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Australian Year Book of International Law |
James Crawford[∗] and Simon Olleson[∗∗]
Among his contributions to the literature of international law, Professor D W Greig has deepened our understanding of the law of treaties and its relation to the law of state responsibility.[1] Our focus here is on one particular issue: the doctrine commonly referred to as the exceptio inadimpleti contractus, sometimes shortened to the exceptio. We will refer to it as the exception of non-performance. In general terms, this is the principle that performance of an obligation may be withheld if the other party has itself failed to perform the same or a related obligation. In a system as dependent on consent and reciprocity as the international system, it would not be surprising to find such a principle at play. Moreover, as will be seen, there is a substantial comparative law underpinning to the principle, especially in civil law systems. But uncertainty remains as to the status of the exception of non-performance in international law.
In particular, the exception of non-performance, though it has been recognised to some extent as an operative principle in international judicial and arbitral decisions, has not been included either in the Vienna Convention on the Law of Treaties[2] as a basis for the suspension of treaty obligations, or in the International Law Commission’s Articles on Responsibility of States for Internationally Wrongful Acts[3] as a circumstance precluding the wrongfulness of the non-performance of an international obligation. It could be said to have fallen between the two instruments. Thus the question is raised whether the exception is to be regarded as belonging to the law of treaties or the law of state responsibility. If the exception is proper to the law of treaties, the further question arises whether it should be regarded as a rule of international law at all, or simply as a potential outcome of treaty interpretation.
In his Virginia lectures in 1994,[4] Greig noted that the exception might be considered a general principle of law, as Judge Anzilotti had asserted in Diversion of Waters from the Meuse.[5] In Greig’s view, however, it was better seen as
essentially a principle relating to cognate obligations which are more often to be found … in treaty relationships. By their very nature such obligations cannot arise independently. Accordingly, it would make more sense to regard the principle as forming part of the law of treaties within which it has its main field of application. Viewed in this light, it is a pity that the principle was not expressed in the Vienna Convention. However, there is an alternative analysis. It is possible to regard the interrelated obligations … as carrying an implied promise of reciprocity: the performance of one is dependent upon performance of the other. It is thus feasible to ascribe the link between the obligation and its consequences to the intention of the parties. It is then an issue of fact as to whether the link exists.[6]
Greig saw a number of advantages to this approach. First, since the operation of the principle is dependent upon the intentions of the parties, there is no need to question the omission of the exception from the Vienna Convention. By formulating the exception so that it arises from the intention of the parties to create interdependent obligations, it is not necessary to invoke the provisions on countermeasures to justify non-performance. Since it arises as a matter of the interpretation of the treaty, the non-performance may be held to be justified by the treaty itself. Second, such a formulation avoids any interference between the exception and the provisions governing countermeasures. At the same time, he expressed concern lest the provisions regarding countermeasures in the draft articles undermine the Vienna Convention ‘by providing an extraneous ground for non-performance of a treaty’.[7] If the exception is regarded as part of the law of treaties, part of the function performed by countermeasures could be excluded, at least in the context of treaty relations.
This interpretation thus has a third advantage, that ‘the integrity of the Vienna Convention [is] preserved’.[8] Article 42(2) of the Vienna Convention on the Law of Treaties seems to postulate that any suspension or termination of a treaty may only be conducted in accordance with the provisions of the Vienna Convention, and in particular article 60. The ‘extraneous ground’ for non-performance of treaty obligations provided by the rules of countermeasures would seem to undermine this provision, and indeed the whole system of the Vienna Convention. In Greig’s view, the provisions on countermeasures would then only be applicable to non-treaty obligations.[9]
Greig’s warning as to the danger of ‘diluting the law of treaties’[10] by reference to external principles of state responsibility seems to have gone unheeded. The Air Services arbitration[11] had already upheld the view that countermeasures could justify non-performance of a treaty obligation. The decision of the Arbitral Tribunal in Rainbow Warrior[12] had postulated that the regimes of the law of treaties and state responsibility were applicable sequentially to the same situation and that the ‘circumstances precluding wrongfulness’ contained in the draft articles could provide an excuse for the non-performance of a treaty obligation. That view has since been endorsed by the International Court of Justice and reaffirmed by the International Law Commission.
In the Gabčíkovo-Nagymaros Project Case, the Court clearly proceeded on the basis that non-performance of a treaty, adopted as a reaction to a prior breach of that treaty, could be justified as a countermeasure,[13] and this quite apart from the conditions for suspension of a treaty under article 60 of the Vienna Convention. In the Articles on state responsibility finally adopted by the International Law Commission in 2001, it is clear that the temporary non-performance of an unconnected treaty obligation may be justified as a response to the breach by a state of one of its obligations, subject to fulfilment of the requirement of proportionality and the other conditions set out in the Articles.[14]
Thus Greig’s view of the autonomy of the law of treaty performance under the Vienna Convention has not been sustained. At the same time, however, his analysis of the exception of non-performance should be regarded as essentially correct. It is helpful first to outline the treatment of the exception in the work of the International Law Commission, then to review briefly the international and comparative law materials underlying the exception.
In the work of the International Law Commission, the exception has been discussed intermittently, both in the context of the law of the treaties and of state responsibility.
In his Fourth Report on the law of treaties, Sir Gerald Fitzmaurice discussed the principle in the framework of ‘circumstances justifying non-performance’.[15] He was unsure whether to include the exception among those justifications arising ‘ab extra by virtue of a general rule of international law’, or from those arising ‘ab intra by virtue of a condition of the treaty implied in it by international law’.[16] Provisionally placing it in the latter category, he proposed the following broad formulation:
By virtue of the principle of reciprocity, and except in the case of the class of treaties [containing obligations which are self-existent, absolute and inherent for each party, irrespective and independently of performance by the others][17] non-performance of a treaty obligation by one party to the treaty will, so long as such non-performance continues, justify an equivalent and corresponding non-performance by the other party or parties.[18]
Fitzmaurice’s commentary treated the exception as a general principle, not only applicable to treaty obligations:
[t]here is a general international law rule of reciprocity entailing that the failure of one State to perform its international obligations in a particular respect, will either entitle other States to proceed to a corresponding non-performance in relation to that State, or will at any rate disentitle that State from objecting to such corresponding non-performance.[19]
The Commission never debated Fitzmaurice’s Fourth Report, and his successor as Special Rapporteur, Sir Humphrey Waldock, did not address the issue at all. Under Waldock, the scope of what became the Vienna Convention was narrowed to exclude most issues of the performance of treaty obligations. Indeed, it is not too much to say that the Vienna Convention focuses its attention on the conclusion, content and termination of treaties and ignores questions of performance. A general exception, of course, is article 26 (pacta sunt servanda), but it is almost the only article which deals with performance as such. Article 60, is concerned with the issue of breach of treaties only insofar as it gives rise to a right to terminate or suspend the treaty. Hence it is limited to ‘material breach’, narrowly defined,[20] whereas any breach of a treaty (material or not) gives rise to the responsibility of the state committing the breach. In short, issues of performance are left to be dealt with under the topic of state responsibility. Under article 73, ‘[t]he provisions of the present Convention shall not prejudge any question that may arise in regard to a treaty … from the international responsibility of a state …’.
