I. Effect on “property” under Article 4, sentence 2(b) of the CISG
508
To discuss the provision in more detail, the meaning of “property” thereunder and the potential indirect of impact the CISG on the transfer of property under national law must be analyzed.
1. “Property” as an autonomous term under Article 4, sentence 2(b) of the CISG
509
It has not been the subject of discussion whether “property” under Article 4, sentence 2(b) of the CISG is an autonomous term or refers to property under the respective national law. This stands in contrast to Article 4, sentence 2(a) of the CISG and its exclusion of matters of “validity” where the corresponding question has been fiercely discussed for years.1051 While Bridge is correct in pointing out that Article 4 of the CISG does not “formally” define property,1052 it is proposed here to apply the definition of an autonomous term “property” developed above: Property should be understood as the
510
The obvious counterargument to applying this definition to Article 4, sentence 2(b) of the CISG is that the provision would then not exclude any effect the CISG could have on third party interests. In contrast to the notion of property under, for example, Swiss or German law (absolute property), the proposed definition only refers to the seller’s legal interest. At first sight, one might be prompted to conclude that the CISG could consequently have an effect on third party rights in the goods, because such an effect would not be excluded under Article 4, sentence 2(b) of the CISG. However, as Article 4, sentence 1 already clarifies, the CISG only governs the relationship between the seller and the buyer. This wording is coherent with the rest of the Convention, which gives no indication of regulating the legal situation of or relationships with third parties (apart from the Contracting States and their obligations under public international law under Articles 89–101 of the CISG).1055 Article 41 of the CISG is no exception to that rule, since third party rights or claims are only governed in their consequences regarding a potential breach of contract by the seller vis-à-vis the buyer. Therefore, there is no need to explicitly state that the CISG does not affect the property under national law in the goods as far as third parties are concerned or more abstract the legal position of third parties. Thus, defining “property” as proposed does not render the CISG applicable to questions of (absolute) property under national law and other third parties’ interests. The same result is achieved if one agrees with Schroeter that Article 4 of the CISG should not be interpreted to provide any clear insight as to the scope of the Convention.1056 If the question arises who the owner of certain goods is, the CISG provides no answer on its own.
226 2. Indirect relevance of the CISG on the transfer by way of incidental questions
511
Nevertheless, this does not mean that the CISG cannot form part of the chain of reasoning in deciding who is the owner of the goods or whether the seller has transferred his or her legal interest (i.e., property under the CISG). The law applicable to property may make the transfer of rights dependent on certain contractual questions that are subject to the CISG. Private international law terminology would describe this as a preliminary or incidental question (Vorfrage, question préalable).1057 In a causal system that conditions the transfer of property on a valid contract transferring property (for example, French law in Article 1583 of the French Civil Code), the CISG determines whether a contract has been concluded as far as the CISG is the applicable contractual law.1058 Since the CISG itself does not influence the property in the goods, the applicability is merely indirect by way of an incidental question. The reason for the applicability of the CISG is, consequently, national private international law. The latter could pose this question also to unharmonized national contract law without a breach of the respective countries’ public international law obligations under the CISG. Considering public international law, only this interpretation avoids a discrimination of legal systems with a causal relationship between contract and property law, since an abstract system (for example, German law in sections 929 et seq. of the German Civil Code) also does not apply the CISG to answer such questions. This interplay of the CISG and national property law requires countries to separate questions of property and contract more clearly than under national law and presupposes a separation principle (Trennungsprinzip). Yet, it does not concurrently require the countries to introduce an independent or abstract treatment of both questions. At the same time, it does not preclude turning to the CISG for incidental questions. This leaves room for both causal and abstract systems. Conversely, the CISG does not interfere with the decision of a legal system between transfer solo consensu or by traditio: the CISG does not broaden the requirements for a transfer of property under national law, for example a handing-over, just because Article 30 generally requires delivery of the goods.1059
512
The only decision that is sometimes cited to contradict the idea that the CISG does not interfere with the transfer of property, Victoria Alloys, Inc. v. Fortis Bank SA/NV decided by the US Bankruptcy Court for the Northern District of Ohio, can be explained against this background.1060 Victoria Alloys had bought pig iron from its parent company before becoming bankrupt. In bankruptcy proceedings, the question arose whether the pig iron formed part of the bankruptcy estate under section 541(a) of the Bankruptcy Code. This would have been the case if Victoria Alloys had been the owner of these goods. According to the court citing Articles 53–57 of the CISG, payment was a decisive factor in finding whether property had been transferred. Yet, the court cited provisions on payment not because the CISG dictates that property can only pass with payment of the goods, but rather because the parties had agreed on a cash-against-documents transaction. The linkage between payment and property, thus, did not stem from the CISG, but stemmed in this case from a parties’ agreement that the applicable property law accepted. Whether payment has been effected might be considered an incidental question to be answered by the CISG, which, however, only confirms the aforesaid.
| 1051 | Cf. Schlechtriem/Schwenzer/Schroeter/Ferrari, 8th German edn, Art. 4 para. 16. |
| 1052 | Bridge, International Sale of Goods, para. 10.29. |
| 1053 | See above for the definition under Art. 30 CISG, para. 172. |
| 1054 | Corresponding to the result reached in Easom Automation Systems, Inc. v. ThyssenK-rupp Fabco, Corp., US District Court for the Eastern District of Michigan, 28 September 2007, CISG-online 1601. |
| 1055 | Schroeter, 58 Villanova Law Review (2013), 553, 556 with the accurate remark that the regulation the Contracting States’ obligations under public international law renders Art. 4, s. 1 CISG an (innocent) misrepresentation. |
| 1056 | Schroeter, 58 Villanova Law Review (2013), 553, 556–558. |
| 1057 | See generally on this concept in regard to sales contracts and transfer of property, MüKoBGB/Wendehorst, Art. 43 EGBGB para. 86; Collins/Harris, paras. 2-044–2-063; Gotlieb, 25 International & Comparative Law Quarterly (1977), 734. |
| 1058 | Whether the concluded contract is valid can, in turn, be dependent on national law due to Art. 4, s. 2(a) CISG or due to the applicable property law. |
| 1059 | Unfortunate and ambiguous mixture of delivery under Art. 30 CISG and handing-over under national property law by Schlechtriem/U. Huber, 3rd German edn, Art. 30 para. 7. |
| 1060 | Victoria Alloys, Inc. v. Fortis Bank SA/NV, US Bankruptcy Court for the Northern District of Ohio, 10 April 2001, CISG-online 589. Cited by Schlechtriem/Schwenzer/Schroeter/Ferrari, 8th German edn, Art. 4 para. 30 fn. 179 and Kröll/Mistelis/Perales Viscasillas/Djordjević, Art. 4 para. 28 fn. 77 as an example that diverges from the general understanding. |
Property in Goods and the CISG (2024), S. 225—227
