B. Reasonable degree of certainty as a proposed uniform standard under CISG

All the leading scholars under CISG jurisprudence, including Professors Ingeborg Schwenzer and Peter SchlechtriemSchwenzer I. Ibid. P. 621. or Christoph Brunner and BenjabinGottliebBrunner C., Gottlieb B. Commentaries on Article 35 CISG. - 2019. P. 118-119. promote the view that as the burden of proof and standard of proof are very closely connected, the latter should also be governed by the principles underlying CISG Specifically, scholars refer to the principle of reasonableness.Kritzer A. H. Overview Comments on Reasonableness. - 2015. P. 2. Under this uniform approach the applicable standard of proof under CISG should be reasonable degree of certainty.Koller T., Mauerhofer M. DasBeweismassim UN-Kaufrecht (CISG). - 2011. P. 32.

One should note that in opposition to the aforesaid there is no vast doctrinal and case law elaboration on the definition of the reasonable degree of certainty as a standard. The leading scholar to advocate this view is Professor DjakhongirSaidov, who made a comprehensive analysis in the context of proving losses under Art. 74 CISG, largely trying to project provisions of the Art 7.4.3 UNIDROIT Principles on CISG.Saidov D. Standards of Proving Loss and Determining the Amount of Damages //Journal of Contract Law. - 2006. - Vol. 22. - №. 1. - P. 27-53.This approach in relation of assessing damages is rather consistent and was also included in the para. 6 Article 393 of the Russian Civil Code during the Civil law reform in 2015.4. Гражданский кодекс Российской Федерации (часть первая) от 30.11.1994 № 51-ФЗ (ред. от 29.07.2017) // Собрание законодательства РФ. 1994. № 32, Ст. 3301.

Later Professor DjakhongirSaidov also advocated the same approach as a universal standard of proof under Convention in his work on non-conformity.Saidov D. Article 35 of the CISG: Reflecting on the Present and Thinking about the Future //Vill. L. Rev. - 2013. - Vol. 58. - P. 547. Provided definition of reasonable certainty standard in fact closely resembles the civil law idea of inner conviction of the judge: “judgment must necessarily depend upon their mental power, their own specific education and life experience, and their emotional characteristics and background”.Saidov D. Ibid. P. 548.

Under this approachProfessors Ingeborg Schwenzer and PeterSchlectriem in their commentary also note that prima facie evidence may be sufficient under the reasonable degree of certainty standard of proof.SchwenzerI. Ibid. P. 622. As stated in the first paragraph on the definition of burden of proof, originally the concept of prima facie evidence emergedin common law and means obvious and sufficient evidence that seems to be reliable in the absence of a rebuttal. However, it should be remembered that prima facie evidence is “the smallest thing that can give rise to a grain of probabilityof a claim, but it is not always sufficient for a party to achieve a positive result”.Waincymer J. P. 771.

Previously court practice did not applyuniform reasonable degree of certainty standard of proof and to applied national procedural rules to the standard of proof.In the Farm machines and spare parts case decided by Swiss Court in 2005 it was stated that “extent of proof” and “required extent of conviction of the judge” should be established under the procedural law of forum.Farm machines case. [Electronic resource] // CISG-online database. http://cisgw3.law.pace.edu/cases/050523s1.html(Accessed 23.04.2020). Notably Court gives a certain attention to explain that case cannot be decided on the basis of balance of probabilities where judicial conviction is lacking and the facts of the case remain in doubt.Thus the Court stated that internal judicial conviction is a higher standard that balance of probabilities. In Egyptian cotton case decided by the Swiss Supreme Court in 2000 it was also found that CISG contains provisions on burden of proof but not on the rules “directing judge on how to reach its own opinion”.Egyptian cotton case. [Electronic resource] // CISG-online database. http://cisgw3.law.pace.edu/cases/000915s2.html(Accessed 23.04.2020)However recent decisions show the same tendency as once with the burden of proof: courts and tribunals are starting to consider the standard of proof in the scope of CISG and apply uniform reasonable degree of certainty standard, for example in CISG-online 2936case decided by District Court Wil in 2016..CISG-online case 2936. [Electronic resource] // CISG-online database. http://www.cisg-online.ch/content/api/cisg/display.cfm?test=2936(Accessed 23.04.2020).

And though this uniform approach under CISG is not yet widely accepted in practice, a deeper insight into continental and common law differences shows that basically there are not restrictions for the application of reasonable degree of certainty standard.

