A Test for Disgorgement under the UN Convention on the International Sale of Goods (CISG)
Autor | Jorge Arturo González Calderón/Valeria Alvarado Andrade |
Cargo | Law student at the University of Costa Rica. He participated as team member and oralist for the University of Costa Rica at the 2019 Willem C. Vis International Commercial Arbitration Moot, where his team received an honorable mention in the oral rounds, and he received an honorable mention as individual oralist. He is currently coaching the 20... |
Páginas | 66-83 |
66
X Edición, I semestre 2020
A Test for Disgorgement under the UN
Convention on the International Sale of Goods
(CISG)
Jorge Arturo González Calderón*
Valeria Alvarado Andrade**
Resumen:
Este artículo resume un debate vigente en el mundo académico: la posibilidad de que una empresa pueda reclamar las
utilidades vinculadas al incumplimiento contractual de su contraparte, bajo la Convención de las Naciones Unidas sobre los Con-
tratos de Compraventa Internacional de Mercaderías ("CISG"). Los autores concluyen que este método, como una acción indepen-
diente, no tiene cabida en la CISG. Sin embargo, sí podría llegar a considerarse como un mecanismo para calcular daños y perjuicios
dentro del ámbito indemnizatorio. Bajo esta premisa, se afirma la necesidad de establecer un examen legal que ayude a determinar
cuáles casos podrían justificar el uso de dicho método. De este modo, se propone utilizar un examen que surge en la jurisprudencia
de Inglaterra y Gales. Sin embargo, los pasos de este examen deben ajustarse a la CISG y a sus valores subyacentes.
Palabras claves:
Restitución de ganancias, indemnización, daños y perjuicios, restitución, enriquecimiento ilícito, buena fe, derecho
comercial internacional, derecho de los contratos, CISG.
Abstract:
This paper summarizes the existing discussion on whether a claim for disgorgement of profits can be successful under the
United Nations Convention on Contracts for the International Sale of Goods (“CISG”). The authors conclude that disgorgement
of profits, as an independent remedy, does not have a legal basis in the CISG, but may possibly be considered as a method for
calculating compensatory damages. On this premise, it is submitted that a legal test should be put in place to determine which cases
justify such a mechanism. The authors propose to use a test taken from English and Welsh case law. However, this test must be
adapted to better suit the CISG and its underlying values.
Keywords:
Disgorgement of profits, full compensation, compensatory damages, gains-based damages, restitutionary damages, un-
just enrichment, good faith, international commercial law, trade law, contract law, CISG.
* Jorge Arturo González is a law student at the University of Costa Rica. He participated as team member and oralist for the
University of Costa Rica at the 2019 Willem C. Vis International Commercial Arbitration Moot, where his team received an honor-
able mention in the oral rounds, and he received an honorable mention as individual oralist. He is currently coaching the 2020 team
of the University of Costa Rica for this same moot competition. Contact: jorgearturogonzalez31@gmail.com.
** Valeria Alvarado Andrade is a law student at the University of Costa Rica. She participated as team member and oralist for the
University of Costa Rica at the 2019 Willem C. Vis International Commercial Arbitration Moot, where her team received an honor-
able mention in the oral rounds. She is currently coaching the 2020 team of the University of Costa Rica for this same moot com-
petition. Contact: valeriaaa97@gmail.com.
Fecha de postulación del artículo: 7 de agosto de 2019. Fecha de aprobación del artículo: 1 de marzo de 2020
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X Edición, I semestre 2020
INTRODUCTION
Ensuring that a breach of contract does not pay
is a noble objective. However, whether it is
possible depends on the legal system under
which it is discussed. One of the mechanisms to
achieve this objective is allowing an aggrieved
party to target the profits that its counterparty
derived from the breach as damages. This
mechanism has become known in various legal
systems as “disgorgement of profits”,
1
“an
account of profits”,
2
or more generally, “gain-
based damages”.
3
It has been stated that
exceptional situations such as a “second sale”,
4
may warrant its use.
Whether or not this method is welcome into
contract law has been the subject of intense
academic discussions. As most domestic private
law systems do not provide for gain-based
1
See Ewoud Hondius and André Janssen (eds.), “Dis-
gorgement of Profits: Gain-Based Remedies Throughout
the World”, Ius Comparatum - Global Studies in Compar-
ative Law (N° 8), Springer International Publishing, Swit-
zerland, 2015
2
Esso Petroleum Company Limited v. Niad Limited, High
Court of Justice (England and Wales) 22 November 2001,
case no. EWHC Ch 458
3
Ralph Cunnington, “The Assessment of Gain-Based
Damages for Breach of Contract”, The Modern Law Re-
view, Vol. 71, No. 4 (July 2008), pp. 559-586
4
Some of the most generally accepted hypotheticals that
have been proposed in doctrine are the following:
1) The delivery to a third party (or second sale):
The so-called “second time seller” who does not
comply with its obligation to deliver the goods be-
cause a third party offered a better price. Thus, it
procures a higher profit than the one agreed to un-
der the original contract with the first buyer.
damages, in some cases the outcome has been a
proposal to amend the law. One of the arenas
where these discussions have taken place is the
recognized as being the most successful attempt
to unify commercial law at the international
level.
5
Given that it would be very difficult, if not
impossible, to amend this international
convention, a debate with many policy
ramifications has to be solved by the means of
interpreting and gap-filling its existing
provisions. This occurs because disgorgement of
profits is, without a doubt, not expressly
contemplated in the Convention.
The first section of this paper seeks to lay out the
debate of whether disgorgement of profits can be
allowed into the CISG. Here, the reader will find
that, whereas some scholars believe that
2) The breach of ethical values: The seller contrac-
tually obliged to manufacture the goods in ac-
cordance with ethical or human rights standards
(also known as fair market conditions), who low-
ers his or her production costs by resorting to pro-
duction mechanisms that are in breach of such an
agreement, thus maximizing the profit. They sell
the goods at the same price they would have had
the fair market condition obligation been com-
plied with.
3) The breach of exclusivity: The buyer who sup-
plies a defined market, such as the European Un-
ion, NAFTA or Mercosur, against an express stip-
ulation in the contract making a profit as a conse-
quence
5
Harry M. Flechtner, “Introductory Note on the United
Nations Convention on Contracts for the Internat ional
Sale of Goods”, United Nations Audiovisual Library of In-
ternational Law, n.d., available at: http://le-
gal.un.org/avl/ha/ccisg/ccisg.html
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