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Assignment - Article 19 of CISG

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Added on  2019-10-09

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:Article 19 of the CISG explicitly states that Additional or different terms relating among other things, to the “settlement of disputes” are considered to materially alter the terms of the contract. (Article 19: Spagnolo,, 2014) In the present case, the question arises whether inclusion of the arbitration terms constitutes material alteration of the terms of the contract. Here, the ESS is based in South Korea and RTI in the US. Having chosen to apply the CISG as a binding law on the parties the conflict resolution has to be chosen through an arbitrator. As an established trade usage, arbitration is a common method of settlement of dispute as specified under Article 19(3) of the CISG Rules. Therefore, in cases where the arbitration clause reflects the parties’ practices or an applicable trade usage, it does not result in material alteration of the contractual agreement between the parties to the contract. However, the question here is that RTI has chosen a third country as the seat of arbitration, questioning the fact whether it could lead to material alteration in case the parties do not agree on the place of dispute resolution can cause material alteration of the contract case. Applying the general rule the place of the contracting parties has to be convened asthe seat of arbitration proceedings. Article 1(a) (b) stipulate that wherein the question occurs regarding the contract of sale of goods states where the two states have their places of business in the contracting states, designation of a third state can take place only in case of litigation which took place in the third contracting states. [ CITATION CIS15 \l 1033 ] This ensures that the place of hearing has to be that of the contracting states. Any addition of third place causes material alteration in the clauses and negates the principles of battle of forms. As has been held by the courts in a number of cases, that where there is discrepancy as to the place where the process of arbitration will take place, general acceptable principles of contract law, including the Uniform Commercial Code will be applicable. In the case of Lea Tai Textile Co. v Manning Fabrics[ CITATION 7541 \l 1033 ], the court laid down the fact wherein the arbitration clause is introduced, the parties have to resolve their conflict before the domestic courts. In this case, it has to be either South Korea or United States. Introducing a new place will therefore constitute material changes in the contract under the Convention. Hence in the present case, while adding the arbitration clause per se does not by itself cause material alteration of the contract, but introducing a third place other than that of the contracting parties can lead to material alteration of the clauses of the contract.
Assignment - Article 19 of CISG_1

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