CISG Advisory Council Opinion No. 14

Interest Under Article 78 CISG

3. Calculation of interest

a. Interest rate defined by the contract

3.22 Given that freedom of contract is the rule under the CISG, the parties may liberally define the default interest rate. Tribunals should prefer to give a contractual rate effect,[51] provided this rate does not violate applicable national law provisions on validity, especially usury (Art. 4 CISG) or public policy.[52]  If the parties have a choice of law clause and the law of a certain state applies to their contract without the CISG, this law also defines the interest rate.[53]  A contractual clause regarding place of payment may sometimes also be interpreted as a latent agreement regarding interest rate.

3.23 On the other hand, the parties may be bound by any usage to which they have agreed, and by any practices, which they have established between themselves, which are presumed to be included into the contract based on Article 9.[54]  Whether or not the parties might be considered to have impliedly made international trade usages regarding an interest rate applicable to their contract should be judged very carefully. It should not be disregarded that the existence of an international usage is only acceptable if the usage is widely known in international trade, and regularly observed by parties to contracts of the type involved in the particular trade concerned. In fact, CISG doctrine does not give any example of an international trade usage regarding the applicable interest rate in case of default. Therefore, Article 9(2) should not be interpreted in a manner that allows it to become a gateway for arbitral choices of interest rates.[55]

b. Residuary rule for defining the interest rate

3.24 Whenever the parties’ intention in regard to a late payment interest rate cannot be ascertained, Article 78 will find application. Given that the Drafters of the Convention have left the issue of default interest rate unresolved, it must be decided how this lacuna in Article 78 can be best filled. Below, the tendencies in doctrine and case law will be reflected first and then the preference of the Advisory Council will be outlined.

aa. Different approaches in practice and literature

3.25 Tendencies in defining the rate of interest have been manifold. But the two major streams that can be discerned are those preferring a uniform approach, and those giving national law the primacy. The first one interprets the lacuna in Article 78 as inviting tribunals to define the applicable interest rate by way of resorting to general principles deduced from the CISG (cf. Article 7 (2) first part of the sentence). It is perceived as an intra legem lacuna. The second approach however interprets Article 78 as excluding the question of the interest rate from the sphere of application of the CISG, and therefore as an express invitation to tribunals to resort to the applicable national law (Article 7 (2) second part of the sentence); that is, a praeter legem lacuna is assumed.

3.26 Even though those in favor of the uniform law approach aim at defining one principle applicable to all cases where a default interest rate must be ascertained, the suggestions regarding this general principle vary considerably. The major proposals can be summarized as follows :[56]

- The current interest rate at the creditor’s place of business;[57]
- The current interest rate at the debtor’s place of business;[58]
- The current rate of interest related to the particular currency of the claim (lex monetae);[59]
- An internationally or regionally applied interest rate like the Libor (London Interbank Offered Rate)[60] or the Euribor (Euro Interbank Offered Rate)[61] or the reference rate defined by Directive 2011/7/EU on Combating Late Payment in Commercial Transactions;
- Application of Article 7.4.9 of the Unidroit PICC.[62]

3.27 Given that none of these proposals has so far prevailed in doctrine and case law, the most supported view is still to accept a lacuna praeter legem. Consequently the interest rate is determined according to domestic law applicable by reference of the conflict of law rules of the forum state.[63]

bb. Evaluation and proposal

3.28 This very diverse picture in doctrine and case law demonstrates the urgent need for an effort to unify the application of Article 78 around one common principle. Given that predictability is of utmost importance for parties in international trade, a uniform approach towards the interest issue would certainly further foster trade relations.

aaa. Evaluation of the different approaches

3.29 As already stated about at paras 3.1-3.2, the uniform law approach, that is to fill in the gap in Article 78 from within the Convention, is preferable. The major problem of leaving issues regarding interest to the applicable private international law rules is the unpredictability of this solution for the parties. The PIL rules might sometimes refer to the law of the country where the creditor has his place of business, or the debtor, or sometimes to the law of another place, like the place of performance. As long as the PIL rules themselves are not unified globally this approach will always hamper uniform application of the CISG.

3.30 Among the different uniform law approaches summarized above, utilization of the interest rate at the debtor’s place of business is not favored, since Article 78 (as put forward at paras 3.4-3.5 above) is not aimed at disgorgement. Parallel to what is stated in AC Opinion No. 9 regarding the “Consequences of Avoidance of the Contract”, the commercial investment rate current at the debtor’s place of business should be applied for restitutionary matters in Article 84.[64] However, the interest claim in Article 78 is based on the concept of compensation and requires different reference points.

