〈Case concerning the court's duty to examine ex officio the United Nations Convention on Contracts for the International Sale of Goods, the method of filling gaps under the Convention, and the existence of gaps〉

【Holding】

[1] Whether the content of foreign law as the governing law applicable to a legal relationship involving foreign elements is a matter to be examined ex officio (affirmative) / In a case involving foreign elements, whether the court has a duty to examine and investigate the international convention applicable to the legal relationship or the governing law under the Act on Private International Law, even if no argument concerning the governing law has been raised (affirmative)

[2] Whether an implied agreement on the governing law may be recognized under Article 25(1) of the former Act on Private International Law even in the absence of an express agreement (affirmative) / Whether an implied agreement on the governing law may be recognized merely on the ground that the parties did not dispute the governing law in the litigation proceedings (negative)

[3] Whether, with respect to a legal relationship that is governed by the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) but concerns matters not expressly settled in the Convention, the application of the general principles on which the Convention is based must be considered first (affirmative), and the governing law applicable to a legal relationship concerning matters that the Convention excludes from its application or does not govern (= the governing law determined under the private international law of the forum)

[4] In a case where A Co., Ltd., a Korean corporation, entered into a contract with B, a Russian foreign corporation, to supply assembly equipment for the production of disposable razor components, delivered the assembly equipment, and requested payment of the price of the goods, whereupon B proposed a supplementary agreement under which the time of payment was agreed to be the date of signing the certificate of completion of the trial run, and B refused to prepare the certificate of completion of the trial run on the ground of defects in the assembly equipment and asserted that the time for payment of the price of the goods had not yet arrived, the Court held that the due date of B's obligation, as the buyer, to pay the price of the goods could be sufficiently determined solely through the interpretation of the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) and the above contract

【Summary of Decision】

[1] Foreign law as the governing law applicable to a legal relationship involving foreign elements is law, not fact, and the court must examine its content ex officio. Therefore, in a case involving foreign elements, even if no argument concerning the governing law has been raised, the court has a duty to examine and investigate the international convention applicable to the legal relationship or the governing law under the Act on Private International Law, such as by actively exercising its authority to request clarification to give the parties an opportunity to state their opinions or to have them submit necessary materials.

[2] Article 25(1) of the former Act on Private International Law (before wholly amended by Act No. 18670 on January 4, 2022) allows the parties to freely choose the law governing a contract, while, in order to prevent this from being unduly expanded, restricting an implied choice to cases where it can reasonably be recognized from the terms of the contract and all other circumstances. Accordingly, even in the absence of an express agreement on the governing law, an implied agreement may be recognized; however, it is difficult to recognize an implied agreement on the governing law merely on the ground that the parties did not dispute the governing law in the litigation proceedings.

[3] International treaties to which the Republic of Korea has acceded generally apply in priority over the Civil Act, the Commercial Act, or the Act on Private International Law. Under Article 1(1) of the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) ("CISG"; hereinafter the "Sales Convention," and unless otherwise indicated, references to articles are to the articles of the Sales Convention), the Sales Convention applies to contracts of sale of goods between parties whose places of business are in different States when those States are both Contracting States (subparagraph (a)) or when the rules of private international law lead to the application of the law of a Contracting State (subparagraph (b)), and Article 3(1) provides that contracts for the supply of goods to be manufactured or produced are also considered sales.

The Sales Convention provides that, in light of the purpose of the Convention, statements made by and other conduct of a party are to be interpreted according to that party's intent where the other party knew or could not have been unaware what that intent was (Article 8(1)); that if the preceding paragraph is not applicable, statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances (Article 8(2)); and that in determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances, including the negotiations, any practices which the parties have established between themselves, usages, and any subsequent conduct of the parties (Article 8(3)).

Meanwhile, with respect to a legal relationship that is governed by the Sales Convention but concerns matters not expressly settled in it (so-called "internal gaps"), the application of the general principles on which the Sales Convention is based must be considered first, and only in the absence of such general principles does the governing law determined under the private international law of the forum apply (Article 7(2)). With respect to a legal relationship concerning matters that the Sales Convention excludes from its application or does not govern (so-called "external gaps"), the governing law determined under the private international law of the forum applies.

[4] In a case where A Co., Ltd., a Korean corporation, entered into a contract with B, a Russian foreign corporation, to supply assembly equipment for the production of disposable razor components, delivered the assembly equipment, and requested payment of the price of the goods, whereupon B proposed a supplementary agreement under which the time of payment was agreed to be the date of signing the certificate of completion of the trial run, and B refused to prepare the certificate of completion of the trial run on the ground of defects in the assembly equipment and asserted that the time for payment of the price of the goods had not yet arrived, the Court held that the due date of B's obligation, as the buyer, to pay the price of the goods could be sufficiently determined solely through the interpretation of the Sales Convention and the above contract, in light of the following: since both the Republic of Korea and Russia have acceded to the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) ("CISG"; hereinafter the "Sales Convention"), the Sales Convention applies in priority, pursuant to Articles 1(1) and 3(1) thereof, to the contract under which A, a Korean corporation, agreed to supply assembly equipment to B, a Russian corporation, unless there are special circumstances; even where the Sales Convention applies, the governing law determined under the private international law of the forum applies to matters that constitute external gaps or that constitute internal gaps for which there is no applicable general principle, but it is reasonable to interpret the intention of the parties in agreeing that the time of payment of the price of the goods would be "the date of signing the certificate of completion of the trial run" as meaning that "if A, the seller, delivers goods having the performance specified in the contract and obtains confirmation thereof from B, the buyer, through a trial run, B shall pay the price," and this cannot be interpreted as an agreement making B's "signing of the certificate of completion of the trial run" a separate condition and allowing B to arbitrarily decide whether and when to pay the price; and since the assembly equipment delivered by A had the performance generally required under the contract and social norms, and A had performed the installation and trial run of the assembly equipment, it is reasonable to find that the due date of B's obligation to pay the price of the goods had arrived, and the fact that B did not prepare the certificate of completion of the trial run does not alter this conclusion.

【Referenced Statutes】

[1] Articles 1 and 5 of the Act on Private International Law; Article 134 of the Civil Procedure Act [matters to be examined ex officio] [2] Article 1 (see current Article 1) and Article 25(1) (see current Article 45(1)) of the former Act on Private International Law (before wholly amended by Act No. 18670 on January 4, 2022) [3] Articles 1(1), 3(1), 7(2), and 8 of the United Nations Convention on Contracts for the International Sale of Goods [4] Articles 1, 5, and 45(1) of the Act on Private International Law; Article 134 of the Civil Procedure Act [matters to be examined ex officio]; Articles 1(1), 3(1), 6, 7(2), 8, 35(1), 59, 60, 61, and 62 of the United Nations Convention on Contracts for the International Sale of Goods

【Referenced Precedents】

[1] Supreme Court Decision 89DaKa20252, April 10, 1990 (Gong1990, 1043)
Supreme Court Decision 2016Da222712, December 24, 2019 (Gong2020Sang, 332)
Supreme Court Decision 2021Da269388, January 13, 2022 (Gong2022Sang, 328)
[2] Supreme Court Decision 2021Da269388, January 13, 2022 (Gong2022Sang, 328)
[3] Supreme Court Decision 2013Da81514, March 24, 2016 (Gong2016Sang, 611)
Supreme Court Decision 2021Da255655, September 27, 2023 (Gong2023Ha, 1909)
Supreme Court Decision 2023Da288772, March 12, 2024 (Gong2024Sang, 645)

(Source: Supreme Court Decision 2021Da242185, March 27, 2025 | Judicial Information Disclosure Portal, Precedents)