A German seller entered into a contract with an Australian buyer regarding the sale of machinery to be used in the processing of olive oil. A choice-of-law clause in the contract provided for the application of Australian law, with the exception of UNCITRAL law. The seller submitted that such a clause amounted to full exclusion of the CISG. The buyer opposed claiming that “UNCITRAL law” should be interpreted as referring only to laws that might affect issues relating to the transfer of ownership, as the clause followed a section of the contract relating to the seller's right to retain ownership until receipt of payment.
First of all, the Court found that CISG was applicable to the case at hand since both parties had their places of business in Contracting States and CISG has been incorporated into Australian law (Art. 1(1)(a) CISG). However, making reference to Art. 6 CISG, the Court held that the choice-of-law clause in the contract revealed the parties’ intention to exclude the application of the Convention. In so doing, the Court observed that since the buyer was aware of the counterparty's intention to sell its products at international level, the expression “UNCITRAL law” was to be construed as referring to the uniform law text endorsed by the UNCITRAL and purporting to govern international sales contracts, that is CISG. Moreover, since the choice-of-law clause was placed at the end of the contract, under a topic heading meant to designate generally applicable miscellaneous terms, the Court found it to govern all terms in the contract and completely to exclude the application of the CISG.
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