3.31 Any solution based on the interest rate applicable at the place of payment (such as those in Article 7.4.9 PICC or Article 9:508 PECL) also seems to be problematic given that it does not provide a simple and clear-cut solution. Contractual stipulations regarding place of payment will almost always raise interpretation problems; differing interpretations will hamper the aim of unification. For example, it will always be a matter of interpretation as to exactly where the place of payment is if ‘cash on delivery’, ‘documents against payment’, ‘payment according to letter of credit’ is stipulated, or in cases in which parties have agreed on payment by means of fund transfer, direct debiting or cash card, or by sending a check to the creditor.[65] Whether or not the place of payment is also the place where the creditor would like to invest the money, or would have to refinance it, is certainly also very doubtful. The place of payment may be chosen with the sole motive of simplifying the transaction (cash on delivery) without the creditor ever giving any real consideration to the possibility of retaining the money at the place of payment.

3.32 On the other hand, applying the interest rate at the place of payment is similarly problematic in regard to damages claims. In fact, the Unidroit PICC have a separate provision for interest accruing on damages in Article 7.4.10, in which a rate is not even defined. Literature suggests this requires resort to the applicable national law.[66]  That means under the PICC different interest rates apply according to the nature of the monetary claim, which certainly is unsuitable for a uniform approach. Even if it is accepted that for a damages claim the interest rate at the place of payment must be decisive, one has to answer again the delicate question concerning where the place of payment for damages is. This precise issue is highly debated in CISG doctrine as well as in case law.[67]  All in all, defining the place of payment and thereby the relevant law for the interest rate, involves with so many difficulties that accepting this approach would not serve the unification purpose.[68]

3.33 Neither does the suggestion to use internationally or regionally applied interest rates like the Libor or Euribor seem satisfactory, since the scope of application of these rates is simply too narrow: The London Interbank Offered Rate is defined for just five different currencies;[69]  the Euro Interbank Offered Rate just for the Euro. Therefore these rates would not provide an interest rate that could be applied for every currency.

3.34 Finally, to apply the interest rate of the country of the currency does not seem convincing either. In fact some currencies like the US Dollar, Euro or the Swiss Franc are very often defined in international trade as the payment currency even though they are not the official currency at the place of payment, or at the parties’ places of business. Why exactly the average bank short-time lending rate in the US should be applied in a case involving a Turkish Seller and an Israeli buyer who conclude a contract with the price fixed in USD is not explicable. This interest rate would certainly not reflect the loss of the Turkish creditor given that the money would most probably have been used in Turkey and not in the US. In fact, it is also quite normal that in countries with weaker currencies there are established default interest rates for currencies other than the national one. Therefore it is preferable to apply an interest rate which has a closer connection to the contract.

bbb. Proposed Rule

3.35 This Opinion sees the major purpose of an interest claim as compensating the time value of money for the creditor.[70]  The interest claim in Article 78 is closer to a damages claim than to any other claim. Therefore the full compensation idea behind damages claims should also be applied to interest claims and the focus should be on the creditor and compensating its losses. However these losses need not be proven; just like the abstract calculation method of Article 76, Article 78 favors also a calculation independent of the creditor’s actual loss. Obviously it is of crucial importance to determine which amount of loss a creditor will sustain almost certainly in a case of late payment. Only for this amount should it be accepted that compensation without proving the loss and without exemption is possible. Since in the vast majority of the cases it can be assumed that the creditor would invest the money at its place of business, or take a loan at this place to refinance its business, the interest rate at this very place should be decisive in defining the amount of loss claimable as interest. This solution would in most of the cases be predictable for an obligor who delays payment.

3.36 Consequently, the reference point for the interest rate applicable to any mature sum shall be defined according to the law of the state where the creditor has its place of business. The provisions of this country regarding the default interest rate will define the amount of loss demandable under the special regime of interest claims. The advocated principle would be similar to a private international law rule, since it refers the tribunal to the laws of a certain country. Therefore, a tribunal searching for the rate of interest to be paid by the debtor would not have to refer to private international law provisions anymore, but could directly apply the laws of the creditor’s state. In fact, this solution is inspired also by Article 28 CISG. Just like the interest claim, the specific performance claim was also much debated among the Drafters of the Convention and Article 28 was introduced as a compromise.[71]  There the deciding tribunal is entitled to consider the laws of the forum in respect of a specific performance claim. Under Article 78 the court is referred to the laws of the creditor’s place of business.