The problem of the permissible degree of doubt is somewhat clouded by general phrases about the judge's inner, purely subjective conviction.Engel C. Preponderance of the evidence versus intime conviction: A behavior perspective on a conflict between American and Continental European law //Vt. L. Rev. - 2008. - Vol. 33. - P. 440. Nevertheless, in recent time standard of proof is also discussed and even sometimes legislate.Taruffo M. Rethinking the Standards of Proof // 51 American Journal of Comparative Law. 2003. P. 662-664. The Austrian Supreme Court has stated that a minimum standard of proof must correspond to a high probability.Nunner-Krautgasser B., Anzenberger P. Evidence in Civil Law-Austria. - Institute for Local Self-Government and Public Procurement Maribor, 2015. P. 11. The German Supreme Court states that a civil court may admit a fact to be proven if there is a reasonable level of certainty, despite the possibility that some doubts may exist.Wolf C., Zeibig N. Evidence in Civil Law-Germany. - Institute for Local Self-Government and Public Procurement Maribor, 2015. P. 21-22, 25. The Swiss Supreme Court states that a court must be convinced of the truth of a contested fact on the basis of objective grounds, but absolute certainty is not required: it is sufficient if the court does not have serious and essential doubts.Schweizer M. The civil standard of proof--what is it, actually? //The International Journal of Evidence & Proof. - 2016. - Vol. 20. - №. 3. - P. 220.

The fact that continental courts in practice use a standard of proof in civil cases that at first glance seems to be above a balance of probabilities makes some Common law lawyers wonder how much Europeans are mistaken.Clermont K. M., Sherwin E. A comparative view of standards of proof //The American Journal of Comparative Law. - 2002. - Vol. 50. - №. 2. - P. 248. For example by citing Austrian Procedural Law, which contains the provision in which a judge should be guided not even be by an inner convictionbut by “full conviction” (“volleьberzeugeng”) in evaluating evidence.Redfern A. et al. The standards and burden of proof in international arbitration //Arbitration International. - 1994. - Vol. 10. - №. 3. - P. 335. However, considerable amount of continental scholars answer that these assumptions are not true and that in reality continental courts use not that high standard of proof in civil cases.Wright R. W. Proving facts: Belief versus probability //European tort law 2008. - Springer, Vienna, 2009. - P. 84. In fact, in practicewith a number of exceptions the continental process uses a more flexible standard of proof. It is just not attempted to denote levels of subjective certainty by specific concepts. The courts are given the opportunity to choose implicitly and without declaring it openly in their subjective view the most reasonable and appropriate standard in a particular case. This provides maximum flexibility but creates uncertainty about the content of the standards applied. For example,some German scholars believe that a reasonable degree of certainty, which according to the German Supreme Courtshould be considered sufficient to prove facts in civil disputes, is reasonably comparable to a balance of probabilities. Murray P.L., Stьrner R. German Civil Justice. Durham, 2004. P. 311.

Consequentially, empirical studies have led a number of scholars to conclusion that the standard of proof actually applied in civil disputes on the continent is in fact similar to the standard of proof de facto applied in common law countries in similar cases and thus there is no significant disagreement between different understanding of the standard of proof.Schweizer M. Ibid. P. 221.In the research of Hanotiau it is emphasized that judges do not establish the likelihood precisely, giving all the parties to produce the evidence and then evaluating them.Hanotiau B. Satisfying The Burden of Proof in International Commercial Arbitration: The Viewpoint of A Civil Law Lawyer // Arbitration International, 1994, P. 317.The evidence always goes through the prism of the inner's conviction of a person, even if the “objective” balance of probabilities is applied.Kazazi M. Burden of proof and related issues: a study on evidence before international tribunals. - MartinusNijhoff Publishers, 1996. - Vol. 1. P. 377.The only difference is that the common law tradition tries to clarify the content of the standards in a more specific way, linking them to a certain level of subjective certaintyand clearly differentiate them for different categories of disputes, while the continental tradition tends to leave these issues less articulate.Waincymer J. P. 771.

American Law Institute/UNIDROIT Principles also call for median approach: in Article 21.2 it is stated that the court should be “reasonably convinced of their [facts] truth”. In commentary P-21B it is reflected that on one hand this standard is used is in fact used in civil law countries and on the other common law balance of probabilities standard “functionally is the same”. ALI / UNIDROIT Principles of Transnational Civil Procedure. Ibid.

To summarize this paragraph, discussion over the standard of proof under CISG reflects the same line of argumentation as formerly with the burden of proof. The latter was not also in the first place intended to be regulated by CISG according to travaux prйparatoires and initial case practice but later unilaterally was considered to fall within the scope of CISG.In the contemporary CISG doctrine it is unilaterally stated that CISG regulates the standard of proof and that appropriate standard is “reasonable degree of certainty”. Nevertheless, tribunals only start to apply this standard in practice, in fact there is not so much difference in common and civil law approaches to the standard of proof as both include objective and subjective criterion of proof. Therefore, in the coming years the practice under CISG will probably start more actively to use reasonable degree of certainty as a uniform standard of proof.

