk. De onderhandelingspositie, de commerciële verhoudingen, de vestigingsplaats van de partijen, de plaats van levering, e.d.m. hebben alle een invloed.
Aan de onderhandelingstafel moet je daarom de juiste beslissing kunnen nemen. Last minute een ander recht toepasselijk verklaren zonder nazicht van de mogelijke gevolgen, kan als een boomerang terugkeren.
We geven hierna enkele handvaten en basisoverwegingen mee die je leiden naar het recht dat het kader zal vormen voor je rechten en plichten als koper of verkoper bij een internationale koop.
1. General
In international agreements, you must first address the question of which law applies to your contract. Private international law (PIL) serves as a sort of traffic guide or GPS, directing you to the applicable law. It does this through so-called choice-of-law rules, which identify the applicable law using connecting factors such as residence, place of performance, and choice of law, among others. These rules though do not determine how the rights and obligations of the parties should be determined on the merits.
Uniform international sales law – Vienna Convention (CISG)
General
Sales agreements hold a unique position in international contract law. The sale of movable goods is one of the few contracts governed by uniform rules that define the rights and obligations of the parties in an international sale. When such an instrument exists, the ‘GPS’-function of private international law is no longer necessary, as both parties can apply the same rules. This naturally facilitates cross-border trade, enhances legal certainty, and reduces risks.
These rules are outlined in the Vienna Convention on Contracts for the International Sale of Goods (CISG), adopted on April 11, 1980 (Convention on the International Sale of Goods). It is a global treaty that has been adopted by ninety-seven countries, including Japan, China, and the United States.
For example, an international sales contract between a Belgian company and a business in Austin (Texas), will be governed by the uniform sales law of the CISG.
In Europe, the notable absentees are Ireland and Malta, and outside the EU, the UK. Many African countries, for instance, have also not ratified the Convention. Make sure to check carefully whether the State where your counterparty is located has ratified this Convention.
The CISG has had a significant impact on other legal systems and is regarded as a successful instrument. The text of the future Belgian Sales Law (Book 7 of the Civil Code, the draft of which is currently back on the negotiation table) will be inspired by this convention.
The Convention provides for ‘automatic’ application to cross-border sales of movable goods between traders from states that are parties to the Convention.
E.g., In a sales agreement between a Belgian buyer and a German seller, the Convention automatically and directly applies without the parties needing to include a choice in their contractual terms.
Furthermore, the Convention is ‘indirectly’ applicable when the applicable PIL-rules designate the law of a contracting party as the applicable law.
E.g., When a Belgian seller enters into an agreement with a buyer from the UK, the Convention will not apply automatically, but it can be applied ‘indirectly’ through a choice for Belgian law.
Therefore, keep in mind that in international sales law, these uniform rules can ‘override’ Belgian law without the parties needing to take any action.
Do the uniform rules of sale law always apply?
No. For example, the Convention does not apply to consumer sales, to the sale of securities or electricity.
Furthermore, these rules do not govern every aspect of the sale. Aspects such as the absence of agreement, representation, capacity, unfair terms in contracts, pre-contractual information obligations, property rights, and statutes of limitations are not addressed. However, the key aspects of the sale, such as the formation of the agreement and the rights and obligations of the buyer and seller, are covered. This means that the Convention must always be envisaged in connection with rules with the designated applicable national sales law.
Applicable law when the uniform sales rules (CISG) do not apply?
No choice of law
When the dispute is brought before a Belgian (or other EU) court, in the absence of a choice of law, the law of the country where the seller is established will apply. It should be noted that this law will serve as the framework within which the contractual agreements can take effect (e.g., regarding their interpretation, as well as for any aspects that the parties have not addressed).
Choice of law
In principle, parties can choose the law of any country without any requirement for a connection to the agreement or the parties. Parties established in the EU can perfectly choose the law of another EU member state or that of a third country.
E.g., a Belgian seller and a German buyer can opt for the application of Chinese law.
You should also keep in mind that even in the case of the application of the CISG, a choice of law clause remains relevant. As said, the CISG only governs a limited number of subjects, so aspects not covered by the CISG must be assessed according to the chosen law.
