Limitation of claims on sales contracts with a foreign entrepreneur. When the provisions of the Convention on limitation in the international sale of goods apply
The Limitation Convention (also known as the New York Convention) provides for a four-year limitation period for claims on international sales of goods. This is much more than the basic limitation periods in many European countries (e.g. in Poland, claims under the sales contract expire after 2 years). The Convention also introduced autonomous provisions regarding the calculation of the limitation period and interruption of its running. Before concluding a sales agreement with a foreign entrepreneur, it is worth checking whether the provisions of the convention will apply to it and whether they are more advantageous to the contracting party than the national regulations.
1. States parties to the limitation convention
Despite the passage of several dozen years from the drafting of the convention, less than 40 countries have signed it today. In addition to Poland, in which the Convention entered into force on June 1, 1996, its signatories include Argentina, Belarus, Belgium, the Czech Republic, Norway, Romania, Slovenia, Slovakia, Ukraine and the United States.
A full list of Convention signatories is available at: http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1974Convention_status.html.
Warning! The Convention was amended during its validity by the 1980 Protocol, which was not adopted by all signatories. Therefore, the Convention in its original 1974 version will apply to some countries (e.g. Norway, Ukraine).
2. To which contracts do the Limitation Convention apply?
The convention will apply to contracts regarding the international sale of goods. In order for it to be organized, it must be organized in the United Kingdom.
In some cases, the Convention is also indirectly applicable – if conflict-of-law. Thus, the Convention will, for example, apply to the contract, which is not already domiciled in the country signatory to the Convention.
Warning! The United States, the Czech Republic and Slovakia have excluded the possibility of indirectly applying the Limitation Convention.
The convention explicitly excludes its application to some sale contracts as in the Convention on Contracts for the International Sale of Goods (so-called CISG). And so, the convention will not apply to sales contracts:
- of goods purchased for personal use, for example, for the purchase of any of them. these purposes,
- obtained at the auction,
- by way of execution or otherwise by judicial authorities,
- considering shares, stocks, investment insurance, securities or money,
- for ships, vessels, hovercraft or aircraft,
- for electricity,
- where the majority of the seller’s obligations consist in the provision of manpower or the provision of other services,
- and contracts for the delivery of goods to be made or produced if the party ordering the goods assumes the obligation to deliver a substantial part of the materials necessary for such execution or production.
In addition, for example, for the contract due to the death or physical injury of any person or promissory note, are excluded from the application of the Convention.
3. Can the application of the Convention be excluded?
The parties to the contract may decide that they will not be bound by the provisions of the Limitation Convention, but they must clearly indicate in the contract. The implicit exclusion of the application of the Convention will be ineffective.
In particular, the indication in the contract of the law of a state party to the convention as being appropriate to contractual claims will not exclude its application. If the international contract for the sale of goods indicates, for example, Polish law as the applicable law, then the provisions of the limitation convention may apply to it (a convention as a ratified international agreement is part of the Polish legal order). In addition, the exclusion of the application of the statute of limitations cannot be limited to only some of its provisions.