It is essential to understand the relatively narrow focus of the Vienna Convention in order to understand its provisions on treaty suspension. Although, of course, the suspension of a treaty has consequences for its performance (as does the invalidity or termination of a treaty), this is not the essential point. Instead, suspension is a surrogate for termination of a treaty in several different ways.
First, in the context of bilateral treaties, a state with the right to terminate a treaty may instead suspend its operation.[21] Such suspension operates both ways, that is, it suspends the requirement to comply for both parties, including the state responsible for the breach. It is therefore not a sanction or a penalty as such. The responsible state may be seeking to rid itself of the obligation, whereas the only interest of the injured state may be to reinstate its performance. Moreover, very little is said about the subsequent process of ‘unsuspension’, that is, of bringing the treaty back into operation. It is not clear, for example, whether this requires the consent of both states, or whether a state which has unilaterally suspended a treaty is entitled unilaterally to restore it.[22] All that is said is that, during the period of suspension ‘the parties shall refrain from acts tending to obstruct the resumption of the operation of the treaty’.[23] It may be inferred that where a treaty is suspended for temporary impossibility of performance, the treaty revives when performance once more becomes possible. But even this is not expressed in article 61(1) and it may be that, again, some act of the parties is required.
Second, the Vienna Convention deals with suspension of multilateral treaties. Here too the concern is not performance as such but the impact of suspension on third states. The basic principle is that the termination of a multilateral treaty (other than in accordance with its provisions) requires the consent of all the states parties. States injured by the breach of a multilateral treaty or faced with a situation of impossibility of performance or fundamental change of circumstances may be individually entitled to withdraw from the treaty or to suspend it in their relations with the responsible state. But the treaty itself survives until the last (or perhaps the second-last) state leaves and, as it were, turns out the lights. None of this has anything to do with treaty performance as such.
Third, the Vienna Convention deals with the suspension of treaties containing what are sometimes (misleadingly) referred to as ‘integral’ obligations but which are perhaps better termed ‘interdependent obligations’. An obligation is interdependent if it is of such a character, according to article 60(2)(c), that ‘a material breach of its provisions by one party radically changes the position of every party with respect to the further performance of its obligations under the treaty’. In such a case, any party may invoke the breach in order to suspend the treaty in whole or in part as with respect to itself against all other parties, not only the state responsible for the breach.
At various stages during the work of the ILC on state responsibility, the question of including the exception of non-performance was raised. Various views have been put forward. Some have proposed that it be included in the draft articles as a ‘circumstance precluding wrongfulness’; others have taken the view that it did not fall within the scope of the articles, either because it was not a secondary rule, or alternatively because it added nothing to the provisions on countermeasures.
In his Fourth Report, Willem Riphagen suggested that outside the cases covered by article 60 of the Vienna Convention, which only relates to material breaches
if it appears from the treaty or is otherwise established that the performance of an obligation by a State party is the counterpart (quid pro quo) of the performance of the same or another obligation by another State party, the non-performance by the first mentioned State need not be a material breach in order to justify non-performance by the other State.[24]
Accordingly, Riphagen in his Fifth Report proposed as article 8 of Part Two the following:
Subject to articles 11 to 13 [excluding certain obligations from the scope of the article], the injured State is entitled, by way of reciprocity, to suspend the performance of its obligations towards the State which has committed an internationally wrongful act, if such obligations correspond to, or are directly connected with, the obligation breached.[25]
In the debate, some members pointed out ‘the fine and somewhat formalistic distinction between [draft article 8] and the suspension of treaty obligations’.[26]
Riphagen’s successor, Gaetano Arangio-Ruiz, similarly dealt with the exception as an aspect of countermeasures, noting that:
The problem here is to see whether practice justifies making a distinction of such ‘conventional’ measures as treaty suspension and termination and countermeasures in general, not only for merely descriptive purposes but in view of the legal regime to be codified or otherwise adopted by way of progressive development. As well as the question of so-called reciprocity in general, the issues relating to these two ‘conventional’ measures — issues connected with the relationship between the law of treaties and the law of State responsibility — will require further study before any draft articles are formulated.[27]
In the event, the Commission decided not to consider reciprocal measures ‘as a distinct category of countermeasures’ on the ground that they ‘did not deserve special treatment’.[28] Accordingly, in the Draft Articles on State Responsibility adopted on first reading in 1996, no provision on the exception of non-performance was included, implicitly denying its status as one of the secondary rules of responsibility. Moreover, no distinction was made in the regime of countermeasures based on the notion of interdependent or reciprocal obligations.
The Commission began the second reading of the Draft Articles in 1998 and completed it in 2001. In his Second Report, the Special Rapporteur returned to the issue of the exception of non-performance, proposing a provision within the chapter on Circumstances Precluding Wrongfulness,[29] based on the dictum of the Permanent Court of International Justice in the Factory at Chorzów Case:
It is … a principle generally accepted in the jurisprudence of international arbitration, as well as by municipal courts, that one Party cannot avail himself of the fact that the other has not fulfilled some obligation or has not had recourse to some means of redress, if the former Party has, by some illegal act, prevented the latter from fulfilling the obligation in question, or from having recourse to the tribunal which would have been open to him.[30]
It was suggested that this dictum supported at least a narrow version of the exception, and that a state should not be held responsible where ‘it has been prevented from acting in conformity with the obligation in question as a direct result of a prior breach of the same or a related international obligation by another State’.[31] The wider issue of justification of non-performance following the breach of an obligation by another state (and not merely the situation where a state has been prevented from performing by the other’s breach) was, on the other hand, felt to be sufficiently covered by the law relating to suspension or termination of treaty obligations contained in article 60 of the Vienna Convention on the Law of Treaties and by the provisions of the articles relating to countermeasures.[32]
The Special Rapporteur’s proposal received a mixed reception both from other members of the Commission[33] and from states.[34] In the light of this response, it seemed wiser not to press the proposed provision, and to accept the view that the principle should be regarded essentially as an aspect of treaty interpretation.[35] The Commission agreed with this conclusion and the matter was dropped.