Chapter II. Exceptional rules on the burden of provingthe non-conformity under CISG

As brought by A. Zuckerman, burden of proof is essentially is solely a risk allocation for a lack of evidence, making it is an instrument to decide which party would benefit from the uncertainty.Zuckerman A. Ibid. Para. 21.39 At first sight simple rules on the burden allocation become a key issue to decide the whole case if a discovery of non-conformity occurs a considerable time after the risk passed. It becomes even more complicated if the goods have already been processed (e.g. used in production) and it is uncertain what in fact caused a defect. Recent scandal with Kobe Steel in 2017 can be a classic example: the company supplied steel for major car and aircraft manufacturers with false certificates for the steel and at the end could not confirm to its clients whether the steel was affected by the fraud..KobeSteel scandal hits Boeing, Toyota and Nissan [Electronic resource] // The Financial Times. https://www.ft.com/content/a1e494c2-ad9f-11e7-beba-5521c713abf4(Accessed 22.04.2020). Unfortunately, no arbitral awards or court decisions could be found in available sources on this scandal;, otherwise it would a very valuable source for the research at hand. At any rate in such circumstances, astrict application of the rule-exception principle and reasonable degree of certainty standard of proof may not be justified and shifting of the burden can be done.

The shift of the burden under CISG is clearly affected by civil law tradition as in the UK or US the courts in case of evidentiary difficulties would use means of disclosure or discovery, rather than the shift of the burden on another party.However, as the UK is not a signatory to the Convention and the overwhelming majority of the signatories are from civil law tradition, the elaboration on exceptional cases to shift the burden is of vital importance.

Elaboration on the case law and doctrine highlights the main problem of the burden of proof allocation under CISG: absence of uniform conventional application. Almost all decisions are influenced by the domestic national concepts. Notably, the German Supreme Court contributed to this most of all in his landmark decisions under Convention like Powder Milk case, Paprika case or Frozen Pork case.Therefore, a critical analysis of this and similar extraordinary decisions will be a primary subject of this chapter.

2.1. The first exception: acknowledgement of non-conformity by the seller

The Powdered Milk case decided by the German Supreme Court in 2002 illustrates the complexity of burden allocation in such difficult circumstances as drawn above..Powdered Milk case. [Electronic resource] // CISG database. http://cisgw3.law.pace.edu/cases/020109g1.html] (Accessed 23.04.2020).

The case considered the purchase of a powdered milk from the German seller to the Dutch buyer. Both parties conducted the required examinations upon the delivery and haven't found any deviations. The powdered milk was then exported to the Dutch buyer's customers in Algeria and Aruba, where it was used for the production of the milk. The milk appeared to have rotten and rancid taste, which was found out later, originated from the contamination of the milk powder with inactive lipase. This lipase could only be discovered through an expensive bacteriological examination, but not standard tests applied in industry. The Dutch buyer asserted that contamination originated by the time of passing of the risk, while the German seller insisted that it occurred during the transportation to the customers. Finally, according to expert reports it could not be established whether it was contaminated at the time the risk passed. Thus, the decision was left solely to be dependent upon the burden of proof allocation.

On this matter German Supreme Court stated two major considerations. Firstly, it confirmed that CISG regulates the burden of proof explicitly (e.g. Art. 79) or implicitly (e.g. Art. 2) under rule-exception principle, meaning in application that if goods were delivered and accepted by the buyer without notice of non-conformity pursuant to Article 39, it is the buyer not the seller who should prove that goods did not met contract requirements under Article 35 CISG.Consequentially, stating that recourse to national law in this matter is impossible.

Secondly and more debatable in the doctrine, notwithstanding the adherence to uniform approach, the German Supreme Court reversed the burden of proof on the seller as he partially acknowledged non-conformity in one of its letters to the buyer. The German Supreme Court has not provided any argumentation for the justification of the shifting the burden. The Court merely stated that whilst burden of proof allocation is governed by CISG, the shifting the burden is an external gap in CISG according to Art. 4 para. 1 CISG and is being reversed on the prevailed view of German law without further elaboration.

Therefore, at the end it was the respondent to prove that the powdered milk was conforming at the moment of the risk passed as it failed to do so the buyer won the case.

It seems that if the German Supreme Court applied general rule on the burden allocation strictly the buyer would not be able to win its case. Like in Hungarian wheat case, in whichthe buyer did not discharge the burden of proof as the sample tested by a third party had been destroyed by the time of proceedings and likewise in powdered milkit was alsoimpossible to determine conformity by the time the risk passed.Hungarian wheat case. [Electronic resource] // CISG Database. http://cisgw3.law.pace.edu/cases/060208g1.html (Accessed 23.04.2020).

On the other hand, in Heliotropin case decidedin 1993 the Chinese arbitrationbody has not the same way elaborated on the ratio but in the same manner decided that as the seller has not made any objection to the buyer's inspection report he is now burdened to prove non-conformity.Heliotropin case wheat case. [Electronic resource] // CISG Database. http://cisgw3.law.pace.edu/cases/930710c1.html (Accessed 23.04.2020).Professors IngeborgSchwenzer and Peter Schlechtriemin their commentary also acknowledge this approach under CISG.I. Schwenzer. Ibid. P. 632.

