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Digital Goods and the CISG
Get PDFThe digital age requires rules for the purchase and sale of digital goods. Do the traditional sales rules—codified or judge-made—still suffice for trading such goods? Only a few years ago, in 2019, the European Union enacted special norms for these sales by two Directives, although essentially restricted to transactions between businesses and consumers.1 The Member States of the European Union (EU) had to implement the norms of the Directives. For instance, the German legislator included a considerable number of new provisions into the German Civil Code (BGB); partly they are entirely new, partly they replace or modify the formerly applicable ones. The new rules have applied since January 1, 2022. This was the mandatory date on which the new law entered into force in all Member States.
The following text pursues whether, in the international arena, the CISG is still fit for the digital age or also needs a digital refurbishment
New Currency, Same Story: How the CFA Franc Facilitates French Neocolonialism in West and Central Africa
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Greening the Supply Chain: CSR Clauses and Codes of Conduct in Light of the Corporate Sustainability Due Diligence Directive (CS3D)
Get PDFCorporate social responsibility has historically been a voluntary practice. However, in recent years, a clear shift has taken place, particularly in the national legislation of some European States: corporate responsibility as a tool for mitigating environmental and human rights impacts has progressively transitioned from the realm of voluntary commitments to legally enforceable obligations. This transformation did not occur overnight, but is the result of a long regulatory evolution, culminating in the adoption of the European Union (“EU”) Directive on Corporate Sustainability Due Diligence (hereinafter “CS3D” or “Directive”)—a subject of intense debate within the EU in recent years. The impact of this Directive extends beyond European borders. Like previous EU legal instruments, the CS3D will have extraterritorial effects, making it essential for companies outside the EU to understand its requirements; under certain conditions, indeed, non-EU companies operating within the European market will be subject to compliance obligations.This Article examines the potential implications of the transition from soft law to hard law, with a particular focus on sustainability clauses in commercial contracts and the drafting of codes of conduct. It explores how—and to what extent—the CS3D reshapes contractual governance in supply chains; the challenges associated with its implementation, particularly for small- and medium-sized enterprises (“SMEs”); and the possible unintended consequences of regulatory overreach.Section I of this Article traces the historical evolution of corporate social responsibility from voluntary initiatives to a mandatory regulatory legal framework. Section II outlines the core obligations imposed by the new CS3D. Section III examines the state of sustainability clauses and codes of conduct before the Directive’s adoption, while Section IV analyzes how they may evolve once the Directive’s mandatory provisions become applicable. Finally, Section V discusses the specific challenges faced by SMEs before concluding with a critical assessment of the Directive’s potential impact
Misinterpreting Section 5(n) of the FTC Act: A Critique of the District Court’s Rulings in FTC v. Kochava
Get PDFIn August 2022, the Federal Trade Commission (“FTC”) commenced a lawsuit against Kochava, Inc. (“Kochava”) in the United States District Court for the District of Idaho. The FTC’s lawsuit contains a single count, which claims that Kochava, by its sale of customized geolocation data feeds that allow purchasers of those feeds to identify and track specific mobile device users at “sensitive locations,” is engaged in an “unfair” trade practice towards consumers, in violation of Section 5(a) of the FTC Act. In its press release announcing the lawsuit, the FTC explained the theory of its unfairness claim against Kochava thusly:
“Kochava’s sale of geolocation data puts consumers at significant risk. The company’s data allows purchasers to track people at sensitive locations that could reveal information about their personal health decisions, religious beliefs, and steps they are taking to protect themselves from abusers. The release of this data could expose them to stigma, discrimination, physical violence, emotional distress, and other harms.”
Commentators immediately recognized that the “unfairness” theory at the heart of the FTC’s lawsuit represented a departure from the FTC’s prior practice of focusing its privacy violation inquiries on whether a company’s data collection practices are “deceptive” towards consumers, due to procedural failures like inadequate privacy notices or a failure to obtain required consumer consents. As such, they rightly characterized the FTC’s action as being a groundbreaking one that could have widespread implications for businesses collecting consumers’ geolocation data, as it had the potential for prohibiting collection of geolocation data outright, rather than merely prohibiting such collection from being done deceptively. And they questioned whether the FTC could meet its burden of proving a Section 5(a) violation based on such collection efforts being “unfair” towards consumers within the meaning of Section 5.