3.37 This proposal overlaps to a certain extent with the results in current practices of the tribunals. From the analyzed 274 decisions 103 were either directly, or by way of reference to PIL rules, applying the law of the state of the creditor.[72]  For the sake of uniformity and predictability it is preferable to come to the same solution, that is, to apply the residual rate of interest at the creditor’s country, by inferring it directly from Article 78. In fact, ascertaining the interest rate by way of reference to the state of the creditor was also the approach of the ULIS in Article 83.[73]  It is interesting to note that the 2011 EU Proposal for a Common European Sales Law no longer shares the approach of the PICC, PECL or the DCFR, which all refer to the interest rate at the place of payment. Instead it has preferred in Article 166 to refer to the interest rate applicable at the place of the creditor.

3.38 Given the huge differences in doctrine, this Opinion attempts to focus on the minimum for which a global consensus could be reached; that is, in the view of the Council, defining the applicable law without the help of national PIL rules. This Opinion does not prefer to go one step further and to choose also a specific interest rate in the creditor’s country, such as, for example, the bank short-term lending rate to prime borrowers (cf. Art. 7.4.9 Unidroit PICC, Art. 9:508 PECL or Art. 166 CESL). Even a dynamic interpretation of a Treaty should always aim at finding the most acceptable interpretation. Choosing a specific interest rate which is thought to best compensate the losses of the creditor would be too far reaching a goal given the drafting history of the Convention. Therefore this Opinion only looks for the law which presumably is best applied to compensate the losses of the creditor. Given that the interest claim is an exceptional claim, since the creditor needs not prove its actual loss, its calculation must also be backed up by the idea underlying this exception; that the creditor is granted this special claim only for the amount of loss of interest it is assumed it will undoubtedly suffer. And this loss of interest can only be what the creditor normally is entitled to get at its place of business according to the residuary rules of its own domestic law under a domestic sales contract.

3.39 In cases where the country of the creditor has a statutory rate applicable for debts in arrears such as ‘8 %’, this rate will apply; where such a law has a dynamic reference like ‘the average bank short-term lending rate to prime borrowers’ then this rate finds application also under the CISG.[74]  Otherwise the case law of the relevant country will be decisive in finding the correct rate. The burden of proof regarding the interest rate and the calculation of interest lies on the creditor.

3.40 The proposed solution might have the negative side effect that the domestic law of the creditor works with a residuary rule which provides for a fixed interest rate that no longer reflects market conditions.[75]  Yet whenever the creditor remains under-compensated due to a fixed interest rate, a correction can be achieved through a damages claim based on Article 74.[76]  To suggest as an alternative an interest provision that circumvents the residual rules of the creditor’s country and which gives the creditor a chance to claim opportunity cost of the sum due without even proving its loss, would fail the ratio of Article 78. As long as it is the general rule in many countries that the residuary interest rate is a fixed one defined by state authorities and any further loss has to be proven by the creditor, a different rule on the international level is not convincing.

3.41 Obviously, the mirror image problem is balancing an over-compensation caused by fixed interest rates. Since the debtor is not granted the right to prove the creditor’s actual loss, or that the default interest rate is above market conditions, the risk of enrichment of the creditor is given. But this windfall profit must be accepted as a side effect of the proposed rule since the problem of overcompensation is also existent under domestic contracts. If the lawmaker in the country of the creditor does not react properly to the changes in the market, it cannot be the role of a tribunal to simply bypass these residual interest rules in order to find a more adequate interest rate for international disputes. The creditor would in a national dispute be able to claim this fixed amount of interest without discussion on the fairness of this rate. The same should be valid for an international dispute. Besides, this solution would also be in line with the tendency in some countries to use high interest rates as a deterrent for late payment practices.[77]  The Late Payment Directive of the European Union[78]  for example sets the interest rate applicable between businesses at 8 percentage points above the European Central Bank’s reference rate.

3.42 Another question which can arise is the lack of a residuary interest rate for the currency at dispute. If, for example, the loss has arisen in another currency than the one at the place of business of the creditor, the creditor might demand interest to accrue on this currency. However, many countries provide the debtor the right (facultas alternativa) to convert the foreign currency debt to the local currency and make payment with this currency.[79]  That would mean that the late payment interest rate of the local currency applies. But the parties may have contracted for the currency of account to be exclusive (effectivo clause). In such case the obligor can only effect payment in this currency. In principle conversion is excluded. If, for example, in a sales contract a buyer from Brazil and a seller from Mongolia define the price in USD and an effective payment clause is given, the Mongolian seller may, in case of late payment, demand interest according to the rate applicable to USD debts, if such rate exists in Mongolia. In fact, many weak currency countries also have an official default interest rate for hard currencies like USD, Euro, GBP or CHF. Even if such an official rate does not exist, it is highly probable that an interest rate for foreign currency debts has been developed in case law, since weak currency countries also tend to use hard currencies in national contracts where a similar problem of defining a default interest rate arises.[80]  However, if no special rate can be found for the contractual currency, in our example USD, the only option will be to apply the default interest rate for the local currency of Mongolia (Tögrög) to the USD debt.[81]