One reason for the prevailing uncertainty as to the status of the exception concerns its precise formulation. In fact, as the Commission’s debate in 1999 made clear, two forms of the exception of non-performance may be discerned, and different sources support one version or the other. The narrower form of the exception is based on the idea that state A may not complain of the non-performance of an obligation owed to it by state B where such performance has been prevented by the prior wrongful act of state A. This narrow version of the exception seems to overlap with the excuse of force majeure or impossibility, or (in cases not involving actual impossibility of performance) with the principle that a state may not take advantage of its own wrongful act.
The wider form of the exception allows a state to withhold performance of an obligation when another state has not performed an obligation of its own. As to this wider version of the principle, it is clear that the exception can only be applicable to interrelated obligations; otherwise it would completely undermine the principle pacta sunt servanda. However, it is not clear whether it applies only to interrelated treaty obligations, or to all interrelated obligations whatever their source. And even if the principle is restricted solely to interrelated treaty obligations, there is a potentially problematic overlap with the law of countermeasures.
The exception in both its versions has found some recognition in the International Court. In the Meuse Case,[36] the Netherlands complained of the diversion by Belgium of water from a lock in Belgian territory for irrigation and other purposes: this was alleged to be a breach of a bilateral treaty of 1863. Belgium responded that its use of the water was not wrongful at all, given similar actions by the Netherlands with regard to a lock on its side. Subsidiarily, it argued that, ‘by constructing certain works contrary to the terms of the Treaty, the Applicant has forfeited the right to invoke the Treaty against the Respondent’.[37] The Permanent Court upheld the principal Belgian argument, which was essentially based on interpretation.[38] But the second argument was addressed in various ways in some of the separate and dissenting judgments.
Judge Altamira in a separate opinion denied that the obligations were synallagmatic; therefore Belgium could not rely on the Netherlands’ conduct as a circumstance precluding wrongfulness.[39] Judge Anzilotti dissented. Referring to Belgium’s subsidiary argument, he said:
I am convinced that the principle underlying this submission (inadimplenti non est adimplendum) is so just, so equitable, so universally recognized, that it must be applied in international relations also. In any case, it is one of these ‘general principles of law recognized by civilized nations’ which the Court applies in virtue of Article 38 of its Statute.[40]
Judge Hudson, in an individual opinion, referred both to analogous principles of the English law of equity as well as to civil law sources:
It would seem to be an important principle of equity that where two parties have assumed an identical or a reciprocal obligation, one party which is engaged in a continuing non-performance of that obligation should not be permitted to take advantage of a similar non-performance of that obligation by the other party. The principle finds expression in the so-called maxims of equity which have exercised great influence in the creative period of the development of the Anglo-American law […] A very similar principle was received into Roman law […] The exceptio non adimpleti contractus required a claimant to prove that he had performed or offered to perform his obligation […] [E]ven where a code is silent on the point Planiol states the general principle that ‘in any synallagmatic relationship, neither of the two parties may claim a benefit to which it is entitled unless it offers to perform its own obligation’. The general principle is one of which an international tribunal should make a very sparing application. It is certainly not to be thought that a complete fulfilment of all its obligations under a treaty must be proved as a condition precedent to a State’s appearing before an international tribunal to seek an interpretation of a treaty. Yet, in a proper case, and with scrupulous regard for the limitations which are necessary, a tribunal bound by international law ought not to shrink from a principle of such obvious fairness.[41]
In the ICAO Council Case,[42] the Court emphasised that a mere allegation by a party to a treaty that another party had committed a material breach of the treaty did not allow the former unilaterally to consider that treaty as terminated or suspended in accordance with article 60 of the Vienna Convention on the Law of Treaties. Judge de Castro in a separate opinion expressly referred to the exception in answering India’s contention that ‘no question of interpretation of application can arise with regard to a treaty which has ceased to exist or which has been suspended’.[43] Relying upon article 60 of the Vienna Convention ‘which follows from the contractual nature of treaties’,[44] Judge de Castro said:
It should not be overlooked that the rule opens the possibility of raising the exceptio inadimplenti non est adimplendum. The breach of an obligation is not the cause of the invalidity or termination of the treaty. It is a source of responsibility and of new obligations or sanctions. Alongside this, it is the material breach of a treaty which entitles the injured party to invoke it in order to terminate or suspend the operation of the treaty.[45]
In the Gabčíkovo-Nagymaros Project Case,[46] the question arose in a rather specific and unusual form. The Court held that Hungary had not been justified in suspending and terminating work on the project in the period 1989 to 1991, but equally that Czechoslovakia was not entitled subsequently to divert the Danube for the purposes of its ‘Variant C’. Both parties were accordingly in breach of the 1977 Treaty establishing the Project. But the Court declined to allow Hungary to rely on Czechoslovakia’s breach (undoubtedly a material breach within the meaning of article 60) as a ground for termination of the Treaty. Relying on the passage from the Factory at Chorzów Case,[47]
cited above, the Court said it could not
overlook that Czechoslovakia committed the internationally wrongful act of putting into operation Variant C as a result of Hungary’s own prior wrongful conduct … Hungary, by its own conduct, had prejudiced its right to terminate the Treaty; this would still have been the case even if Czechoslovakia had violated a provision essential to the accomplishment of the object or purpose of the Treaty.[48]
Subsequently, the Court noted that ‘[t]he principle ex injuria jus non oritur is sustained by the Court’s finding that the legal relationship created by the 1977 Treaty is preserved and cannot in this case be treated as voided by unlawful conduct’.[49] However, it should be noted that while Slovakia’s later breach of the Treaty was ‘caused’ by Hungary’s earlier breach (in the sense of being a causa sine qua non), it was not caused by the earlier breach in the sense of the dictum of the Court in Factory at Chorzów. Instead it was, as the Court held, independently unlawful.[50]
Another peculiarity of the Gabčíkovo-Nagymaros Project Case is the position apparently adopted by the Court that Hungary had suspended the operation of the 1977 Treaty. It raised the point despite the fact that the procedures of article 65 of the Vienna Convention had not been complied with, or even invoked. In what can only be described as elliptical language, it said that
The Court cannot accept Hungary’s argument to the effect that, in 1989, in suspending and subsequently abandoning the works for which it was still responsible at Nagymaros and at Dunakiliti, it did not, for all that, suspend the application of the 1977 Treaty itself or then reject that Treaty.[51]
Evidently the Court took the view that Hungary had in substance attempted to suspend the Treaty, despite its own statements that it was acting out of necessity (that is, on the basis of circumstances precluding wrongfulness). But it is slightly odd to describe a state as suspending a treaty when (a) it has never purported to do so and (b) it is not entitled to do so under the law of treaties.
