Recovering Attorneys’ Fees as Damages under the U.N. Sales Convention (CISG): The Role of Case Law in the New International Commercial Practice, with Comments on Zapata Hermanos v. Hearthside Baking

Fletcher, Harry M. | January 1, 2002

The conclusion I ultimately draw is that, although the holdings of individual cases are ambiguous, as a group the relevant foreign decisions clearly sanction an award of CISG damages to cover attorneys’ fees that would not normally be compensable under U.S. national law. As I discuss in Part III of the article, the firmly-established “American rule” on recovery of attorneys’ fees is that, in the absence of a statutory or contractual provision to the contrary, each party to a dispute must bear his or her own attorneys’ fees. A line of U.S. cases construing Article 2 of the U.C.C. strongly suggests that the provisions of the CISG would nut trigger the statutory exception to the American rule under the usual approach employed by U.S. courts. Thus if the damage provisions of the Convention appeared verbatim in domestic U.S. legislation, it is quite unlikely that U.S. courts would interpret them in the same way as have foreign tribunals. The CISG, however, is not purely domestic U.S. legislation. It is, instead, a multi-party international convention that creates treaty obligations on the part of the U.S., including the obligation under Article 7(1) to interpret the Convention in a fashion that reflects its “international character” and that promotes “uniformity in its application.”’10 In Part IV of the article I turn to the ultimate question of how a U.S. court should comply with these obligations when confronting a claim that the CISG authorizes damages to cover an aggrieved party’s attorneys’ fees. A key issue is the extent to which U.S. courts (and other tribunals, both U.S. and foreign) should be influenced by the line of foreign decisions that interpret the damage provisions of the CISG to require a losing party to pay attorney costs of the prevailing party. Resolving this specific issue requires development of more generalized criteria for determining the authority that particular foreign decisions should have in CISG jurisprudence. I attempt to identify factors relevant to this determination and apply them to existing decisions awarding attorneys’ fees as CISG damages. Demarcating the authoritative force of foreign decisions awarding attorneys’ fees as damages under the CISG, however, does not provide a final answer to the question of how U.S. courts should resolve the issue. The last part of Part IV of the paper is devoted to that substantive question, concluding that the Convention should not be interpreted to provide for recovery of attorneys’ fees as damages.