Therefore, the first exception from the general rule-exception principle under CISG is the shift of the burden of proof even after acceptance on the seller, if he acknowledged expressly or impliedly the non-conformity of the goods. As in fact this conclusion is quite self-evident and predictable, no extensive elaboration is essentially needed.

2.2. The second exception: proofproximity principle

Two years later in 2004 the German Supreme Court clarified the shift of the burden and established a precedentextending this approach on the CISG in Paprika Powder case. Paprika case. [Electronic resource] // CISG Database. http://cisgw3.law.pace.edu/cases/040630g1.html(Accessed 23.04.2020).

Factual background seems familiar to the former case. The case concerned the paprika powder delivery from the Spanish seller to the German buyer contractually agreed not to be irradiated. Upon the delivery in September buyer conducted examination only for the purity not radiation exposure as such a detailed examination wouldhave been very time-consuming and costly (just like in mentionedWire and Cable case). The buyer processed the delivered powder by mixing it with chili and sold it to one of its clients 3 months later in December (so the burden to prove non-conformity was already with the buyer). In January an article in a test magazine was published indicating powder irradiation and in March the buyer notified the seller about the non-conformity pursuant Article 39. Consequentially, buyer filed a claim for damages for a production of expert report and replacement of the powder to the customer. While the seller relied on the lack of notice of the defect, buyer relied on the exception provided by Article 40 CISG. According to this article seller cannot invoke Articles 38 and 39, if the buyer was aware or should have been unaware of and did not disclosed.

According to general rule under CISG on the burden of proof the buyer should have discharged its burden of proving such unawareness. However, the Supreme Court further stated thata strict application of the rule-exception principle can lead to injustices in the area of application of the CISG, which is why a correction is required in individual cases, though adding the restraint should be advisable.

According to the decision, an exception has to be permitted in the individual cases from the point of view of proofproximity (Beweisnдhe) or if the adducing of evidence would be associated with unreasonable difficulties in proving for the buyer.Baumgдrtel G. et al. Handbuch der BeweislastimPrivatrecht. - C. Heymann, 1981. P. 28-30. On this interpretation Court relied on German CISG commentators, which widely agree that the phrase “could not have been unaware” in Article 39 is equivalent to negligent ignorance.Achilles W. A. Kommentarzum UN-Kaufrechtsьbereinkommen (CISG). - Neuwied :Luchterhand, 2000. Art. 40. Finally, what is indeed essential in analysed ratio decidendi, under certain circumstances, the required evidence could already “result from the nature of the defect itself, so that in the case of gross deviations from the contractual quality, gross negligence is presumed if the lack of conformity had occurred in the seller's sphere” (emphasis added).Achilles W.A. Ibid.

Applying this doctrinal elaborationto the case, German Supreme Court held that the seller could have at least conduct an examination for a radiation of a sample given the importance of this quality attached by the contract. If it was established that the goods according to the respondent's assertions had not been irradiated either in its area or in the area of its customer, the proof of the lack of conformity would at the same time have been proof of the claim that the powder had been irradiated in the claimant's plant or the plant of its supplier. However, the Respondent could at most make a claim “into the blue” with regard to the internal operating procedures of the claimant; sufficient knowledge of the internal production conditions of its seller could not be expected from it as an external buyer.

In German literature this decision was met with approval.Schwenzer I. Ibid. Art. 40 para. 12 At the same time, this recourse to national German law concept has been rightfully criticized as opposing to the international character of CISG pursuant to Article 7(1).Krцll S. et al.Ibid. P. 182. But interestingly the precedent seemed to be a long-lasting one.A less cited and newer case of the Austrian Supreme Court in 2012 concerning paprika powder as well upheld this ratio and assessed its adherence to the international character of CISG.Paprika case [Electronic resource] // CISG Database. http://cisgw3.law.pace.edu/cases/120214a3.html (Accessed 23.04.2019).

The Court affirmed that exceptionally in individual cases reasons of equity, for example the greater proximity of evidence or unreasonable difficulties in proving evidence (Beweisnotstand), may lead to the shift of the burden. According to decision, in principle the buyer bears the burden to prove the fact that the seller knew or should have known the facts on which the lack of conformity is based and did not disclose them to the buyer. However, if the buyer is faced with unreasonable difficulties in proving the facts, the burden of proof is reversed. The Austrian Court also provided an extended evaluation of the Paprika Powder case and its compliance within international character of CISG:

“The decision of the German Supreme Court is in line with the previous jurisprudence of the AustrianSupreme Court on distribution of the burden of proof and an exceptional shift of the burden of proof under CISG. It concerns a relevant precedent; its convincing statements are to be followed with regard to the development of a common worldwide application practice”.

According to this rationale Supreme Court rendered to review the case in the Court of Appeal as issues concerning the breach of contract had not been properly decided and to give the respondent an opportunity to prove that he was not aware of the irradiation or that his ignorance was not due to gross negligence.