In fact, Hungary had indicated its unwillingness to comply with some of the provisions of the Treaty from 1989 through the suspension of works required by the Treaty. But it is clear that, once the reasons given by Hungary for its action were held to be legally insufficient, this refusal entailed its international responsibility for breach of those very provisions; far from being suspended the Treaty continued to produce legal effects. It may be that in substance what Hungary sought to do in 1989-90 (though it never said so) was to suspend those parts of the Treaty of which it disapproved. But there is an important difference between the suspension of a treaty and the refusal (whether or not justified) to comply with a treaty. The suspension of a treaty, if legally justified, places the treaty in a sort of limbo. A treaty which has been suspended ceases to constitute an applicable legal standard for the parties while it is suspended and until action is taken to bring it back into operation.[52] By contrast, conduct inconsistent with the terms of a treaty in force, if it is justified as a countermeasure, does not have the effect of suspending the treaty; the treaty continues to apply and the party taking countermeasures must continue to justify its non-compliance by reference to the criteria for taking countermeasures (for example, necessity, proportionality, reversibility) for as long as its non-compliance lasts. Countermeasures are no more a ground for the suspension of a treaty than is necessity.[53]
In view of its exclusion from both codification projects of the International Law Commission on the law of treaties and on the law of state responsibility, the status of the exception must appear questionable. Two possible alternatives seem to remain: either the exception is properly to be regarded as a general principle of law, or, as Greig suggests, it should be treated as an implied term, limited to certain synallagmatic treaties.[54] It is first necessary to consider whether the exception of non-performance might be regarded as a general principle of law. To that end it is useful to examine the extent to which it is recognised in domestic legal systems.
Despite its Latin tag, the exception in its widest form, expressed by the maxim inadimplenti non est adimplendum, does not appear to have been recognised as a general principle by Roman law. Rather, it seems to have been extracted from certain specific instances, particularly the exceptio mercis non traditae. In most circumstances, the principle of good faith (the ex fide bona clause in most informal contracts) and the exceptio doli (for the stipulatio) were felt to offer sufficient protection to the other party to a contract.[55] It was only later that a general rule was extrapolated from these particular instances by the glossators and their followers.[56] A parallel development in the medieval canon law was based on the principle fidem frangenti fides frangitur/frangenti fidem non est fides servanda. The rule remained part of the ius commune down to the era of codification and the Pandectists.[57]
As part of the legacy of this development, the exception (exception d’inexécution; Einrede des nicht erfüllten Vertrags) is found in most systems having civil law roots, sometimes explicitly as a general principle, sometimes as a specific rule in relation to certain nominate contracts. As with the postulated application of the exception to treaties in international law, within domestic systems, the exception is recognised most commonly in respect of reciprocal or synallagmatic obligations, that is, where it is clear that performance of one party is either a precondition or a concurrent condition to the performance of an obligation of the other party. However, it may also find some application outside the scope of reciprocal contracts in application to other interdependent obligations. In civil law systems its application has considerable overlap with other institutions, particularly rétention (analogous to the lien in common law systems) and compensation (set-off).
In France, the operation of the exception is not subjected to a prior mise en demeure,[58] in the way that a claim for damages or a request to the court to terminate the contract would normally be.[59] The French Code civil does not contain a unitary provision that consecrates the exception. Rather, there are specific provisions relating to sale,[60] exchange,[61] and deposit.[62] Despite this, the French Cour de Cassation has repeatedly stated that the exception constitutes a general principle[63] applicable to all synallagmatic contracts.[64]
The explanations of the general principle of the exception in the French legal system, supported by a rich body of doctrinal writing,[65] parallel those given for the exception in international law. The dominant theory is linked to the theory of ‘cause’ elaborated most notably by Henri Capitant.[66] Under this theory, the obligation of each party finds its raison d’être in the performance of the other party.[67] In accordance with article 1131 Code civil the non-performance of one party therefore removes the basis for the performance of the other and the obligation is without effect.[68]
This theory has been criticised on the grounds that article 1131 Code civil is only concerned with the initial validity of contracts, that the consequence of an absence of cause is the nullity of the contract, not its suspension, and that such an interpretation limits the operation of the contract solely to perfectly synallagmatic contracts, when it is clear that its operation is much wider.[69] The rival explanations of the exception in French law propose that it should be understood as arising either from the implied will of the parties,[70] or from the nature and common origin of the reciprocal obligations.[71] According to the former theory, which closely parallels the English mechanism, the exception derives from the interpretation of the agreement of the parties, which leads to the conclusion that each party only agreed to perform if the other party also performed.
The latter theory is most comprehensive, since the principle has been extended not only to other reciprocal relationships involving an imperfectly synallagmatic contract,[72] but also to relationships where there is no contract at all, but only obligations arising from quasi-contract. For instance, the principle has been held applicable to obligations of restitution following the declaration of nullity or judicial resolution of a contract, so that one side may refuse to return the performance of the other party until the other party is ready to return the performance received.[73] Similarly, where there has been a ‘gestion d’affaire’ involving property, the gérant may retain the thing looked after until recompensed for doing so.[74] It is therefore perhaps more appropriate in French law to speak of the wider maxim inadimplenti non est adimplendum.
The demarcation of the field of application of the exception in French law is complicated by the existence of several rival institutions, which are not always precisely distinguished by the courts and whose application overlaps with that of the exception. Compensation[75] operates in a situation where money is owed by both parties. However, its effects are different from those of the exception since it extinguishes pro tanto the debt on each side, while the exception merely suspends the obligation to pay.
The right of rétention is perhaps best regarded as a particular application or sub-category of the exception.[76] It allows a party who is in possession of property of the other party to refuse delivery until the obligation owed is performed. In many respects it operates in exactly the same way as the exception, and the French courts in the past have often not clearly set out which concept they are using.[77] However, by its nature, it is applicable only to situations where the property of one party is in the possession of the other, whereas the exception has a wider ambit.
By comparison with the French system, the situation in other countries where there is a clear statement of the exception is less complicated. The German Bürgerliches Gesetzbuch (BGB) contains a classic statement of the exception. § 320 (Plea of Unperformed Contract) provides:
1. Whoever is bound by a mutual contract may refuse to perform his part until the other party has performed, unless the former party is bound to perform his part first. If the performance is to be made to several persons, the part due to one of them can be refused until the entire counter-performance has been effected. The provision of § 273(3) does not apply.
2. If one side has performed in part, counter-performance may not be refused to the extent that the refusal would in the circumstances, be contrary to good faith, especially in view of the relative unimportance of the remaining part.[78]
The application of the principle is clearly limited to ‘mutual’ (that is, synallagmatic) contracts, as are the corresponding provisions of the Italian Civil Code[79] and the Swiss Code of Obligations.[80] There is consequently much less doctrinal confusion.