3.43 The proposed residuary rule might be of no avail if the domestic law of the creditor does not provide for any rule defining a default interest rate. Here the courts must try to define, from the evidence presented by the parties, what the practice is in the creditor’s country and whether or not an established rate can be found in the case law of that country. If not, because an interest claim is, for example, forbidden in that country, the tribunal should not award any interest based on Article 78. In such cases, the losses of the creditor can only be compensated subject to the prerequisites of Article 74.

3.44 It is obvious that the proposed rule cannot pretend to perfectly mimic a market default rule which reflects the parties’ alleged interest in the best way possible. On the contrary, it merely attempts to provide a simple answer to the urgent need for unification by way of proposing a private international law rule. This rule is closer to a penalty default rule which sets an incentive for the parties to provide for a contractual rate of interest. If the parties do not want to encounter the problems of over- or undercompensation, they are well advised to define the late payment interest rate in their contract.

4. Compound interest

3.45 Given that the parties are free to define the rate of interest payable in case of default, they may also stipulate capitalization of interest in certain intervals. The CISG does not comprise any provision which might impede compound interest. But the more important question is whether or not residuary default interest accrues on a simple or compound basis.[82]  In case law the tendency is towards rejection of automatically awarding compound interest.[83] CISG literature partly follows this line of thought, and only allows for it under Article 74 if the creditor can prove that it had to pay compound interest due to the breach of the debtor.[84] However, parallel to the solution favored above, the issue should be decided according to the domestic law of the creditor. If residuary rules in its country provide for a capitalization of interest during the time of default and for compound interest to be paid in commercial transactions, this must also be applicable under the CISG regime.[85]  The law of the creditor’s place of business will govern this issue. If there is no provision which allows for interest to accrue on compound basis, the creditor cannot claim it pursuant to Article 78. In such case it may only be able to claim compound interest as an additional loss item under Article 74, subject to the prerequisites of that article.

5. Modalities of payment

3.46 Given that the claim for interest is an accessory claim, its payment modalities should always follow the main claim.[86]  It has to be paid in the same currency and at the same time and place as the main sum in arrears. For interest claimed on damages, the currency in which the loss occurred must first be ascertained.[87] This will generally be the currency at the place of business of the creditor.[88]

6. Defenses against an interest claim

3.47 Although an exemption under Article 79 cannot impede liability for interest under Article 78, the debtor still might have some defenses against an interest claim. According to Article 80 “a party may not rely on a failure of the other party to perform, to the extent that such failure was caused by the first party's act or omission”. Whereas Article 79 exempts only from liability for damages, the contributory negligence exemption of Article 80 finds application to all types of claims, including claims for interest. This means that the creditor is barred from claiming interest to the extent that the non-payment was caused by its own act or omission. The debtor is excused from all the consequences of its non-performance.[89] For example, if a seller has assigned its claims against the buyer to a factoring-business without duly informing the buyer about this assignment, delay in payment cannot trigger the accumulation of interest.[90]

3.48 The right of the debtor to suspend performance will also have an effect on the interest claim since the due date for the debtor’s payment performance will be postponed.[91] If, for example, the buyer is under the duty to fulfill its payment obligation first, but it becomes apparent that the other party will not perform a substantial part of its obligation, the buyer may suspend its payment until the other party provides adequate assurance of performance (Article 71). Obviously this provision is based on the same policy as Article 80, since it is the other party’s failure, which triggers suspension.

7. Cessation of an interest claim

3.49 An interest claim is an accessory to the main obligation. Therefore it stops accumulating at the moment the principal obligation is paid in full.[92] Although some legal systems work on the presumption that the accrued interest extinguishes where the creditor accepts payment of the principal debt without also explicitly reserving its interest claim, this presumption should not be generalized and applied for the CISG. Even though the creditor has accepted the main sum due without any reservation, it should still have the right to claim separately for the accrued interest. Set-off also has the effect of extinguishing the principal obligation so that the interest claim will stop accruing. If the principal obligation ceases to exist due to avoidance or is partially extinguished due to partial avoidance or price reduction, the accrued interest will either diminish in full or in proportion to the remaining main sum. The expiration of the limitation period with respect to the principal debt and its effect on the interest claim will be decided according to the applicable law.[93]

3.50 As already mentioned above at para 3.8, CISG interest might also stop accumulating with the rendering of the award, where the laws in the country in which the award will be enforced, provide for post-judgment interest. Under such circumstances the contractual interest claim is superseded by the procedural one.

