INTERPRETATION OF ARTICLE 74 – ZAPATA HERMANOS V HEARTHSIDE BAKING – WHERE NEXT?

Abstract

The facts are simple. The Mexican seller supplied biscuit tins to the American firm for over four years. The American firm failed to pay for the tins and were subsequently sued in the Federal District Court of Illinois.1 Besides winning the action the court also awarded $550,000 as foreseeable loss under article 74 for incurring legal fees. On Appeal to the Federal Appellate Court2 the decision in relation to attorneys’ fees only was overturned. The whole matter was contested in a leave application to the Supreme Court of the United States of America. “A Petition for a Writ of Certiorari, an Amicus Brief in support of the Petition, a Brief in Opposition to the Petition, a Reply Brief and a Supplemental Brief for the Petitioner were filed with the U.S. Supreme Court.”3 In the end the Supreme Court invited the Solicitor General to express the views of the United States in an Amicus Curiae Brief. The Solicitor General put the proposition forward that in his view the Petition ought to be rejected. The dispute in essence is not so much concerning article 74 but rather how article 7 is to be interpreted and applied. The Supreme Court of the United States had the unique opportunity to make a significant contribution to the interpretation of the CISG as a whole. It is important therefore to be aware of the fact that it is not only article 74 which is on trial but also article 7 and therefore the interpretation and application of the CISG as a whole. The importance of the matter has been recognised by leading scholars and both sides of the dispute are well represented. It is argued that courts and many academics are looking for “the needle in the haystack” despite incantations that the words in the CISG with the help of article 7 must be given a plain meaning .It appears that in this debate the approach advocated by Honnold has been forgotten. He advocated that to overcome the problem of literary “deconstruction” the CISG consciously “root[ed] out words with domestic legal connotations in favour of non-legal earthy words to refer to physical acts.”4 This paper attempts to have another look at he debate considering that the “heat of the battle” has subsided. It is argued that any solution - at least in a theoretical way - needs to look at the words as they appear at “first glance” without loosing sight of the purpose of the convention as a whole. In other words “attorneys” fees are placed back into the four corners of the convention and applied within that context. Attention is given to the fact that, as the words in the CISG are not “technical” in nature, the method of interpretation cannot be “technical” in nature either. Attention is specifically directed to the distinction between procedural and substantive law. The Appeal Court and some academic writers found this distinction to be of such importance as a tool as to exclude attorneys’ fees as a possible loss due to a breach of a contract. This paper will argue that such a distinction is founded on municipal law and is only sustainable if the mandate of article 7 is disregarded which would do violence to the very purpose of an international legal instrument..