Common law systems also contain mechanisms having analogous effects to the exception, although not under the tag inadimplenti non est adimplendum. However, the reasoning and the terminology used to justify non-performance (or rather the lack of liability for non-performance) is very different from that of the civil law systems. As Treitel notes, ‘[a] comparative discussion of [the exceptio] poses unusually intractable difficulties’.[81]
The apparent absence of the exception as an institution in common law systems may be largely attributed to two factors. First, as Treitel notes, the common law has not elaborated as sophisticated a classification of contracts as is found in the civil law systems.[82] Unlike the civil law, where bilateral contracts are divided into various sub-groups, in the common law
Bilateral contracts … include all those under which each party undertakes an obligation … Indeed, use of the expression ‘bilateral contract’ is uncommon; when the expression ‘contract’ is used, the reference is to a bilateral contract.[83]
Second, while civil law countries tend to differentiate sharply between the operation of the exception and the rules applicable to termination of a contract for breach, common law systems tend to apply the same rules to the two remedies, even using the term ‘rescission’ for both.[84]
In the common law systems, although the maxim inadimplenti non est adimplendum is not generally used or even known,[85] parallel effects are produced by an analysis of the obligations of the parties, leading to the conclusion that the performance of each party’s obligation is subject to the ‘condition’ of performance by the other party.[86] In short, the same result is produced by means of interpretation. Although it has a number of different meanings in common law systems of contract,[87] in this context the term ‘condition’ means the subordination of the obligation of one party to the occurrence of a particular event (the other party’s performance). In this way, the non-performance by party A leads to the conclusion not that the non-performance of party B was wrongful but is excused, but rather that the performance by party B never became due in the absence of performance or an offer of performance by party A.
Starting in the eighteenth century, in the absence of express terms assigning an order of performance, common law courts tended to classify the obligation of each party as being subject to the performance of the other party’s obligation and thus as being inter-dependent. In other words, each of the parties had agreed to perform only if the other did.[88] In Kingston v Preston,[89] a case involving a contract for the transfer of the defendant’s business to the plaintiff in return for secured payment, Lord Mansfield concluded from ‘the evident sense and meaning of the parties’ and ‘the intent of the transaction’[90] that the performance of the two parties’ obligations were not independent. The plaintiff’s performance of his promise to provide security was a condition precedent to the liability of the defendant to perform, since, as Treitel explains, to hold otherwise would leave on the defendant the risk of non-performance by the plaintiff.[91] Subsequent cases have tended to hold that the two obligations are subject to ‘concurrent conditions’, since otherwise a similar risk would be thrown on the plaintiff.[92]
A similar rule is generally accepted in the United States in the case of an ‘exchange of promises’ (that is, a contract where the performance of both sides is due at some point in the future). The Restatement Second Contracts adopts the position that:
Where all or part of the performances to be exchanged under an exchange of promises can be rendered simultaneously, they are to that extent due simultaneously, unless the language or the circumstances indicate the contrary.[93]
The results of a non-performance by one party are then set out:
it is a condition of each party’s remaining duties to render performances to be exchanged under an exchange of promises that there be no uncured material failure by the other party to render any such performance due at an earlier time.[94]
Again, if the analysis of the contract suggests that the obligations of the two parties are to be performed simultaneously, non-performance of one party will mean that the performance of the other party has not become due. No liability is possible since no breach has been occasioned by non-performance.
The operation of such conditions should be distinguished from the operation of a number of other rules. As noted above, in common law systems the analysis of the situation of termination or rescission for breach is often not clearly separated from that of non-performance justified by the non-performance of the other party. A party will oppose the other’s claim for non-performance by asserting that the other party had materially breached the contract and that the contract has been terminated. In such a situation, the defendant is released from further performance, but this is because the contract has been brought to an end, rather than because the condition precedent for performance has not occurred.
To complicate the picture further, other rules seem to fulfil some of the functions covered by the exception in civil law countries.[95] In English law, the mechanism of the lien allows certain classes of contractant to retain possession of the chattel bailed by the other party until performance (normally payment) is forthcoming.[96]
To summarise, the exception of non-performance is certainly much more developed and better articulated in the civil law systems. As Treitel notes:
The effect of the exceptio in CIVIL LAW must be distinguished from that of termination … Termination brings to an end each party’s duty to perform, though the circumstances making the remedy available may give the injured party a right to damages; it also gives the injured party a right to the return of his own performance on restoring what he has received under the contract. The exceptio does not produce these effects, but only gives rise to what has been called a ‘waiting position’. It is a ‘dilatory plea’ which does not terminate the contract but merely entitles the injured party for the time being to refuse to perform his part … The injured party may rely on the exceptio both in legal proceedings and extrajudicially. Where the circumstances are such as to justify the injured party’s refusal to perform, the court is bound to give effect to the exceptio: it has no discretion in the matter — even in those systems (such as the French) in which the remedy of termination is subject to the discretion of the court.[97]
On the other hand, various European systems approach the exception in different ways. This depends, for example, on whether it is expressly recognised as such by the legislator or is a judicial extrapolation from other more specific principles. But it also depends on other variables, including rules on related issues such as when property passes. Moreover, common law systems have so far managed to do without the exception and have produced not dissimilar results by contract interpretation and by the notion of conditional obligations.
One can hardly avoid the conclusion that the exception of non-performance is under-theorised and that it has not established an independent place as a rule or principle of international law. This seems to be the case whatever view one takes of the teachings of comparative law, although as summarised here they hardly justify categorising the exception as a general principle of law in the sense of article 38(2)(c) of the Statute of the International Court. It also seems to be the case, even though results expressed in terms of the exception will often intuitively appeal to our sense of the just or appropriate outcome. Intuitions based on notions of reciprocity and mutual good faith are, after all, not difficult to generate. But they do not necessarily lead to specific legal doctrines, still less ‘general principles of law’.