8. Relation of interest to additional damages

3.51 The residuary interest rate applicable in the country of the creditor generally represents the rate pursuant to which a lump sum can be claimed by the creditor. But, Article 78 expressly stresses that the aggrieved party is entitled to interest “without prejudice to any claim for damages recoverable under Article 74”. Therefore the creditor may always prove that default interest by itself does not fully compensate the losses incurred due to late payment. If the creditor, for example, proves that it would have utilized the funds to become involved in risky investments to maximize its profit, it might seek damages which go beyond a risk-free measure like default interest.[94] In cases where the creditor had to take a bank loan due to cash flow shortages, the difference between the contractual interest rate of the loan and the applicable interest rate under Article 78 can also be claimed as a loss.[95]

3.52 However, any damages claim is subject to the prerequisites of the CISG. That means, according to Article 74, the loss must be proven by the creditor[96] , must be foreseeable, and the creditor must have acted upon its duty to mitigate its loss under Article 77. Further, the debtor may seek to defeat such a claim by establishing the exemption under Article 79.

9. Burden of proof

3.53 Whenever the creditor claims interest it must prove the existence of a sum due and the applicable interest rate in the given case.[97]  If the claim is based on a contractual interest rate, the existence of the contractual provision must be proven. If the interest rate requires the application of the domestic law of the creditor, the lex fori provisions of the tribunal will determine the duty in relation to proof of foreign law. This may sometimes be a burden placed upon the parties, whereas in other instances the Tribunal undertakes this investigation ex officio.

FOOTNOTES

51. E.g. I.C.C. International Court of Arbitration, 01.01.2003 (No. 11849), CISG-online 1421 (“Contractual rate finds application”); CIETAC China International Economic & Trade Arbitration Commission Arbitration, 06.12. 2000, CISG-online 1449 (“[Buyer] shall pay the interest on the delayed payment based on the 0.45% monthly interest rate agreed by the two parties”); Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry Arbitration, 07.04.2006 CISG-online 1943.

52. Cf. Schlechtriem/Schwenzer/Bacher (fn.26) Art. 78 para 42; Gotanda (fn.7) at p. 57. Cf. for comparative information on limits to interest rates Schwenzer/Hachem/Kee (fn. 11) paras 46.37-46.41.

53. Cf. Rechtbank Rotterdam (Netherlands), 15.10.2008, CISG-online 1899; I.C.C. International Court of Arbitration (No. 7565), 01.01.1994, CISG-online 566; I.C.C. International Court of Arbitration (No.1308), 01.10.1998, CISG-online 1308.

54. Honnold/Flechtner (fn. 8) para 421; Faust, Zinsen bei Zahlungsverzug, RabelsZ Bd. 68 (2004) pp. 511–527, at p. 517.

55. But cf. for example Juzgado Nacional de Primera Instancia en lo Comercial (Argentine) 23. 10. 1991, CISG-online 460 (The court expressly referred to the international trade usages on the basis of Article 9 CISG. In this respect the Court held that payment of interest, 'at an internationally known and used rate such as the Prime Rate', constitutes 'an accepted usage in international trade, even when it is not expressly agreed between the parties', then granting the seller recognizance for its credit for interest 'at the Prime Rate ... as required by the creditor', without specifying which Prime Rate it was, and applying a rate of 10%). Similar also Juzgado Nacional de Primera Instancia en lo Comercial (Argentine), 06.10.1994, CISG-online 378 (The court just states that International business practices allow an annual interest rate of 12%, especially when there is an obligation in arrears and the parties have agreed, as a financing mechanism, an annual interest rate of 9%, as evidenced by the invoice without explaining which business practice this exactly is). Cf. also on the difficulty of defining such international usage Kizer (fn. 4) 1297.

56. Cf. for an overview case study attached to this Opinion, and also UNCITRAL Digest (fn. 25), Art. 78 para 11-14; Gelzer (fn.2) para 295 et seq.; Schwenzer/Hachem/Kee (fn. 11) para 46.103-106; MünchKomm/Huber (fn.26) Art. 78 para 13-14.