The District Court has subsequently rendered two rulings on the legal sufficiency of the unfairness theory being advanced by the FTC against Kochava, the first on May 4, 2023 (“Kochava I”) and the second on February 3, 2024 (“Kochava II” and, jointly with Kochava I, the “Kochava Rulings”). Among other issues, the Kochava Rulings address whether the FTC’s claim against Kochava is affected by Section 5(n) of the FTC Act, the first sentence of which provides that the FTC “shall have no authority under” Section 5 of the FTC Act to declare an act or practice unlawful on the grounds that such act or practice is “unfair” within the meaning of Section 5(a) “unless the act or practice [1] causes or is likely to cause substantial injury to consumers [2] which is not reasonably avoidable by consumers themselves and [3] not outweighed by countervailing benefits to consumers or to competition.” Specifically, the in the Kochava Rulings the District Court ruled that:
• An intangible injury such as “invasion of privacy” can constitute “substantial injury” to a consumer within the meaning of Section 5(n)’s first prong.
• An act or practice is “likely” to cause an injury to a consumer within the meaning of Section 5(n)’s first prong where it creates a “significant risk” that the consumer will incur that injury.
• An act or practice is sufficiently alleged to fail the cost-benefit test inherent in Section 5(n)’s third prong merely by alleging that the cost of safeguards to prevent the consumer injury threatened by the act or practice would be “reasonable.”
• Evidence sufficient to satisfy the three prongs of Section 5(n) is in and of itself sufficient to establish that the act or practice in question is “unfair” to consumers within the meaning of Section 5(a).
Each of the District Court’s four above-described Section 5(n) rulings embraced an interpretation of Section 5(n) advanced by the FTC and rejected a contrary interpretation advocated by Kochava. Moreover, as described in this article, each of these rulings either represented a “first-ever” judicial ruling on the issue in question or contradicted at least one other prior judicial ruling that had already addressed that issue. As a result it is small wonder that the Kochava Rulings led one leading commentator to remark that the court’s decision “would be a game changer in the consumer protection realm, if it continues to hold water later in this case and across other courts,” and prompted a Democratic-appointed FTC Commissioner to state publicly that the Kochava Rulings’ backing of the unfairness theory advanced by the FTC in Kochava is a “very big deal” for the FTC and in the data privacy community generally.
Unfortunately, as discussed in this article, the Kochava Rulings’ interpretations of Section 5(n) of the FTC Act are not only novel but also, at least in this author’s view, incorrect. Those rulings therefore stand as a “potential game changer” and as a “very big deal” for all the wrong reasons. If the District Court’s misinterpretations of Section 5(n) in FTC v. Kochava are upheld in that case as it moves forward and/or are followed in other cases by other courts around the country, the FTC will have achieved a dramatic, albeit legally indefensible, expansion of its unfairness authority under Section 5(a) not only in the consumer data privacy realm but in all other consumer contexts as well. It is vitally important, then, for courts and litigants alike to understand how badly the Kochava Rulings misinterpret Section 5(n), so they can prevent those misinterpretations from taking hold more widely and causing even more mischief than they have already caused for Kochava. This article seeks to provide such an understanding
Formal and Operative Rules of the CISG: Case of Article 25
Get PDFThe United Nations Convention on Contracts for the International Sale of Goods (CISG) has been the law of some countries for the better party of forty years. The case law (judicial and arbitral) has grown steadily over this time. Unfortunately, the case law is spread unevenly over its eighty-eight substantive articles. This Article will provide a framework for performing a factors analysis of one of its most important articles. CISG Article 25 sets the standard of fundamental breach for the type of breach that allows the nonbreaching party to avoid or terminate the contract. A factors analysis seeks to discover the key facts or factors that best predict a court’s (and arbitral tribunal) decision on whether or not a breach is fundamental. The difference between formal and operative law can be drawn out by such an analysis. The difference between these two perspectives or types of rules can be depicted by two questions: In reading an article or rule of the CISG, what is the plain meaning or common sense meaning of the rule (formal rule)? In its application, what factors are most predictive of the decision involving the rule’s application, irrespective of the rule’s plain meaning (operative rule)? This analysis is founded on the simple premise that certain facts or factors in particular cases predict if and how a court applies a rule of law. This Article will focus on the interface between formal law and operative facts or factors
From an Interpretive Tool to Substantive Law: The Apotheosis of Good Faith in CISG Jurisprudence
Get PDFThis Article offers a narrow lens of analysis: it examines the essence of an interpretive provision in Article 7’s mention of “Good Faith” in the United Nations Convention on Contracts for the International Sale of Goods (“CISG” or “Convention”) and considers how that article has become glorified, ultimately rising to the deified status of substantive law by way of oftentimes creative, interpretive incorporation techniques by various domestic courts and international arbitral tribunals. Borrowing from religious terminology, court treatment of good faith over the years has resulted in the elevation and exaltation of a universal trope to a divine honor, an apotheosis. This Article argues that this elevation to an apotheosis-like status was never the original intention of the drafters of the Convention; quintessence was never contemplated. The compromise worked out at the 1980 Vienna Conference confined good faith to the interpretation of the CISG only. Good faith did not