Just published: Ulrich Schroeter's article 'Uniformity and Standardized Flexibility under the CISG'

Just published in the UCLA Journal of Islamic and Near Eastern Law: Ulrich Schroeter's article on 'Uniformity and Standardized Flexibility under the CISG: Options for Newly Acceding Contracting States Observing Islamic Law'

The United Nations Convention on Contracts for the International Sale of Goods of 1980 (CISG) has been widely ratified around the world, but its success among States observing Islamic law has been mixed. An accession hurdle discussed in this context have been the Convention's provisions on interest (Arts. 78 and 84(1) CISG), due to their possible incompatibility with Islamic law. Saudi Arabia's recent accession to the CISG may have reflected these concerns, as the Kingdom acceded with a reservation excluding the Convention's entire Part III (Arts. 25-88 CISG, and thereby also Arts. 78 and 84(1) CISG).

Against this background, this article develops the concept of States' “standardized flexibility” under the CISG, and outline how and to what effect it may be used by newly acceding States observing Islamic law. In this regard, three flexibility features are discussed:

(1) The reservations authorized by Part IV of the CISG, and their standardization both in content and in effect. As a result, any Art. 92 CISG reservation regarding Part III extends to 64 of the Convention’s 101 provisions, but nevertheless not completely excludes the applicability of its interest-related provisions.

(2) The limits to the CISG's substantive scope, because the Convention does not settle the interest rate to be applied under Arts. 78 and 84(1) CISG (a "gap"). This grants any State flexibility to fix the interest rate to be applied to CISG transactions where the gap-filling law is the respective State’s domestic law, with such flexibility including the possibility to exclude any interest, being the equivalent to an interest rate of 0 percent. 

(3) The possibility for any CISG Contracting State observing Islamic law to make an interpretative declaration in case it so desires, and to thereby make clear that it will not fill the Convention’s interest-rate gap in any manner that would conflict with Islamic law.