Model Law on International Commercial Arbitration

States have intended to arrive at a common and uniform international law that will govern international transaction. “Contracts of sale with a cross-border element are an everyday occurrence and one which is becoming ever more common with the advent of modern communications technology. ” “Because the purpose of the Convention is to provide a new measure of certainty concerning the law, which governs international commercial sales, it is expected to facilitate the negotiation of international sales contracts and the resolution of legal disputes arising under them.

” This end purpose of the UN-CISG is to establish the rights and obligations of the parties to an international transaction that has been rendered doubtful and ambiguous because of conflicting national laws as well as international agreements. A uniform international law will provide for measures in cases of breach by a party belonging to a different state, which at one point of time was quite difficult to be remedied owing to issues of jurisdictions and certain limitation, which emanated from the scope and application on national or domestic laws.

Several attempts had been shown to establish a uniform law on international commercial transactions. “The Governing Council of the International Institute for the Unification of Private Law (UNIDROIT) developed the first draft of a uniform law on the sale of goods in 1935. ” The UNIDROIT, and was set up as an adjunct or commercial arm of the League of Nations through a convention held in Hague, The Netherlands and has for its purpose the modernization, harmonization and coordination of private international laws and commercial laws of states.

The progress of the UNIDROIT was affected adversely by subsequent events such as World War II. Further, the UNIDROIT failed to gain popular support and was never accepted by majority of states. “The failure of these treaties to win wider acceptance is in part attributed to the dominant influence of the civil law traditions of Western Europe and to the neglect of both Socialist and Third World countries. ”

After cessation of World War II, when the United Nations came into existence, it established the United Nations Commission on International Trade Law (UNCITRAL, for brevity). “The purpose is to simplify contracts for the international sale of goods by subjecting them to a single uniform law, and to eliminate wrangles over which particular national law should apply to an international contract. ” The UNCITRAL was established by the United Nations in order to set and prescribe a certain model of commercial arbitration.

It has developed, among others, the UNCITRAL Model Law on International Commercial Arbitration, which provides for a certain method of settling disputes and cases in international sales and transactions. The said model however was not binding upon states and has no force of its own as its application simply depends when the parties to a contract, belonging to different countries or jurisdictions, have agreed to embrace and incorporate the provisions of the UNCITRAL as the governing rules for dispute resolution.

Moreover, the UNCITRAL will only have a force and effect of a substantive law of a state when its rules and provisions were adopted and incorporated by a state to form part of its municipal law. The thrust of the UNCITRAL however, paved the way for the further study in the formulation of an International Sales Law. This led in the initiation and preparation of a draft of what was later to be termed as the Vienna Convention on Contracts for the International Sales of Goods (CISG).