57. Perales Viscasillas, La Determinacion Del Tipo De Interes En La Compraventa Internacional, Cuadernos Juridicos (julio-agosto 1996) No. 43, 5-12, at II A 5 (here cited from http://www.cisg.law.pace.edu/cisg/biblio/78art.html); Kröll/Mistelis/Perales Viscasillas/Djordjevic (fn. 9) Art. 4 para 45 (savings rate for the currency in the creditor’s place of business); Stoll, Inhalt und Grenzen der Schadensersatzpflicht sowie Befreiung von der Haftung im UN-Kaufrecht, im Vergleich zu EKG und BGB, in: Schlechtriem (ed.) Einheitliches Kaufrecht und nationales Obligationenrecht, 1987, pp. 279-280; Kizer (fn. 4) 1297 (savings rate for the currency in the creditor’s place of business); Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft in Österreich (Arbitration), 15.06.1994, CISG-online 691 (= cf. CISG-online 120 and 121); I.C.C. International Court of Arbitration (No.7331), 01.01.1994, CISG-online 106; Landgericht Frankfurt am Main (Germany), 16.09.1991, CISG-online 26; Rechtbank van Koophandel, Hasselt (Belgium), 20.09.2005, CISG-online 1496; Serbian Chamber of Commerce Arbitration, 19.10.2009, CISG-online 2265.

58. Heuzé, La vente internationale de marchandises: droit uniforme, 2000, para 464 (p. 420); Saenger in: Bamberger/Roth (eds.) Beck'scher Online-Kommentar BGB, 2011, Art. 78 CISG para 5; Landgericht Berlin (Germany), 21.03.2003, CISG-online 785; Tribunal Cantonal Vaud (Switzerland), 11.04.2002, CISG-online 899; Yugoslav Chamber of Commerce Arbitration, 28.01.2009, CISG-online 1856; Rechtbank van Koophandel Oudenaarde (Belgium), 10.07.2001, CISG-online 1785; LG Heidelberg (Germany), 2.11.2006, CISG-online 1416.

59. Schlechtriem/Schwenzer/Bacher (fn. 26) Art. 78 para 30; Corterier (fn.13) para IV; Piltz (fn. 35) para 2-160 and 5-495 et seq.; Drobning, Der Zinssatz bei internationalen Warenkäufen gemäß CISG nach Rechtsprechung und Schiedspraxis, in: Kronke/Thorn (eds.), FS von Hoffmann, p. 775; Rechtbank van Koophandel Oudenaarde (Belgium), 10.07.2001, CISG-online 1785.

60. I.C.C. International Court of Arbitration (No. 11849), 01.01.2003, CISG-online 1421; Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, 15.11. 2006, CISG-online 2008.

61. Rechtbank van Koophandel, Hasselt (Belgium), 10.05.2006, CISG-online 1259 (European Central Bank rate for the marginal loan facility); Serbian Chamber of Commerce Arbitration, 23.01.2008, CISG-online 1946; Serbian Chamber of Commerce Arbitration, 04.06.2009, CISG-online 2266.

62. Brunner (fn. 8) Art. 78 para 12; I.C.C. International Court of Arbitration (No. 8769), 01.12.1996, CISG-online 775; China International Economic and Trade Arbitration Commission, 02.09.2005, CISG-online 1712.

63. Nicholas, in: Bianca/Bonell (eds.), Commentary on the International Sales Law, 1987, 568-571 (here cited from http://www.cisg.law.pace.edu/cisg/biblio/nicholas-bb78.html) note 2.1; Mazzotta (fn. 4) para V; MünchKomm/Huber (fn.26) Art. 78 para 15; Staudinger/Magnus (fn. 8) Art. 78 para 13; Ferrari (fn. 26) Art. 78 para 18; Schlechtriem/Butler, UN Law on International Sales, 2009, para 318; Huber/Mullis (fn. 8) p.359-360; Zeller, Damages under the Convention on Contracts for the International Sale of Goods, 2005, p. 136-137; Magnus in: Honsell (ed.), Kommentar zum UN-Kaufrecht, Art. 78 para 12; Garbers, The Dogmatic and Practical Implications of Article 78 of the CISG on Claims for Interest under International Sales Contracts Case Law (here cited from http://www.cisg.law.pace.edu/cisg/biblio/garbers.html); Behr (fn. 5) V C; Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry Arbitration, 09.06.2004, CISG-online 1239; Kantonsgericht Zug (Switzerland), 27.11.2008, CISG-online 2024; Tribunal Cantonal du Valais (Switzerland), 28.01.2009, CISG-online 2025; Handelsgericht des Kantons Aargau (Switzerland), 19.06.2007, CISG-online 1741; Rechtbank Breda (Netherlands), 16.01.2009, CISG-online 1789; Landgericht Dresden (Germany), 28.04.2006, CISG-online 1630; Oberlandesgericht Hamburg (Germany), 25.01.2008, CISG-online 1681; District Court Dolny Kubin (Slovak Republic), 17.06.2008, CISG-online 1874.

