Elephant in the Room: CISG, Hardship, and Uniform Application

Abstract

It has long been disputed by scholars, courts, and arbitral tribunals whether or not hardship is covered by Article 79 of the CISG. In 2020, the CISG Advisory Council published an opinion and expressed the view that CISG governs cases of hardship but under Article 79, the parties have no duty to renegotiate the contract; and a court or arbitral tribunal may not adapt the contract or bring the contract to an end. Council’s opinion is primarily based on the aim to prevent recourse to domestic law. In fact, if one accepts that CISG contains a gap concerning hardship, domestic law will apply to fill such gap, and this would undermine the unification of the law. However, this can hardly be a reason to accept that cases of hardship are covered by Article 79 CISG. Historical, textual, and teleological interpretation of Article 79 as well as an economic analysis of the concerned remedies show that Article 79 does not cover and/or is not suited to apply to cases of hardship. Therefore, there is an internal gap within the CISG concerning hardship and except for some exceptional cases, where one could find an international trade usage between the parties, the last resort to fill such gap is resorting to the domestic law applicable through private international law. Hardship, adaptation, renegotiation, CISG, external gap, internal gap, pacta sunt servanda, clausula rebus sic stantibus, observance of good-faith in international trade, international trade usage