The CISG and Choice of Law in International Sales Contracts

The CISG explained: when it applies, which countries are parties, how to exclude it, and how to choose the law, the courts or ICC arbitration for export deals.

Every export contract is governed by some law, whether or not the parties wrote one down. When a container of goods arrives late or does not match the specification, the questions that decide who pays are legal ones: was the contract concluded, what exactly did the seller promise, how quickly did the buyer have to complain, and which court or tribunal will decide. If the contract is silent, the answers come from rules the parties never chose, sometimes from a country neither of them knows.

The most important uniform rulebook for these questions is the CISG, the United Nations Convention on Contracts for the International Sale of Goods. This lesson explains what it covers, when it applies (including to exporters from countries that are not parties, such as Algeria), whether you should keep it or exclude it, and how to choose the governing law and the forum: state courts or arbitration under the ICC or another institution.

This is a practical overview, not legal advice. For a large or long-term contract, have the clauses reviewed by a lawyer who knows both legal systems.

What is the CISG?

The CISG was adopted in Vienna in 1980 under the auspices of UNCITRAL, the UN commission on international trade law, and entered into force on 1 January 1988. It is often called the "Vienna Convention". It provides a single set of rules for:

• the formation of the contract: offer, acceptance, counter-offer;
• the obligations of the seller: deliver goods conforming to the contract, hand over documents, transfer property;
• the obligations of the buyer: pay the price and take delivery;
• the remedies for breach: performance, price reduction, damages, avoidance (termination) and interest.

It does not deal with the validity of the contract (for example fraud or illegality), with the transfer of ownership, or with liability for death or personal injury caused by the goods. Those remain under national law.

Which countries are parties to the CISG?

According to UNCITRAL's status table, 97 states were parties in 2026. They include the United States, Canada, Mexico, Brazil, China, Japan, South Korea, Russia, Turkey, Australia and most member states of the European Union, including France, Germany, Italy, Spain and the Netherlands. In Africa and the Arab world, Egypt, Mauritania, Lebanon, Iraq, Bahrain and Saudi Arabia (from 1 September 2024) are among the contracting states.

Several important trading nations are not parties: the United Kingdom, India, South Africa, Indonesia, and, in the Maghreb, Algeria, Morocco, Tunisia and Libya. The list changes, so check the UNCITRAL status page before relying on it.

When does the CISG apply to your contract?

The Convention applies to contracts for the sale of goods between parties whose places of business are in different states:

1. when both states are contracting states (article 1(1)(a)); or
2. when the rules of private international law lead to the law of a contracting state (article 1(1)(b)), for example because the parties chose that law. A few states, including the United States and China, have declared that they do not apply this second route.

It does not apply to consumer sales, auctions, securities, ships and aircraft, or electricity (article 2), nor to contracts where the main part of the seller's obligation is labour or services (article 3). And the parties may exclude it or vary its rules (article 6).

What the CISG says: the rules exporters must know

Formation: offers, acceptance and the battle of forms

A definite offer that fixes a time for acceptance is generally irrevocable until then. An "acceptance" that materially changes the price, payment, quality, quantity, delivery, liability or dispute settlement is a counter-offer. When both sides exchange their own general conditions, the result can be uncertain; agree on one signed set of terms. The practical consequences for your offers are covered in writing a professional export quotation.

The CISG requires no written form (article 11), although some states have made a declaration keeping a written form requirement. Put everything in writing anyway.

Conformity and the buyer's duty to give notice

The goods must match the contract in quantity, quality and description and be fit for their ordinary purpose and any particular purpose made known to the seller. The buyer must examine them within as short a period as is practicable (article 38) and notify any lack of conformity within a reasonable time after discovering it, and at the latest two years after the goods were handed over (article 39). A buyer who misses this loses the right to rely on the defect.

Remedies, damages and exemption

• The buyer can avoid (terminate) the contract only for a fundamental breach (article 25), one that substantially deprives it of what it was entitled to expect; otherwise it claims damages or a price reduction.
• Damages cover the loss, including loss of profit, that the party in breach foresaw or ought to have foreseen at the time of the contract (article 74), and the injured party must mitigate (article 77).
• Unpaid sums carry interest (article 78), but the rate is not fixed by the Convention.
• A party is exempt from damages for a failure caused by an impediment beyond its control that it could not reasonably have foreseen or avoided (article 79). A detailed force majeure clause is still useful.

Should you keep the CISG or exclude it?

Many exporters keep the CISG and fill its gaps with precise clauses: a claims period ("quality claims within 14 days of discharge, supported by a survey report"), a limitation of liability, and a clear termination clause. If you exclude it, say so expressly and name the national law that replaces it.

Choosing the governing law

Without a choice, the court applies its own conflict-of-law rules, which may lead to a law neither party expected. When you choose:

• prefer a law you can obtain advice on at reasonable cost;
• a neutral law (Swiss, English, French) is a common compromise, but it adds legal costs for both sides;
• remember that mandatory rules of some countries apply whatever you choose, for example on import regulations, exchange controls, or the protection of commercial agents (see agents or distributors);
• in your own country, check with counsel how far the courts respect a foreign law chosen by the parties. Algerian law, like most legal systems, generally recognises the parties' choice of law for international contracts, subject to conditions.

Courts or arbitration?

The New York Convention of 1958 on the recognition and enforcement of foreign arbitral awards is the main reason exporters choose arbitration: an award made in one member state can be enforced in another, subject to limited grounds for refusal. Algeria has been a party since 1989, applying it on a reciprocity basis to commercial disputes; Morocco, Tunisia, Egypt, Côte d'Ivoire and Senegal are also parties.

Choosing an arbitration institution

• ICC International Court of Arbitration (Paris): the most widely used for trade disputes. Under its 2021 Rules, an expedited procedure with a sole arbitrator applies by default when the amount in dispute does not exceed USD 3 million, for agreements concluded since 1 January 2021, unless the parties opt out.
• Regional centres: CRCICA in Cairo, the OHADA Common Court of Justice and Arbitration (CCJA) in Abidjan, and other centres in the Middle East and Asia, often less costly and closer to the parties.
• Others: LCIA (London), SCC (Stockholm), SIAC (Singapore), or ad hoc arbitration under the UNCITRAL Arbitration Rules.

What a good dispute clause contains

1. The institution and its rules, using the institution's own model clause.
2. The seat of arbitration (a city in a New York Convention state with a supportive arbitration law).
3. The number of arbitrators (one for most export disputes).
4. The language of the proceedings.
5. The governing law of the contract, with or without the CISG.
6. Optionally, a first step of negotiation or mediation for 30 days.

Common mistakes

• Leaving the law and the forum blank, or writing "any competent court".
• Choosing a law that brings in the CISG without knowing it.
• Pathological clauses: a non-existent institution, or both courts and arbitration in the same contract.
• A seat in a country that is not a party to the New York Convention.
• Relying on the CISG's "reasonable time" instead of agreeing a clear claims period.
• Accepting the buyer's general conditions on a purchase order without reading their law and forum clause.

The full list of protective clauses for an export contract is in the international sales contract.