64. Cf. in detail CISG-AC Opinion No. 9, Consequences of Avoidance of the Contract, Rapporteur: Professor Michael Bridge, London School of Economics, London, United Kingdom, para 3.25.

65. Cf. on this issue Atamer, in: Vogenauer/Kleinheisterkamp (eds), Commentary on the Unidroit Principles of International Commercial Contracts (PICC), 2009, Art. 6.1.6 paras 11-16; Huber/Mullis (fn. 8) at p. 309 et seq.; Schlechtrim/Schwenzer/Mohs (fn. 8) Art. 57 paras 6-8.

66. Vogenauer/Kleinheisterkamp/McKendrick (fn. 65) Art. 7.4.10 para 5.

67. Further information on this debate is provided by Liu, Place of Performance: Comparative analysis of Articles 31 and 57 of the CISG and counterpart provisions in Article 7:101 of the PECL, in: J Felemegas (ed), An International Approach to the Interpretation of the United Nations Convention on Contracts for the International Sale of Goods (1980) as Uniform Sales Law (2007) p. 346, 355–356; Schlechtriem/Schwenzer/Mohs (fn. 8) Art. 57 para 29; MünchKomm/Huber (fn.26) Art. 57 paras 30–32. Different views have also been expressed in case law: while for monetary claims some favor to generalize the rule expressed in Art 57 according to Art 7 and to accept the place of business of the creditor as the place of performance for all kinds of monetary claims (Germany: OLG Du¨sseldorf, 2.07.1993, CISG-online 74; France: CA Grenoble, 23.10.1996, CISG-online 305; Austria: OGH, 18.12.2002, CISG-online 1279), others apply the principle that secondary obligations, like damages, follow the main obligation and share its place of performance (Germany: OLG Braunschweig, 28.10.1999, CISG-online 510). According to the Austrian Supreme Court, the place of performance of restitutionary obligations is to be determined by transposing the primary obligations—through a mirror effect—into restitutionary obligations (OGH, 29.06.1999, CISG-online 483).

68. Another criticism regarding the suggestions of the PICC and PECL (‘average commercial bank short-term lending rate to prime borrowers’) is that they are referring to an interest rate that is hardly foreseeable for the party in breach and that the calculation of the exact amount of interest to pay would be very burdensome for the Tribunals due to changes over a short period of time and therefore prone to discussions. Cf. Schwenzer/Hachem/Kee (fn. 11) para 46.108; Gelzer (fn.2) para 325. In fact the CESL has also abandoned this approach and has chosen to apply a rate announced by either the European Central Bank or, for Member States, which are not in the Euro-Zone, the Central Bank of that Member State.

69. Swiss franc, Euro, British pound sterling, Japanese yen, and U.S. dollar. The Danish, Swedish, Canadian, Australian and New Zealand Libor rates have been terminated as end of July 2013.

70. Cf. supra para 3.5-3.7.

71. Schlechtriem/Schwenzer/Müller-Chen (fn. 8) Article 28 para 1.

72. Cf. the chart attached to this opinion to see how often other approaches were used.

73. “Where the breach of contract consists of delay in the payment of the price, the seller shall in any event be entitled to interest on such sum as is in arrear at a rate equal to the official discount rate in the country where he has his place of business or, if he has no place of business, his habitual residence, plus 1%.”

74. Cf. for a detailed comparative overview on statutory interest rates Gotanda (fn.7) pp. 41-50; Schwenzer/Hachem/Kee (fn. 11) para 46.80-46.94.

75. Gotanda, When Recessions Create Windfalls: The Problems of Using Domestic Law to Fix Interest Rates under Article 78 CISG, 13 Vindobona Journal of International Commercial Law & Arbitration (1/2009) 229-240, at p. 230.

76. Cf. infra para 3.51-52.

77. Cf. also Schwenzer/Hachem/Kee (fn. 11) para 46.120.

78. See above at fn. 31.

79. For comparative information see Vogenauer/Kleinheisterkamp/Atamer (fn. 65) Art. 6.1.9 PICC para 3.

80. Cf. Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, 27.12.2005, CISG-online 1484.

81. But cf. Yugoslav Chamber of Commerce Arbitration, 28.01.2009, CISG-online 1856 (“In order to determine exact 'domicile' (Serbian) rate for euro, one should not resort to Serbian law, since it regulates and is appropriate for local currency (RSD) rates only and would result in overcompensation if applied to sums denominated in Euro. Rather, it is more appropriate to apply interest rate which is regularly used for savings, such as short-term deposits in the first class banks at the place of payment (Serbia) for the currency of payment, as this represents rate on a relatively riskless investment”), Serbian Chamber of Commerce, 23.01.2008, CISG-online 1946 (Since as of March 2001 there was no law in Serbia to fix an interest rate for claims in a foreign currency, the Arbitral Tribunal resorted to the EURIBOR given that the claim was a Euro claim).