The rather embryonic and under-theorised character of the exception in international law can be seen, for example, in the persistent confusion between the distinct institutions of termination (or suspension) of treaties for material breach and the various circumstances precluding wrongfulness in the law of state responsibility, especially countermeasures. A similar conflation of ideas can be seen in the treatment of various texts which articulate the exception for the purposes of international trade law. Thus article 80 of the (UNCITRAL) Vienna Convention on Contracts for the International Sale of Goods of 11 April 1980[98] provides that: ‘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.’ By contrast the wider, more general version of the exception is consecrated in article 7.1.3 of the UNIDROIT Principles of International Commercial Contracts, which provides that ‘Where the parties are to perform simultaneously, either party may withhold performance’ if the other is not willing and able to perform.[99] Along the same lines, article 9.201 of the Principles of European Contract Law, entitled ‘Right to Withhold Performance’ provides in its first paragraph that
A party who is to perform simultaneously with or after the other party may withhold performance until the other has tendered performance or has performed. The first party may withhold the whole of its performance or a part of it as may be reasonable in the circumstances.[100]
Although these formulations appeal to an underlying sense of reciprocity and fairness, they are different. It is one thing not to perform an agreement because the other party has made it impossible to do so, and another not to perform because it is unfair to require performance when the other party is unwilling or unable to perform. At some level it may be that both versions invoke a concept of ‘cause’, but it is a different concept. Yet such distinctions are rarely made in the literature.[101]
There is, in any event, good reason to be cautious about adding another general excuse for non-performance of international obligations to those contained in Part One, Chapter V of the International Law Commission’s Articles on state responsibility. The difficulties that unrestrained use of the exception can cause for treaty regimes was stressed, for example, by Secretary-General Hammarskjöld in relation to the Middle East cease-fire agreements …
Obviously … the question of reciprocity must be given serious consideration and full clarity sought. The point of greatest significance in this context is: to what extent can an infringement of one or several of the other clauses of an armistice agreement by one party be considered as entitling the other party to act against the cease-fire clause which is to be found in all the armistice agreements … The very logic of the armistice agreements shows that infringements of other articles cannot serve as a justification for an infringement of the cease-fire article. If that were not recognized, it would mean that any one of such infringements might not only nullify the armistice régime, but in fact put in jeopardy the cease-fire itself. For that reason alone, it is clear that compliance with the said article can be conditioned only by similar compliance of the other party … [T]hus, the cease-fire is a stipulation in the Agreement independent of the other articles…[102]
Clearly, it is easier to reach such context-dependent solutions by the interpretation of the treaty text than by the application of some general rule. Having done so, it is better and more convincing to justify the results by reference to that text and the inferred intentions of the parties and to give them due effect as a matter of treaty law, including by virtue of the lex specialis principle.[103] All these factors point in the direction of Greig’s solution: that of ‘interrelated obligations … carrying an implied promise of reciprocity: the performance of one [being] dependent upon performance of the other’.[104]
[∗] SC FBA, Whewell Professor of International Law, University of Cambridge; Special Rapporteur on State Responsibility, International Law Commission.
[∗∗] BA (Hons)(Cantab); LL M (New York University); Intern on State Responsibility at the International Law Commission, 2001, funded by New York University School of Law.
We should particularly like to thank Anne Bodley for her assistance with the research for this article, and Tony Weir for his suggestions and comments.
[1] Generally on the relations between the law of treaties and the law of responsibility see: R Lefeber, ‘The Gabčíkovo-Nagymaros Project and the Law of State Responsibility’ (1998) 11 Leiden Journal of International Law 609; P Weckel, ‘Convergence du droit des traités et du droit de la responsabilité internationale à la lumière de l’Arrêt du 25 Septembre 1997 de la Cour Internationale de Justice relatif au projet Gabčíkovo-Nagymaros (Hongrie v Slovaquie)’ (1998) 102 Revue Générale de Droit International Public 647; K Wellens, ‘The Court’s Judgement in the Case Concerning the Gabčíkovo-Nagymaros Project (Hungary/Slovakia): Some Preliminary Reflections’ in K Wellens (ed), International Law: Theory and Practice; Essays in Honour of Eric Suy (1998) 765; J K Setear, ‘Responses to Breach of a Treaty and Rationalist International Relations Theory: The Rules of Release and Remediation in the Law of Treaties and the Law of State Responsibility’ (1997) 83 Virginia Law Review 1; P-M Dupuy, ‘Droit des traités, codification et responsabilité internationale’ (1997) 43 Annuaire Francais de Droit International 7; P Weil, ‘Droit des traités et droit de la responsabilité’ in Le droit international dans un monde en mutation; Liber Amicorum Eduardo Jimenez de Arechaga (vol 1, 1994) 523; A Yahi, ‘La violation d’un traité: l’articulation du droit des traités et du droit de la responsabilité internationale’ (1993) 26 Revue Belge de Droit International 437; L-A Sicilianos, ‘The Relationship Between Reprisals and Denunciation or Suspension of a Treaty’ (1993) 4 European Journal of International Law 341; P Sturma, ‘Law of Treaties Reflected in State Responsibility Rules’ (1992) 19 Thesaurus Acroasium 536; D W Bowett, ‘Treaties and State Responsibility’ in Le droit international au service de la paix, de la justice et du développement; Mélanges Michel Virally (1991) 137; R Pisillo Mazzeschi, ‘Termination and Suspension of Treaties for Breach in the ILC Works on State Responsibility’ in M Spinedi and B Simma (eds), United Nations Codification of State Responsibility (1987) 57.
[2] Vienna Convention on the Law of Treaties (23 May 1969), 1155 UNTS 331; 8 ILM 679.
[3] Articles on the Responsibility of States for Internationally Wrongful Acts, UN Doc A/CN.4/L.602/Rev.1 (2001).
[4] D W Greig, ‘Reciprocity, Proportionality and the Law of Treaties’ (1994) 34 Virginia Journal of International Law 295.
[5] Diversion of Water from the Meuse (Netherlands v Belgium) [1937] PCIJ (ser A/B) No 70, 4, 50 (dissenting opinion of Judge Anzilotti). See also the individual opinion of Judge Hudson, ibid 77.
[7] Ibid.
[8] Ibid.
[9] Ibid 401.
[10] Ibid 379.
[11] Case Concerning the Air Services Agreement of 27 March 1946 (United States of America v France) (1979) 18 RIAA 417.
[12] Case Concerning the Difference Between New Zealand and France Concerning the Interpretation or Application of two Agreements, Concluded on 9 July 1986 Between the two States and which Related to the Problems Arising from the Rainbow Warrior
Affair (New Zealand v France) (1990) 20 RIAA 217.
[13] Gabčíkovo-Nagymaros Project (Hungary v Slovakia) [1997] ICJ Rep 7, 56 [84]-[85].
[14] See above n 3, Part Three, Chapter II.
[15] G Fitzmaurice, Fourth Report, ILC Yearbook 1959, vol II, 43-47.
[16] Art 17A (previous non-performance by another party); art 20 (conditions implied in the case of treaties of reciprocity or continued performance by the other party or parties); ibid 45, 46.
[17] Art 18(3)(e); ibid 46.
[18] Art 20(1); ibid 46.
[19] Ibid 70 (emphasis in original).
[20] Above n 2, art 60(3). The definition is closer to the concept of repudiatory than material breach in the common law.
[21] The exception is art 56 (denunciation of or withdrawal from a treaty). Under art 61 (supervening impossibility of performance) a state may only suspend and not terminate a treaty if the impossibility is temporary: art 61(1), second sentence.
[22] It can be argued that such a unilateral right, if it existed, would have been expressed in art 72, which is silent on the point. Art 68 deals with revocation of instruments, but only before they have taken effect; it does not deal with revocation of a suspension that has become effective.
[23] Above n 2, art 72(2). It is unclear what is the basis of this obligation, at least as far as concerns a state which has opposed the suspension of the treaty.
