Regulation of Interest in International Contracts Under UN Convention on Contracts for the International Sale of Goods

Abstract

The 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG) allows for claims of interest on damages, delayed payments or the price already paid (refunds) in articles 78 and 84. However, these articles have become the subject of considerable academic as well as judicial discourse. The question of interest remains a thorny issue in the Convention, with questions raised about whether in the first place, it is an issue that falls within the scope of the Convention. This article argues that because the CISG provides a platform for the uniform interpretation and enforcement of entitlements to interest in international sales, parties to international sales transactions should clearly specify in their contract the default governing law to govern claims for interest and other supplemental damages to minimise the risks that judicial and arbitral tribunals applies rules that expose them to significant claims. The CISG provides an avenue for the application of general principles of international sales law, and domestic legal provisions, hence, promoting flexibility. But the parties must circumscribe this flexibility to limit their exposure to significant interest claims.