Zapata Retold: Attorneys’ Fees Are (Still) Not Governed by the CISG

In Viva Zapata (the 1952 movie), a Mexican revolutionary hero named Zapata led a band of hungry peasants in a wild uprising against the government in power. In the film, Zapata (played by Marlon Brando, himself) scored some crowd-pleasing victories, but (historians tell us) the rule-making powers ultimately prevailed, reigning in the Wild One and ending (forever) Zapata’s quixotic quest

The Unidroit Principles of Contract Law; Is There Room for Their Inclusion into Domestic Contracts?

When the UNIDROIT Principles (the Principles) were published in 1994 they were considered to be “soft law” and hence not binding on the courts. However, these principles have demonstrated that they are offering concrete and worthwhile solutions and arguably are a move forward in harmonizing and unifying contract laws. Indeed, the intention of the UNIDROIT Working Groups was to “develop a set of norms best suited to accommodate the needs of the international commercial community.” The Principles themselves argue that it reflects “concepts to be found in many, if not all, legal systems.” As a result the Principles are not: “a rigid and limitative legal source but instead leave considerable room for flexibility, either to accommodate specific provisions to further individual parties’ interest in their private dealings, or to promote national trade and economic policies. This makes the Principles a unique tool to be adapted into any contract and arguably protect the parties’ just expectations arising from their contract

The Enron Collapse and Criminal Liabilities of Auditors and Lawyers for Defective Prospectuses in the United States, Australia and Canada: a Review

A lack of uniformity in laws regulating professionals such as auditors and lawyers in relation to defective prospectuses exists across nations around the world. Securities legislation of some jurisdictions clearly imposes criminal liabilities for defective prospectuses on professionals along with directors and promoters of the issuer of securities. But the laws of some other countries are ambiguous in this regard. Such an ambiguity is present in the securities legislation of the United States, Australia and Canada. Their legislation does not categorically name the persons who should be criminally liable for a defective prospectus; nonetheless auditors and lawyers are sometimes caught by virtue of judicial interpretations of those vague legal provisions. Even though they could be on the hook under such interpretations, legislation provides a wide range of defences that facilitate escaping liabilities by offenders at the expense of the integrity of the market. Regarding sanctions, although the term of imprisonment is identical in all these three jurisdictions, pecuniary penalties significantly vary after the recent reforms triggered by some spectacular corporate bankruptcy taking place especially in the U.S. and Australia. Most importantly, the post-Enron reforms explicitly amend the laws governing secondary securities markets, and therefore their application to defective prospectuses is questionable except for the Canadian reforms. If the post-Enron reforms do not really touch the prospectus liability regimes in the U.S. and Australia, it can be said that the lawmakers have ignored their primary securities markets. If this is so, it would be an unwise policy to wait for an Enron-type disaster to occur in the IPO market for stimulus to initiate reforms addressing professional malpractices in the preparation of prospectuses. If not, the law should make it clear before it is too late

Legal Costs as Damages in the Application of UN Sales Law

In the literature on the uniform UN sales law (CISG), the decisions in the first and second instances of the Zapata1 case triggered an extraordinarily lively discussion. Simply stated, the case concerned the delivery of painted cookie tins used for packaging Christmas cookies, for which the American buyer (i.e., place of business in the USA), citing flimsy pretexts, refused to pay. The Mexican seller (i.e., place of business in Mexico), sued and was awarded compensatory damages; as part of the damages, the trial court also awarded the plaintiff its attorneys’ fees. At the appellate level, where only the issue of attorneys’ fees was disputed, the appellate court rejected the claim for reimbursement of attorneys’ fees and reversed the trial court decision. [The seller’s] appeal to the U.S. Supreme Court by writ of certiorari was denied. The cases concerned the so-called “American rule,” according to which the parties each bear their own litigation expenses, and in particular their own attorneys’ fees, independent of the outcome of the case. This deviates from German legal understanding and has significant practical consequences. In particular, high attorneys’ fees could lead to the result that the compensatory damages awarded to the plaintiff in actuality fall far short of covering his losses, and for the victorious defendant winning a case can be a pyrrhic victory. Yet, the American rule is not without exceptions, and especially for abusive lawsuits brought on obviously groundless claims, American procedural law permits the losing party bringing such claims to be partially burdened with the cost.Also in cases of especially serious breach of contract, an award of punitive damages could make it possible for the victorious plaintiff to recover his litigation expenses and attorneys’ fees. Nevertheless, in the large majority of cases the American rule leads to the described results, which for German jurists appear at first glance surprising and unacceptable. Especially for foreign parties to a contract who come before an American court and win, the American rule can lead to unpleasant surprises