[24] W Riphagen, Fourth Report, ILC Yearbook 1983, vol II, pt 1, 18 [98].
[25] W Riphagen, Fifth Report, ILC Yearbook 1984, vol II, pt 1, 3; for the draft commentary, see W Riphagen, Sixth Report, ILC Yearbook 1985, vol II, pt 1, 10-11, treating the right to suspend the performance of obligations as a weak form of countermeasure, based on reciprocity, as opposed to the stronger form of countermeasure (termed reprisals) having the purpose of influencing the responsible state to perform its obligations.
[26] Report of the Commission to the General Assembly on the Work of its Thirty-sixth Session (7 May-27 July 1984), ILC Yearbook 1984, vol II, pt 2, 103 [373].
[27] G Arangio-Ruiz, Third Report, ILC Yearbook 1991, vol II, pt 1, 14 [35].
[28] Report of the Commission to the General Assembly on the Work of its Forty-fourth Session (4 May-24 July 1992), ILC Yearbook 1992, vol II, pt 2, 23 [151].
[29] See J Crawford, Second Report, UN Doc A/CN.4/498 and Add.1-4 (1999) [314]-[329]; for the text of the proposed provision, see ibid [356].
[30] Case Concerning the Factory at Chorzów (Germany v Poland) (Jurisdiction) [1927] PCIJ (ser A) No 9, 31.
[32] Ibid.
[33] See J Crawford, Third Report, UN Doc A/CN.4/507 and Add.1-4 (2000) [363]; Report of the Commission to the General Assembly on the Work of its Fifty-first Session (3 May-23 July 1999), UN Doc A/54/10 171-175 [334]-[347] for a summary of the debate.
[34] See Topical Summary of the Discussion held in the Sixth Committee, UN Doc A/CN.4/504 and Add 1 (2000) [52].
[366]. In addition there were problems as to the possible overlap with the other circumstances precluding wrongfulness, in particular force majeure, and as to its formulation; ibid fn 716.
[37] Ibid 8.
[38] Ibid 25.
[39] Ibid 39, 43.
[40] Ibid 50. See also the decision in Klöckner Industrie-Anlagen GmbH and others v Republic of Cameroon (1983) 2 ICSID 3, where a mixed tribunal in an International Centre for the Settlement of Investment Disputes (ICSID) arbitration involving the Cameroonian government and a European multi-national company, made express reference to the dictum of Judge Anzilotti as evidence of the proposition that the exception of non-performance was accepted in international law. The Award was later annulled on multiple grounds: Decision on Annulment, (1985) 2 ICSID Reports 95.
[41] Above n 5, 77 (individual opinion of Judge Hudson).
[42] Appeal Relating to the Jurisdiction of the ICAO Council [1972] ICJ Rep 46.
[43] Ibid 124.
[44] Ibid 129.
[45] Ibid 128. Judge de Castro further added that ‘[i]t is the breach of rights or obligations having their source in the agreement which lies at the root of the exceptio non adimpleti’ (129), thus pointing out the limits of India’s contention.
[47] See text accompanying above n 30.
[49] Ibid 76 [133].
[50] Ibid 54 [78].
[51] Ibid 39 [48]. See also ibid 54 [78] ‘It is true that Hungary, in concluding the 1977 Treaty, had agreed to the damming of the Danube and the diversion of its waters into the bypass canal. But it was only in the context of a joint operation and a sharing of its benefits that Hungary had given its consent. The suspension and withdrawal of that consent constituted a violation of Hungary’s legal obligations, demonstrating, as it did, the refusal by Hungary of joint operation …’ (emphasis added). In the context of a subsisting valid treaty, it is not clear what significance is to be attached to the notion of suspension or withdrawal of consent, and the Court did not develop the point.
[53] As the Court affirmed: [1997] ICJ Rep 63 [101].
[54] There is a clear analogy with the debate over whether the doctrine of fundamental change of circumstances in the law of treaties was based upon an implied clause in the treaty or was an independent rule of law. Art 62 of the Vienna Convention on the Law of Treaties, above n 2 treats it as a rule of law, and this is now the accepted view: see Fisheries Jurisdiction (United Kingdom v Iceland) (Jurisdiction) [1973] ICJ Rep 3, 18 [36]; Fisheries Jurisdiction (Federal Republic of Germany v Iceland) (Jurisdiction) [1973] ICJ Rep 49, 63 [36].
[55] R Zimmermann, The Law of Obligations; Roman Foundations of the Civilian Tradition (1996) 801 fn 133, citing Ulp. D. 19.1.13.8; Scaev. D. 18.4.22; and Marcell./Ulp. D. 21.1.31.8.
[56] Zimmermann, above n 55, 801, fn 133, citing Bartolus, Commentaria, ad D. 19.1.13.8. See also W Ernst, Die Einrede des nichterfüllten Vertrages; Zur historischen Entwicklung des synallagmatischen Vertragsvollzugs im Zivilprozeß (2000) 76-111, for a detailed account of the evolution of the exception.
[57] Zimmermann, above n 55, 801 fn 133.
[58] See art 1146, C. civ.
[59] Com., 27 January 1970, J.C.P. 1970.II.16554, note A Huet. Belgium however, seems to have retained the need for a mise en demeure before the invocation of the exception: Cass., 9 April 1976, Pas. I, 1976, 887 (general principle of law that a mise en demeure is necessary before any civil sanction).
[60] Arts 1612, 1653, C. civ.
[61] Art 1704, C. civ.
[62] Art 1948, C. civ.
[63] As has its Belgian counterpart: Cass., 13 September 1973, Revue critique de Jurisprudence Belge, 1974, 356; Cass., 15 June 1981, Pas. I, 1981, 1179; Cass., 2 November 1995, Pas. I, 1995, 977.
[64] See Req., 28 April 1862, D. 1863.I.250; Req., 17 May 1938, D.H. 1938.419; Civ. 1re, 20 June 1995, Revue de Jurisprudence de Droit des Affaires, 1995, no 1361. The principal impetus for this development seems to have come mainly from Saleilles, relying on the work of the German Pandectists: Ernst, above n 56, 112, citing Saleilles, ‘Les théories allemandes sur les droits qui, au cas de contrat synallagmatique, appartiennent à la partie poursuivie en paiement, lorsque son adversaire de son côté n’exécute pas ses engagements’ Annales de Droit Commercial 1892-3, 25 et seq.
[65] See eg, R Cassin, De l’exception tirée de l’inexécution dans les rapports synallagmatiques (exception non adimpleti contractus) Et de ses relations avec le droit de rétention, la compensation et la résolution Thesis, Paris (1914); E Raynaud, L’exception tirée de l’inexécution dans les contrats synallagmatiques Thesis, Paris (1906); J-F Pillebout, Recherches sur l’exception d’inexécution (1971); R Carré de Malberg, Histoire de l’exception en droit romain et dans l’ancienne procédure française Thesis, Paris (1887). For a brief discussion of the different theories, see C Malecki, L’exception d’inexécution (1999) 37-53.
