aa) The correct methodology of incidental questions is not decisive
577
Based on the same premise, Sonnentag has described the whole discussion as revolving around whether the law applicable to the incidental question would have to be found by way of applying the private international law of the forum (selbstständige Vorfrage) or the rules of the private international law of the law applicable to the main question (unselbstständige Vorfrage).1178 While the correct method regarding incidental questions is to this day subject to discussion,1179 it is not decisive here. For this discussion to be relevant, the lex causae would have to be a foreign law for the competent court, since otherwise both methods would apply identical conflict of law rules, and additionally the conflict of law rules of the lex causae and the lex fori would have to lead to different applicable laws.1180 Against the background of most private international laws allowing the parties to choose the law applicable to their contract and, for example, the unification under the Rome I Regulation, the applicable contract law will in most cases be the same irrespective of whether the rules of the lex causae or of the lex fori are applied. Furthermore, it is inaccurate to interpret Landfermann, Hornung, Krebs, and Claude Witz to argue that the solution is to be found in applying the law of the lex causae to the incidental question (unselbstständige Vor 260 frage).1181 They do not advocate applying the conflict of law rules of the lex causae (which is the lex rei sitae to this end), but rather to apply the material rules of the lex causae regarding the question of whether avoidance has an effect vis-à-vis third parties.1182 Thus, the relevant question is not one of methodology of incidental questions within private international law.
bb) Introducing a discussion on the same problem in private international law literature
578
Rather, the question is whether the applicable contract law should be exclusively relied upon to decide the incidental question posed by national property laws, for example, in France. It should be noted that there have been sophisticated discussions on the relevance of contract law in this regard in literature on private international law. These discussions, however, have gone unexamined by literature on the CISG. Niboyet has dedicated a substantial part of a monography to the interplay between contract and property law.1183 He discerned that, for example, under Article 1138 of the French Civil Code old version1184 for property to pass, four requirements would have to be fulfilled in line with Article 1108 of the French Civil Code old version: consentement, capacité, objet and cause licite.1185 Yet, French property law does not indicate which law applies to determine whether these requirements are fulfilled; the law applicable to these questions must be found by applying conflict of law rules.1186 Later, Niboyet even went further and argued that these questions should de lege ferenda be answered entirely by the lex rei sitae.1187 The main discussion that his analysis caused was on the question of whether the validity of the sales contract for purposes of the transfer of property was subject to the applicable contract law, the rules on validity of the legal system that was applicable to property, or a combination of both.1188
261 579
Nevertheless, also the consequences of a contract avoidance and whether the intent to transfer property can be rescinded have been touched upon in the periphery of the main discussion. Niboyet has argued that applying the rules of other fields of law of the lex rei sitae (specifically contract law) to the requirements posed by the lex rei sitae would lead to a desirable uniformity in cases of avoidance of contract.1189 Lalive also favors an interpretation regarding the comparable Article 1543 of the Quebec Civil Code old version and argues that the proprietary effect of the contract’s dissolution should be left to the lex rei sitae.1190 Zaphiriou follows Bartin in arguing that one has to distinguish between the sales contract and the consensual element of the transfer of property.1191 While the sales contract is governed by the applicable contract law, the consensual element is subject to the lex rei sitae.1192 This specifically extends to the question of whether the consensual element is annulled or rescinded, for example, by avoidance of contract.1193 Rabel’s remarks can be understood to be in line with the latter approach.1194
580
The arguments that, for example, Privat has raised against this approach are aimed at the relevance of validity of the contract under the lex contractus and the lex rei sitae and, thus, not directly at effects of an avoidance of contract. Nevertheless, his criticism of the approach of Lalive and Zaphiriou is correct as far as he criticizes that it assumes a consensual element in French property law distinguishable from the consensual contractual element.1195 Echoing Privat’s analysis, most scholars in the German-speaking regions have argued that in causal property systems, all questions of consent and existence of contract should, by way of an incidental question, be left to the applicable contract law.1196
cc) Contrat translatif as a requirement under the national property law
581
In my opinion, property laws in both causal and consensual systems indeed encompass incidental questions concerning consent: Whether a contract has been concluded is determined by the applicable contract law. Also, it goes 262 without saying that the contract is governed by the applicable contract law, including the question of under which circumstances the contract can be avoided. For example, French property law requires the contract to be of translative character, as is evidenced by Article 1196(1) of the French Civil Code.1197 The question of whether the contract as it exists under the applicable contract law at the relevant point in time exhibits the characteristics of what French law would consider a sufficient basis to transfer property, should be considered relevant for the requirement under the French property law as the lex rei sitae. Thus, if French law considers a sales contract avoided by the seller due to the buyer’s failed payment as no longer exhibiting these characteristics, there is no longer a contrat translatif (a contract with proprietary effect)1198 which would allow considering the buyer to never have become the owner of the goods. This effect is, hence, due to national property law and is independent from the question of whether the applicable law, for example the CISG, considers avoidance of a contract to have retroactive effect or not. If, in a causal legal system like Swiss law, the contract is considered sufficiently intact after avoidance for purposes of property law as to maintain that the property has passed,1199 there is again no need to revert to the applicable contract law in this regard. The results reached under this approach mirror the opinions of Landfermann, Hornung, Krebs, and Claude Witz under the CISG.