incorporate any behavioral standards by which parties’ performances under sales contracts were to be measured; it did not serve as a standard of conduct for contractual performance. There was nothing “divine” or even special about the incorporation of those words into the CISG. Good faith was to play only a modest and limited role. The plain meaning reference to it suggests it was of emblematic value, and its placement in a provision dealing with interpretation of the Convention is somewhat surprising and strange. This perplexity continues: one cannot find a definition or explanation of good faith in the CISG. It is a compromise provision that merely formulates good faith as an interpretive device only. But this is a far cry from what it has become and the heights it has climbed.The uncertain status and function of good faith by the drafters of the Convention appears to be deliberate: They imposed on contracting parties no substantive duty to act in good faith. Further, the placement of good faith in the CISG’s general principles also suggests that the reference to it is directed to the courts rather than to contracting parties. This outlier treatment stands in stark contrast to other international instruments, such as the Principles of European Contract Law and the UNIDROIT Principles of International Commercial Contracts, both of which explicitly impose a duty of good faith on the contracting parties. Nevertheless, in CISG cases, good faith is commonly referred to in judicial decisions but in such a way as not to make it clear what good faith means or to show why there is any need to invoke it outside of its interpretive purpose.Thus, domestic courts, international tribunals, scholars, judges and arbitrators have, at times, conflated the CISG’s interpretive provisions with its substantive ones, as this Article demonstrates with good faith. This comingling of an interpretive provision is problematic as it creates uncertainty among parties involved in international trade. The merging of different conceptions of the provision also reflects the scholarly discourse on the topic: some CISG scholars argue that the role of good faith is limited to the interpretation of the CISG only while others view good faith in the CISG as a general principle that must govern the conduct of the contracting parties. Distinctions between what is simply interpretive guidance and what is substantive law is of crucial importance to courts and tribunals in developing sound and principled jurisprudence regarding the proper application of the CISG. This Article argues that an expansive role for good faith was never contemplated by the drafters of the Convention, and a review of subsequent case law on it has neither clarified what good faith means in practice nor shown legal practitioners why it needs to be invoked when the cases can be settled by other means. The current confusion over good faith creates contractual ambiguity and this lack of clarity does not auger well for the future of the CISG as a uniform sales law in international transactions
Professional Responsibility and Privilege in the Cross-Border Practice of Law
Get PDFThis Article captures my presentation and the discussion at the May 2024 Dubrovnik Program on Cross-Border Dispute Resolution co-sponsored by the Center for International Legal Education (CILE) at the University of Pittsburgh School of Law and the Law Faculties at the University of Verona and the University of Zagreb. I review U.S. law on professional responsibility and cross-border practice, with a focus on disciplinary decisions and cases dealing with the unauthorized practice of law. I follow that discussion with consideration of the attorney-client privilege and work product doctrines in order to highlight how challenges to the admissibility of evidence in dispute resolution proceedings both demonstrate the differences in legal system approaches to the lawyer-client relationship and indicate the need for careful communication at all stages of that relationship when it crosses borders. I conclude that the current system of lawyer regulation does not meet the needs of the contemporary world. The result is a need for vigilance on the part of any lawyer engaged in the cross-border practice of law
Monopolectomy: An Antitrust Analysis of Healthcare Facilities Mergers Under the FTC\u27s 2023 Merger Guidelines
Get PDFHealthcare services markets display a trend toward concentration in recent decades. 1,887 hospital mergers have been announced in the United States between 1998 and 2021. In one regional market—really, in several regional markets—the University of Pittsburgh Medical Center (UPMC) acquired twenty-eight hospitals between 1996 and 2019. UPMC’s consolidating tendency has not slowed down into the present: in June of 2023, UPMC signed a non-binding letter of intent to affiliate with the Washington Health System, which consists of two hospitals. Meanwhile, in December of 2023, the two federal agencies empowered to enforce federal antitrust law, the Federal Trade Commission (FTC) and the Department of Justice (DOJ), released new merger guidelines thatsignal a more aggressive approach to Section 7 of the Clayton Antitrust Act in seeking injunctions against corporate mergers. The new guidelines above all signal a stronger presumption of illegality with respect to mergers and thus require less concrete evidence of a merger’s future individualized detrimental impacts on consumer welfare than previous guidelines for FTC or DOJ’s antitrust division to prosecute such mergers. Whether these guidelines will acquire cachet in the courts and change the state of antitrust law as we know it is an open question.Similarly, in February of 2023, the Department of Justice retracted Clinton-era policy statements creating an “antitrust safety zone” for hospital mergers. This Note will consider how the changes in FTC and DOJ policy signaled by the 2023 guidelines bear upon the healthcare services market. Though ultimately it is not likely that the shift in the agencies’ policies will be perfectly reflected in judicial decisions, healthcare administrators and their legal counsel concerned with the expense of litigation can consult this Note to understand how the FTC and DOJ will analyze mergers in their industry under the new guidelines