Contrasting Disgorgement Damages with Efficient Breaches under Article 74 CISG

The contractual remedy of disgorgement damages has increasingly gained acceptance in international legal practice. Disgorgement of profits can result from a situation in which contractual breach is incentivised due to its financial superiority, ie profitability, over the proper fulfilment of the initial contract. In this situation, the aggrieved party can raise a claim for disgorgement damages, meaning it can claim the profits that the breaching party has made as a result of the breach. This differs from compensatory damages focusing solely on the loss of the aggrieved party. The calls for acceptance of disgorgement damages as an acceptable remedy under the United Nations Convention on Contracts for the International Sale of Goods (‘CISG’) specifically do not only stem from emerging international case law, but disgorgement as an applicable remedy under Article 74 CISG is also supported by leading CISG scholars such as Ingeborg Schwenzer and Pascal Hachem. This paper analyses the recoverability of disgorgement damages under Article 74 CISG, including an assessment of possible additional requirements a prima facie case needs to fulfil for the remedy to apply. The affirmative view to the applicability of disgorgement damages will be contrasted with the opposing concept of efficient breach.