The doctrinal interpretation by the Supreme Court of the burden of proof shifting under Article 40 when it can result from the nature of the defect itself closely resembles at its core the English tort law doctrine res ipsa loquitur (“thing speaks for itself”). This is an evidentiary facility under which for claimant is sufficient to prove only that accident causing the claimant's physical harm always happens as a result of negligent conduct. It is called “thing speak for itself” as the breach of the duty of care, its existence and causation are presumed from the very nature of action. The doctrine first appeared in English law in Byrne v Boadle case and later it was codified in U.S. Law.Skontzos A. V.Ibid. P. 579German law knows a similar concept of Anscheinbeweiss or Prima-facie-Beweis, which is rather hesitantly admitted by German courts in medical malpractice suits, environmental damages, in cases of labour discrimination and in consumer's relation for the supplier's liability.Brinkmann M. DasBeweismaЯimZivilprozessausrechtsvergleichenderSicht. - C. Heymanns, 2005. P. 86. The doctrine was even codified in Principles of European Tort Law in Articles 4:201 and 4:202, justifying the shift of the burden in light seriousness of possible damage and likelihood of its occurrence.Koziol H. European tort law 2004. - Springer, 2005. P. 99. These doctrines are of little help under CISG disputes.Though in its commentary Professor Stephan Krцll notes to the case outside CISG concerning cardiac stimulators, “but with a potential influence on the application of CISG”.Krцll S., Mistelis L., Viscasillas P. (ed.). UN Convention on Contracts for International Sale of Goods (CISG). Commentary - Verlag CH Beck, 2018. P. 513. The case was decided by the European Court of Justice in 2015 under EU Directive on Product liability which contains the similar provisions to the Article 35 CISG. In the casean internal report indicated that cardiac stimulators could malfunction. There, the court stated that the mere risk of malfunction justified the finding of non-conformity - this risk ran contrary to the buyers' expectations that the goods had to be fail proof. The European Court of Justice there stated that where it is known that class of products or its forming part has a potential defect, such a product can be deemed defective without need to establish that specific good has this defect.European Court of Justice 5 March 2015, Boston Scientific Medizintechnik GmbH v AOK Sachsen-Anhalt - Die Gesundheitskasse et all., Joined Cases C-503/13 and C-504/13 [Electronic Resource] // EUR-lex Database. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62013CJ0503(Accessed 05.04.2020). In fact, it means shift of the burden on the producer to prove the contrary.

However, influence of thedoctrines like this give rise to various interpretations under CISG. For example, A. Linne proposes a “ping-pong” approach to the burden of proof in her article on non-conformity under CISG: in the first step seller has always to produce prima facie evidence of conformity, in the second - burden shifts to the buyer, in the third - if buyer met the burden, seller has to prove why he is not be liable.Linne A. L. Ibid. P. 35. This approach however is no more than a solely theoretical proposal since it is not in compliance with the international character of CISG pursuant to Article 7. Author bases this proposal on a non-existent presumptioninfluenced by non-harmonized German law that seller always has a duty to provide proof of non-conformity in the first place. What is more, this approach is not justified by any relevant case practice on CISG.

This “American optics” of approach is natural as it follows from the two features of the Common law process of proving facts. Firstly, because evidence thereis treated relativelynot absolutely like in the civil law, secondly that the process of fact-finding includes 2 stages - assessing by the judge whether the evidence can be passed to the jury and then by the jury according to the balance of probabilities.БудылинС.Л.Ibid. P. 37

Importantly the proofproximity principle is applicable not only in relation to Article 40 CISG but also directly to the non-conformity in itself under Article 35 CISG.International character of this principle is well-recognized in CISG doctrine and case law.Schwenzer I. Ibid. P. 621, footnote 51.

For example in Spinning mill case decided by Swiss Appellate Court in 2011, since it was easier for the seller (respondent) to furnish proof in the present case, the burden of proof for complete delivery and thus fulfilment of its contractual obligations was imposed on the seller..Spinning mill case. [Electronic resource] // CISG Database. http://cisgw3.law.pace.edu/cases/111108s1.html (Accessed 23.04.2020). In such cases in interest of substantial equity, in deviation from the distribution of the burden of proof indicated by the rule-exception relationship, the burden of proof is placed on the party who can generally provide the evidence more easily financially or organizationally.This is particularly the case in situations where the most important piece of evidence is located within the territorial jurisdiction of a party. It does not mean the goods itself solely but can also relate “to the packing lists, consignment notes and similar documents”.Hence, the relevant criteria are “relative accessibility and practicality of proof as well as other concerns of public policy”. Murray P. L., Stьrner R. German civil justice. - Carolina Academic Press, 2004. P. 267-268.

Furthermore, this proof proximity principle is universal in relation to the non-conformity “in a wide sense”. In CD Media caseAustrian Supreme Court applied the same principle in relation to industrial property rights under Article 42 CISG, underwhich goods should be not only physically non-conforming but also free from any rights and claims of the third parties.CD Media case. [Electronic resource] // CISG Database. http://cisgw3.law.pace.edu/cases/060912a3.html (Accessed 23.04.2020).