[66] H Capitant, De la Cause des Obligations (1923).
[67] Civ., 30 December 1941, D.A. 1942.98.
[68] Civ. 1re, 25 May 1976, Bull. Civ., I. 159, no 200; Civ. 1re, 23 February 1982, D. 1982.429, note Gourlay. See also B Nicholas, The French Law of Contract (2nd ed, 1992).
[69] In this sense, see B Starck, H Roland & L Boyer, Obligations, 2. Contrat, (5th ed, 1995) 705.
[70] H L Mazeaud, J Mazeaud and F Chabas, Leçons de Droit Civil, t. II, vol I, Obligations; théorie générale, (9th ed, 1998) 1170.
[71] Above n 69, 706; Pillebout, above n 65, 199. See also Le Tourneau, J.C.P. 1977.II.18653, note following Orléans, 23 October 1977, suggesting that the rule is an entirely judicial creation.
[72] Ibid 423. See Civ., 17 January 1866, D.P. 1866.I.77; Com., 16 June 1981, J.C.P. 1981.IV.318 (mandate).
[73] Civ., 17 December 1928, D.H. 1929.52.
[74] Civ., 25 January 1904, D.P. 1904.I.601; Sirey 1910.I.142. This is interpreted by P Malaurie and L Aynès, Cours de Droit Civil, t. VI, Les Obligations (10th ed, 1999) 423-4, fn 6 as an application of the exception, although the judgment speaks in terms of a right of rétention by analogy with art 1948 C. civ. (deposit).
[75] Arts 1289-1299, C. civ.
[76] Arguably, arts 1612 and 1948 C. civ. may be more appropriately characterised as cases of rétention. See also the case cited in above n 74.
[77] Malaurie and Aynès, above n 74, 422.
[78] See also § 321 which allows a party to refuse performance unless security is given or the other side performs first, if the other party’s financial situation significantly deteriorates after the formation of the contract.
[79] Codice Civile, art 1460 (Italy) (‘Eccezione d’inadempimento’): ‘Nei contratti con prestazioni corrispettive, ciascuno dei contraenti può rifiutarsi di adempiere la sua obligazione, se l’altro non adempie o non offre di adempiere contemporaneamente la propria, salvo che termini diversi per l’adempimento siano stati stabiliti dalle parte o risultino dalla natura del contratto.
Tuttavia non può rifiutarsi l’esecuzione se, avuto riguardo alle circostanze, il rifiuto è contrario alla buona fede’ (emphasis added).
[80] Code des Obligations, art 82 (Switzerland): ‘Celui qui poursuit l’exécution d’un contrat bilatéral doit avoir exécuté ou offrir d’exécuter sa propre obligation, à moins qu’il ne soit au bénéfice d’un terme d’après les clauses ou la nature du contrat’ (emphasis added).
[81] G H Treitel, Remedies for Breach of Contract; A Comparative Account (1988) 245.
[82] Ibid 247.
[83] Ibid.
[84] Ibid 245. Treitel notes that the use of the term ‘rescission’ in this context is declining.
[85] See the comments of Staughton LJ in Channel Tunnel Group v Balfour Beatty Ltd [1992] 2 All ER 609, 616, denying the existence of the exception in English law as a means to justify suspension of performance: ‘It is well established that if one party is in serious breach, the other can treat the contract as altogether at an end, but there is not yet any established doctrine of English law that the other party may suspend performance, keeping the contract alive.’ The law applicable to the contract in that case was a hybrid of English and French law, in default of which general principles of law were applicable. The question whether the operation of the exception was excluded by the applicable law clause was left to the arbitrators: see Lord Mustill [1993] 1 All ER 664, 680-1.
[86] Treitel, above n 81, 255 ff.
[87] G H Treitel, The Law of Contract (10th ed, 1999) 58; H G Beale et al (eds), Chitty on Contracts (28th ed, 1999) §§ 2-134 et seq; J Beatson, Anson’s Law of Contract (28th ed, 1998) 133-4, all drawing a distinction between ‘contingent’ and ‘promissory’ conditions.
[88] Treitel, above n 81, 279-281.
[89] (1773) Lofft 194, also referred to in argument in Jones v Barkley (1781) 2 Dougl. 684, 689.
[90] 2 Dougl. 691.
[91] See Treitel, above n 81, 280-1.
[92] Ibid.
[93] American Law Institute, Restatement of the Law Second Contracts (1979) § 234(1), and the Comments and Illustrations, ibid 205ff. For the statement of when the existence of an ‘exchange of promises’ will be presumed, see ibid § 232.
[94] Ibid § 237 and Comment a: ‘Under the rule stated in this Section, a material failure of performance … operates as the non-occurrence of a condition.’ See also §§ 224, 225 for the provisions relating to conditions, and § 241 for the circumstances relevant to determining whether a failure is material.
[95] The rules of equity noted by Judge Hudson in the Meuse Case, above n 5, are however generally not applicable to contractual claims; they only apply to equitable remedies, of which an action for damages is not one.
[96] Liens are recognised, inter alia, in the following relationships: seller-buyer of goods (Sale of Goods Act 1979, s 39(1)(a)); agent-principal (Williams v Millington [1788] EngR 245; (1788) 126 ER 49); carrier-owner of goods (Skinner v Upshaw (1702) 2 Ld Raym. 752; 93 ER 3); innkeeper-guest (Robins & Co v Gray [1895] UKLawRpKQB 158; [1895] 2 Q.B. 501); and artificer-client (Bevan v Waters [1828] EngR 731; (1828) 3 Car. & P. 520, 523, Re Southern Livestock Producers Limited [1964] 1 WLR 24). See generally, N E Palmer, Bailment (2nd ed, 1991) 943-958 (artificer), 1013-1015 (carrier); 1499-1504 (innkeeper).
[97] Treitel, above n 81, 310-311 (emphasis in original).
[99] International Institute for the Unification of Private Law (UNIDROIT), Principles of International Commercial Contracts (1994).
[100] O Lando and H G Beale (eds), The Principles of European Contract Law, Parts I & II (2000).
[101] Cf P D O’Neill and N Salam, ‘Is the exceptio non adimpleti contractus part of the new lex mercatoria?’ in E Gaillard (ed), Transnational Rules in International Commercial Arbitration (1993) 152. For a good comparative survey, see Pillebout, above n 65, esp 9-13.
[102] UN Doc S/3596 [17]-[19] cited by S Rosenne, Breach of Treaty (1985) 113.
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