582
In contrast to the approach favored by Schlechtriem, this interpretation avoids a disadvantage that has been pointed out by Niboyet in the parallel discussion: Under Schlechtriem’s approach, the buyer would not become the owner of the goods after avoidance of the contract but would have to transfer property concurrently against repayment of the price under Article 81(2) of the CISG. Yet, for example, French law does not regulate how the buyer could retransfer the property, since the law does not provide for separate real contracts or abstract contracts to transfer property.1200
583
Moreover, leaving the question of whether avoidance of contract has retroactive effect to the applicable contract law is destined to cause haphazard outcomes: This is because the applicable contract law might have been drafted without any consequences for property law in mind. The consequences 263 of an avoidance of a contract for property are a case in point: The idea of a Rückgewährschuldverhältnis was created in Germany, a country that considers the contract and the transfer of property generally to be separate from one another (Abstraktionsprinzip). The Rückgewährschuldverhältnis was first and foremost meant to overcome problems with damage claims after avoidance of a contract and not for implications on the property in the goods (since the questions as to whether a contract ceased to exist ex tunc or ex nunc was and is in principle completely irrelevant for questions of property under German law).1201 The spirit of the incidental question of whether rather the seller or the buyer should be protected by remaining the owner of the goods is, thus, completely missed by some applicable contract laws, such as for example, German law. On a similar note, this could also explain why the delegates did not find it necessary to decide whether a contract under the CISG can be avoided with retroactive effect,1202 since effects on property were excluded from the CISG under Article 4, sentence 2(b).
584
A practical illustration of the haphazard results stems from the example of German and French sellers that conclude identical sales contracts with a French buyer. Yet, one contract is subject to German law, while the other is governed by French law. The goods are delivered to the buyer in France, and it becomes evident that he or she might not be able to pay. Both sellers rightfully avoid their respective contract under the respectively applicable contract law. Subsequently, the buyer becomes insolvent. Applying the opinion that makes property dependent on whether the contract still exists or whether it ceased to exist ex tunc under the applicable contract law, the French seller would be considered the owner of the goods, while the German seller would not.1203 There is no material reason under French insolvency or French property law why a seller under a different contract law should (without further agreements between the parties) be treated less favorably. Landfermann has rightfully pointed out that this result would startle an Italian or French judge.1204
585
French law could have also regulated the protection of the unpaid seller who avoids the contract before insolvency in insolvency law.1205 The fact that it indirectly placed the rule in contract law due to its overall causal system 264 should not obscure the view that this rule is in effect a protection in insolvency. The location of the rule is more due to a national lawmaker’s view that its legal system is a unit, while the impact that such a rule might have after a fragmentation into different applicable laws in international cases is less at the forefront of his or her thinking.1206 The seller’s protection by relapse of property was especially necessary in France, because during the time it was developed, the French legal system did not allow retention of property clauses to have an effect on property in the goods.1207 The principle of causality and consensus that subordinates the property law to contract law should not be taken so strictly as to override the relevance of the allocation of property in insolvency. There is no reason why an abstract property system, such as German law, should be privileged in deciding according to national standards when property passes even in international cases,1208 while causal systems are required to adhere to the consequences of a foreign contract law that might never have been checked in this regard since national law does not link such consequences to the (merely obligatory) contract.
586
Also, German and Swiss scholars may have sympathy for this interpretation since it results in the contract avoidance not having retroactive effect. This is a consequence they are familiar with due to their own national laws. However, if one were to take the interpretation literally, it could produce very different results, too. If goods were situated in Switzerland but the respective sales contract was subject to French contract law, the avoidance of the contract would lead to its non-existence ex tunc. The applicable causal Swiss property law would under the interpretation in question find that no contract exists, and the property has never passed from the seller to the buyer. Thus, even if one follows the approach under Swiss law that avoidance of a (national) sales contract should not lead to the automatic relapse of property,1209 this would nevertheless result if French contract law applied. It cannot be assumed that a causal property system gives up its reign over 265 such a central property question for the lex rei sitae just to stay true to the principle of causality.
587
These issues can be avoided by preserving the principle of causality and addressing the question of contract existence through the applicable contract law by way of an incidental question. Yet, whether this contract exhibits the characteristics of a contract that effects a transfer of property is left to the applicable lex rei sitae. In contrast to what Privat has argued, this approach does not apply two different laws to the contract and, thereby, does not split up the contract under two diverging laws.1210 Rather, the question of whether the contract is a contrat translatif is without relevance for contract law and its supremacy over the contract between the parties. Moreover, the interpretation does not contradict the opinion of the Comité français de droit international privé that Privat cites to argue that the applicable contract law should assume these kinds of questions altogether. He cites Article 89 of the “avant-projet de réforme du Code Civil” and the accompanying comments to argue that “contrats relatifs à la constitution ou à la transmission d’un droit réel sur un meuble” should also be subject to the law chosen by the parties.1211 Yet, this Article only envisaged the obligatory effects of the contract (“les contrats sont soumis, en ce qui concerne [...] leurs effets obligatoires”).1212 The accompanying discussion that Privat cites concerned the suitability of applying the lex rei sitae to the obligatory effects of the contract if the parties have not chosen an applicable law.1213 This is not a convincing basis upon which to argue whether or not the law applicable to the contract should have an impact on property, or should have relevance by way of incidental questions from the applicable lex rei sitae.