This approach reflects a well-established continental theory of the spheres (Sphдrentheorie, Fefahrenkreis, Verantwortungsbereich, Herrschaftsbereich): the party that has legally or financially easier access to the mean of evidence falling within its sphere of influence or control and which are therefore better known to the party should bear the relevant burden.Prцlss J. BeweiserleichterungenimSchadensersatzprozeЯ. - Verlag Versicherungswirtschaft, 1966. - №. 7.P. 901. In cases where the suspected defect relates to the period in time before the passing of the risk and when the goods were in the seller's control, it is the seller who is better equipped to prove the conformity of the goods.

To conclude this paragraph, shifting the burden of proof under the notion of proof-proximity is well-established in modern CISG doctrine and caselaw and can be considered as a second exception from the general principle of rule-exception for the burden allocation. This principle is applicable to the non-conformity “in a wide sense” both to Article 35 CISG about the non-conformity, third party rights under Article 42 CISG and seller's knowledge of non-conformity under Article 40 CISG. The proof proximity principle is not limited to the physical controlover the goods but means the evidence which can be more easily financially or organizationally be adduced, consequentially including for example documents attached to the quality of goods.

2.3. The third exception: suspicion as non-conformity doctrine

Third exception hit the CISG jurisprudence in Frozen Pork case decidedby German Supreme Court under CISG in 2005. In this case the seller claimed the whole purchase price for the delivered pork, which was under suspicion to be contaminated by dioxin. Frozen Pork case. [Electronic resource] // CISG Database. http://cisgw3.law.pace.edu/cases/050302g1.html(Accessed 23.04.2020).

Such cases are not rare, when already the suspicion of a false declaration or bacterial infestation led that the end consumers stopto buy goods of the suspicious varietyand therefore the trade had to accept immense material losses. In other words, the goods due to suspicion are not or hardly conforming for sale or use under Article 35 para. 2(a) CISG, although the suspicion might not have been true.In 2011 a similar serious scandal had occurred when several cases of severe bacterial intestinal infections occurred in Germany, some of them even fatal, caused by the so-called EHEC bacteria. В ФРГ причиной вспышки кишечной инфекции стали испанские огурцы [Electronicresource] // Коммерсант. https://www.kommersant.ru/doc/1746584(Accessed 22.04.2020). As the entire country was initially warned against the consumption of raw tomatoes, lettuce and above all Spanish cucumbers, the sales of vegetable producers slumped drastically. However, as it later turned out, it was not Spanish cucumbers that caused the infections, but the Egyptian fenugreek seed, from which sprouts were produced in Europe. Final presentation and evaluation of the epidemiological findings in the EHEC O104:H4 outbreak, Germany 2011, Robert Koch-Institute, September 2011[Electronic resource] // Robert Koch Institute Website. https://www.rki.de/EN/Content/infections/epidemiology/outbreaks/EHEC_O104/EHEC_final_report.pdf?__blob=publicationFile(Accessed 23.04.2020). As a consequence at the end Spanish producers successfully sued Hamburg Health authorities for damages in the six-figure range.LandesgerichtHamburgUrt. v. 09.12.2015, Az.: 303 O 379/11 [Electronic Resource] // Dejure.org. https://dejure.org/dienste/vernetzung/rechtsprechung?Gericht=OLG%20Hamburg&Datum=31.12.2222&Aktenzeichen=1%20U%20275/15(Accessed 05.04.2020).

Coming back to the Frozen Pork case, the German Supreme Court examined whether and to what extent the provision on hidden defects inArticle 36 CISG)can be made useful for cases where the suspicion arises only after the passing of risk.

In the caseGerman buyer had ordered large quantities of pork from a Belgian meat wholesaler with the instruction that the goods were to be delivered by the seller directly to the end customer in Bosnia-Herzegovina. The contract for the supply of Belgian pork had been concluded in April 1999. The deliveries were made in three instalments between mid-April and the first week of May.The suspicion that Belgian pork might be contaminated with dioxins only arose at the beginning of June 1999, and the regulation by which the Germany declared the meat unfit for circulation came into force on 11 June 1999. In response to this suspicion, regulations were issued in Germany, Belgium and the EU to protect consumers from Belgian pork, which declared it to be not fit for circulation unless certificates of safety could be presented to confirm that the goods were free of dioxins. The Bosnian customs then destroyed the porkas suspected to be contaminated by dioxin, because buyer was unable to present quality certificatesthat the pork was free of dioxin, which was several times demanded from the seller. Based on that the seller refused the fullpayment and subsequently buyer claimed for the purchase price.

The German Supreme Court decided the case in favour of the buyer. The court considered the suspicion to be sufficiently substantiated by the public law measures enacted and qualified the goods as defective due to their lack of usability. The Court deduced from this that the properties which (later) led to the seizure and loss of usability had already been inherent in the meat at the time of the passing of risk because it had objectively been established at that time that it originated from stocks suspected of being contaminated with dioxins. Lock C., Powell D. The Belgian dioxin crisis of the Summer of 1999: a case study in crisis communications and management. February 1, 2000. - Report, 2000. - Vol. 13. - P. 24. The fact that the suspicion only became known weeks later and led to extensive official precautionary measures in Germany, the EU and finally also in Belgium did not alter the existence of the suspected feature at the time the risk passed.