2. Points of attention when drafting a choice of law clause
First question: exclusion of the CISG?
Many templates exclude the application of the CISG, e.g.: ‘The Agreement, any non-contractual obligation arising out of or in connection with it, and any dispute arising out of or in connection with it, shall be governed by, and construed in accordance with the laws of Belgium, at the exclusion of the UN Convention on Contracts for the International Sale of Goods (CISG)’.
However, such an exclusion clause does not always have the intended effect.
Depending on your position, it may create new unforeseen risks. Therefore, it is important to know when it is advantageous to exclude the CISG or not.
The complaint regime for non-conforming delivery is addressed differently under the application of the Convention than under Belgian law. For example, the buyer’s obligation to inspect the goods in a timely and adequate manner upon delivery is stricter under the rules of the Convention, which is thus in favor of the seller.
In terms of sanctions, the Convention offers the buyer more flexibility than Belgian law. Both regimes provide for identical sanctions, such as the right to repair or replace the goods, compensation, price reduction, or termination. However, in Belgian law, the sanctions regime is subject to stricter formalities, which gives the buyer less flexibility.
In this newsletter, we will not further elaborate on the differences between the two sales regimes. Please feel free to contact us if you would like more information on this topic.
In case of exclusion of the CISG
If the CISG is validly excluded, the chosen law will apply and in the absence of such a choice, the law of the seller’s place of establishment governs the contractual relationship.
3. Reflections – key considerations
- The Belgian party often proposes a choice for Belgian law. In practice, a potential co-contracting party from another country will typically insist that the law of the country where she is established applies. This is often unknown territory, and you want to be cautious about dealing with it outright.As a solution, you can propose to apply the law of a ‘neutral’ country (in the sense that there is no connection or link to either of the contracting parties), such as Swiss or German law in the case for example of a sale of a batch of fruit from a Belgian seller to a French buyer.
- Make sure to do some research in advance about these alternatives so you can assess their implications. It is advisable to have relevant contract templates reviewed by a specialist in the chosen law beforehand, so that the templates are ready in a variant version.
- Align the forum for disputes, to the extent possible and as far as relevant, with this choice of law.
- Have you given sufficient thought to the implications of choosing one law over another?
- First, the chosen law may be more advantageous for one party than for another on a specific legal point. For example, the obligation to notify non-conforming delivery may be more lenient for the buyer in one legal system. Therefore, a choice of law clause for the law of this country is beneficial if you are assisting the buyer.
- Keep in mind that you are choosing to apply the entire legal system of the chosen law, and this may include rules that are more detrimental to the party you are assisting with (e.g., stricter rules on penalty or damages clauses).
- If the chosen law contains a lot of ‘mandatory law’ (from which one cannot deviate), this may result in parts of the agreement being unenforceable.
E.g.: in many general terms and conditions, so-called penalty clauses appear, i.e., a provision where a person agrees to pay fixed compensation for damages that may arise in the event of non-performance of the contract.
Under Belgian law, these clauses can have a broad application, and the court can reduce them within certain limits. It is possible that the chosen law does not provide for such a reduction authority or imposes different conditions on it (for example, no reduction authority for clauses with a ‘punitive’ character).
The rules of the chosen law can also be ‘overridden’ by rules of public order (e.g., competition law) or ‘overriding mandatory rules.’ The court will have to apply the overriding mandatory rules from their own legal system. For example, it may be argued that a Belgian court must mandatorily apply the rules regarding unlawful clauses in the B2B law, regardless of the choice of a foreign law (because the parliamentary preparatory work favors an interpretation along these lines).
The choice of applicable law in an international sales contract is often not a ‘one-stop’ decision but requires a thoughtful selection that considers the interests of all parties involved and cultural differences. Looking beyond legal borders, even in our neighboring countries, necessitates a thorough study of the functioning of the foreign legal system.
Please feel free to contact us for further advice. Our team of experts, active in a broad international network of lawyers, will be happy to assist you.