82. The validity of such clause remains to be decided by national law provisions according to Article 4 CISG. Especially stipulations in standard terms regarding compound interest can trigger stricter control under national laws.

83. ICC International Court of Arbitration, Case No 8502, 01.11.1996, CISG-online 1295; ICC International Court of Arbitration, Case No 8908, 01.12.1998, CISG-online 1337 (= CISG-online 751); Hof van Beroep, Antwerpen (Belgium), 24-Apr-2006, CISG-online 1258 (“In any event, under the CISG, compound interest is not accorded automatically and the claimant, in this case the [Seller], has to prove that it is entitled to compound interest, e.g., because [Seller] had to pay extra interests itself since it lacked the payments that were due”).

84. E.g. Schlechtriem/Schwenzer/Bacher (fn. 26) Art. 78 para 43; Brunner (fn. 8) Art. 78 para 15.

85. C.f. for a very detailed account of different legal systems regarding compound interest Gotanda, Compound Interest in International Disputes, 34 Law and Policy in International Business 393 (2002-2003). See also Schwenzer/Hachem/Kee (fn. 11) para 46.43-46.46. In favor of compound interest under the CISG Kröll/Mistelis/Perales Viscasillas/Gotanda (fn. 9) Art. 78 para 28.

86. Brunner (fn. 8) Art. 78 para 6; Schlechtriem/Schwenzer/Bacher (fn. 26) Art. 78 para 23.

87. Schlechtriem/Schwenzer/Schwenzer (fn.8) Art. 74 para 63; Brunner (fn.8) Art. 74 para 49. Parallel also Article 7.4.12 PICC.

88. Staudinger/Magnus (fn.8) Art. 74 para 56.

89. Schlechtriem/Schwenzer/Schwenzer (fn. 8) Art. 80 para. 8; Flechtner, in: Ferrari/Flechtner/Brand (eds.), Draft Digest and Beyond (2003), pp. 839–840; Kröll/Mistelis/Perales Viscasillas/Atamer (fn. 9) Art. 80 para 11-12.

90. But cf. Amtsgericht Willisau (Switzerland) 12 March 2004, CISG-Online 961 where the Court applied Article 79 and did not exempt the buyer from paying interest.

91. Schlechtriem/Schwenzer/Bacher (fn. 26) Art. 78 para 21.

92. Gelzer (fn.2) paras 409-412.

93. Cf. Gelzer (fn. 2) para 415 and also Article 27 of the 1974 UN Convention on the Limitation Period in the International Sale of Goods.

94. Cf. Amtsgericht Oldenburg in Holstein (Germany), 24.04.1990, CISG-online 20. Cf. in detail on how interest itself can be awarded as damages especially in international investment disputes Sénéchal/Gotanda, Interest as Damages, 47 Colum. J. Transnat'l L. 2008-2009, pp. 491 et seq.

95. Cf. Handelsgericht des Kantons Zürich (Switzerland), 21.09.1995, CISG-online 246; Bundesgericht (Switzerland), 28.10.1998, CISG-online 413; ICC International Court of Arbitration (No. 7197), 01.01.1992, CISG-online 36 (The tribunal found that the seller operated on the basis of credit for which it had to pay interest at the rate of 12% and applied that rate since the seller would have to obtain credit in order to replace the funds missing due to the non-payment by the buyer); Kantonsgericht Zug (Switzerland), 12.12.2002, CISG-online 720; Handelsgericht Wien (Austria), 03.05.2007, CISG-online 1783; Oberlandesgericht Hamburg (Germany), 25.01.2008, CISG-online 1681; Handelsgericht des Kantons Aargau (Switzerland), 19.06.2007, CISG-online 1741.

96. Oberlandesgericht Frankfurt am Main (Germany), 18.01.1994, CISG-online 123 (“Pursuant to Article 1284 Codice Civile [of Italy] the interest rate amounts to 10%. . . . The [seller's] claim for default interest at an amount of 13.5% could not be awarded. CISG, Article 78 does not bar a claim for damages under CISG, Article 74 to recover additional loss resulting from finance charges. However, the [seller] has not shown evidence of any further loss caused by using credit. The submitted certificates issued by the Banca d'Italia only refer to the discount [rate] fluctuations”).

97. Brunner (fn. 8) Art.78 para 13; Staudinger/Magnus (fn. 8) Art. 78 para 20.