In its defence buyer relied on Article 36 CISG, namely that the seller is liable for hidden defects which already exists at the moment the risk passed but become apparent later. In addition, seller is liable for non-conformityoccurred at a later date if it is because he breached his duty.If the Court would strictly apply rule-exception principle, it would be the buyer who would to sufficiently prove the defect was present at the time the risk passed. However, the Court shifted the burden of proof on the seller who was the claimant and subsequently the buyer won the case. Hence, at the core of the suspicion lies the shift of the burden of proof.

Hence, the rule that the seller is only liable for a lack of conformity which already exists at the time of the transfer of risk under Article 36 CISG also appliesto the suspicions.The application of the rule is certain if the usability of the goods was hindered because of the suspicion before the passing of the risk. However, the situation is more delicate if the suspicion only arises after the transfer of risk, i.e. if the goods were (de facto) still usable at the relevant time. From a general rule on the burden of proof allocation, it could be argued that in such case the seller shouldn't be responsible for the lack of usability of the goods which only occurred after the transfer of risk. In practice, this would rule out recourse of the buyer against the seller in many cases.

However, such an approach would not be sufficient. The seller is also liable for the non-conformity due to suspicion which only becomes apparent after the passing of risk, provided that it existed at the time of the passing of risk pursuant to Article 36 para.1 CISG.In essence, these considerations of the German Supreme Court ultimately go back to the firstArgentinean Rabbit case, the first case of such type decided in 1969 by the German Supreme Court. There the German Supreme Court had stated that the hindered usability based on the fact that the goods originated from Argentinean rabbit imports, on which the suspicion of salmonella contamination was based, and was thus based on factual circumstances which had already existed at the time the risk passed.Argentinean Rabbit case 1969. BundesgerichtshofUrt. v. 16.04.1969, Az.: VIII ZR 176/66 [ElectronicResource] // Dejure.org. https://dejure.org/dienste/vernetzung/rechtsprechung?Gericht=BGH&Datum=16.04.1969&Aktenzeichen=VIII%20ZR%20176/66(Accessed 05.04.2020).

According to this case law, the mere potential non-conformity at the time of the passing of risk, meaning that the goods are not saleable or usablebased on the suspicionis sufficient. In cases of sufficiently serious suspicion, the seller shall not therefore be liable only if the circumstances giving rise to the suspicion have occurred after the passing of risk. For example, in the case of a sale to destination (with passing of risk on handover of the goods to the first carrier)suspicion arises of contamination of foodstuffs by transport-related causes (like the notion of the seller in a Powdered Milk case).

However, it must not be overlooked that the application of the rule on hidden defects in Art. 36 para. 1 CISG can cause difficulties in cases of suspicion. If a suspicion is based on the fact that in other cases quality defects have actually occurred there are concrete circumstances which can be fixed in time. Like in the secondArgentinean Rabbit case, where the suspected rabbit meat was delivered by the same production plant from which another delivery, partially contaminated due to salmonella originated.Argentinean Rabbit case 1972. BundesgerichtshofUrt. v. 14.06.1972, Az.: VIII ZR 75/71 [ElectronicResource] // Dejure.org. https://dejure.org/dienste/vernetzung/rechtsprechung?Text=VIII%2520ZR%252075%2F71&Suche=Bundesgerichtshof%20Urt.%20v.%2014.06.1972%2C%20Az.%3A%20VIII%20ZR%2075%2F71(Accessed 05.04.2020).Likewise in analysedFrozen Pork case, where effective dioxin residues were detected in Belgian pork in spring 1999.

More difficult circumstances if it turns out that a suspicion is based on mere suppositionas was apparently the case with the Spanish cucumbers. In that case there would be no basis for the application of Art. 36 para. 1 CISG,i.e. the seller is only liable for the non-conformity if the usability of the goods has ceased to exist due to suspicion before the passing of risk.

The hindered usability of the goods due to suspicion will usually be easy for the buyer to prove. However, it can often be difficult to prove whether the circumstances giving rise to the suspicion occurred before the transfer of risk (e.g. during the production process) or later (e.g. during transport). Hence, Brunner and Gottlieb in their commentary advocate to presume that the goods are already non-conforming at the time the risk passes if the lack of conformity has been proven in principle. Brunner C.Ibid. P. 567. This is at least the case if the lack of conformity becomes apparent relatively soon after the passing of risk.The seller is then free to rebut this presumption by pointing out the contrary. This must also apply to suspected cases. In case of doubt, it must therefore be assumed that the circumstances which led to the suspicion were already present before the transfer of risk.

Therefore, in the prevailing doctrine and jurisdiction, it is recognized for a few case constellations that a suspicion of a defect may constitute a defect of quality according to Art. 35 CISG. Beyond that, however, there is uncertainty in the doctrine on the certain criterions when a suspicion of a defect can be considered a lack of conformity. There is even the theory that Art. 35 CISG is linked only to the “physical condition” of the goods, which is why the mere suspicion that something is not in order with the goods does not constitute a defect.Grunewald B. DerVerdachtalsMangel //Festschrift fьr Horst KonzenzumsiebzigstenGeburtstag, Tьbingen: Mohr Siebeck. - 2006. - P. 136.

The German Supreme Court and previously Frankfurt Appellate CourtFrozen Pork case. Ibid. in their decisions made a deep analysis of the jurisprudence on the suspicion as non-conformity (VerdachtalsMangel). This concept is well-established in German and Swiss legal system and surprisingly unknown to the Austrian legal system, which is very close to German and Swiss as was shown above.Schwenzer I., Tebel D. Suspicions, mere suspicions: non-conformity of the goods? //Uniform Law Review. - 2014. - Vol. 19. - №. 1. - P. 154. Thus as the concept is originally derived from those countries a recourse can be made to the German law under the international character of the CISG under Article 7 para. 1. It should be added that though the majority of cases analysed further was decided under German Civil Code, provisions on the non-conformity in its Article 434 and CISG Article 35 are identical, so the recourse is absolutely justified.Германское Гражданское Уложение, статья 434. [Электронный ресурс] // Ex-jure. URL: http://www.ex-jure.ru/law/news.php?newsid=166#_Toc70851054 (Доступ 18.04.2020).

Important to emphasize that the Frozen Pork case, Argentinean Rabbit cases and other cases which involve cases of contamination should notestablish a wrong conclusion that suspicion can relate only to food products and relating health or life-threatening risks. It is true that this concept was initially recognized only in relation to health risks and was originally established on the basis of food intended for resale in the first Argentinean Rabbit case: “if there is a suspicion of being harmful to health on account of its origin and this suspicion cannot be eliminated by measures which the purchaser can reasonably be expected to take”.Argentinean Rabbit case 1969. Ibid. This doctrine was first applied before the obligations law reform in Germany in 2001. However, this principlehas been extended over time to other types of good and has been retained even after the reform. Thus,for example, the suspicion of recurring dry rot infestation was sufficient later to justify the defectiveness of an acquired house property.Dry rot case. Landesgericht BonnUrt. v. 30.10.2003, Az.: 10 O 27/03[Electronic Resource] // Dejure.org. https://dejure.org/dienste/vernetzung/rechtsprechung?Text=NJW%202004%2C%2074&Suche=njw%202004%2C%2074(Accessed 05.04.2020). Likewise suspicion of moisture in foundation of purchased house justified non-conformity as this sign of humidity posed a risk of costly remedial actions..BundesgerichtUrt. v. 16.03.2012, Az.: V ZR 18/11[Electronic Resource] // Dejure.org. https://dejure.org/dienste/vernetzung/rechtsprechung?Text=V%20ZR%2018/11(Accessed 05.04.2020). Currently, regardless of the type of the purchase object and detached from the condition of a presumed health hazard, “already the suspicion of a serious defect of the purchase object itself can represent a defect”, if the value and thus the usability of the object decreases through this and the suspicion was not disproved by knowledge occurred in the meantime or was cleared by the buyer reasonable measures.Sonde S. L. Das kaufrechtlicheMдngelrechtals Instrument zurVerwirklichungeinesnachhaltigenKonsums. - Kassel University Press GmbH, 2016. P. 152. Irrelevance of the health risks specifically was been confirmed by the German Supreme Court in its recent decision, in which fodder was at dispute. Court explicitly stated that the danger to the end user is irrelevant and suspected lack of conformity not only affects foods but other objects..BundesgerichtUrt. v. 22.10.2014, Az.: VIII ZR 195/13[Electronic Resource] // Dejure.org. https://dejure.org/dienste/vernetzung/rechtsprechung?Text=VIII%2520ZR%2520195%2F13&Suche=22.10.2014%20-%20VIII%20ZR%20195%2F13(Accessed 05.04.2020).

This very far-reaching recognition of the mere suspicion of a defect as a separate material defect within the meaning Article 434 of the German Civil Code is justified by the fact that “the market generally attributes a lower market value to such items which are suspected of being seriously defective, even though this suspicion may in fact be unfounded”. As long as this suspicion has not been removed, the latter is liable for the item and impairs the suitability for the use presupposed according to the contract within the meaning of Art. 434 para. 1 sentence 2 of the German Civil Code (analogical to Article 35 para. 2(a) CISG).Dry rot case. Ibid. Therefore, a deeper insight into the German jurisprudence on this matter shows that the suspicion as non-conformity doctrine is construed on the shift of the burden model: after buyer sufficiently shows that the goods are not usable due to the facts relating to the moment before passing of the risk.