ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

A Member of the Law Professor Blogs Network

Wednesday, March 26, 2008

Medellin and the CISG

The University of Michigan's Bruce Frier has raised the following interesting question in the aftermath of the Supreme Court's decision in Medellin v. Texas (already mentioned on this blog here) yesterday:

Does anyone know whether the CISG is among the treaties whose enforceability within the United States is endangered by today's Supreme Court decision?

I'm not sure anyone knows, but two Contracts Profs have ventured opinions and given me permission to post them here. 

University of Maryland's Michael Van Alstine writes:

The CISG should satisfy even the Court's (misguided and historically unfounded) heightened requirement for self-execution.  In his message to the Senate in 1983, President Reagan expressly stated the premise that the CISG would be self-executing upon Senate consent and later ratification.  See Message from the President of the United States to the Senate Transmitting the United Nations Convention on Contracts for the International Sale of Goods, Sept. 21, 1983, S. Treaty Doc. No. 98-9 (1983) ("The Convention is subject to ratification by signatory States (Article 91(2)), but is self-executing and this requires no federal implementing legislation to come into force throughout the Untied States").

Seton Hall's Michael Zimmer is unpersuaded:

Given that the Court said the Treaty must explicitly include a provision that it is self-executing, I am not sure that, without more, President Reagan's statement is any better than President Bush's statement.

One note of clarification might be helpful for our readers.  Because the CISG is a treaty, under the Supremacy Clause, it is binding law for international contracts for the sale of goods, provided that the parties to the contract are nationals of signatory states.  The parties might clarify that they intend to be bound by the CISG or by the UCC, and if they do so, this issue would not arise, because parties can freely contract around the CISG or free to choose to be bound by it.  The issue would only arise if the parties do not specify which law governs and at least one party tries to argue that U.S. law relating to the sale of goods rather than the CISG should govern.

The Blog would welcome additional thoughts.

[Jeremy Telman]

http://lawprofessors.typepad.com/contractsprof_blog/2008/03/medellin-and-th.html

Commentary, Recent Cases | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef00e5518b43e98834

Listed below are links to weblogs that reference Medellin and the CISG:

» Blawgosphere Covers Medellin v. Texas from Blawg's Blog by Bill Gratsch
Blawgosphere Covers Medellin v. Texas [Read More]

Tracked on Mar 28, 2008 2:57:36 AM

Comments

The CISG is self-executing and applies where the international sales agreement is silent as to choice of governing law: Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1028 (2d Cir.1995).

“There are two types of treaties: those that are self-executing and those that are not self-executing. A self-executing treaty 'operates of itself, without the aid of any legislative provision' -- without any enabling legislation. Foster v. Neilson, 27 U.S. (2 Pet.) 253, 314 (1829). The Convention is a self-executing treaty. See [International Sale of Goods: Hearing on Treaty Doc. No. 98-9 Before the Senate Comm. on Foreign Relations, 98th Cong., 2d Sess. 39, at 8-11 (1984)…(testimony of Peter Pfund)]".: Susan V. Cook, “The Need for Uniform Interpretation of the 1980 United Nations Convention on Contracts for the International Sale of Goods”, 50 University of Pittsburgh Law Review (1988) 197-226 at 203 (fn. 16, 31).

In American Mint LLC v. GOSoftware, Inc. 2005 WL 2021248 (U.S. Dist. Ct. M.D. Penn.), the court held:

"In the United States, the CISG is a self-executing treaty with the preemptive force of federal law. See U.S. Const., Art. VI (Supremacy Clause); see also BP Oil Int'l, Ltd. v. Empresa Estatal Petroleos de Ecuador, 332 F.3d 333, 336 (5th Cir.2003) (the CISG creates a private right of action in federal court); Vlero Mkt. & Supply Co. v. Greeni Oy & Greeni Trading Oy, 373 F.Supp.2d 475, 480 n. 7 (D.N.J.2005) (noting that the CISG preempts state contract law to the extent that state causes of action fall within the scope of the CISG); Usinor Industeel v. Leeco Steel Prods., Inc., 209 F.Supp.2d 880, 884 (N.D.Ill.2002) (holding that under the Supremacy Clause, the CISG would displace any contrary state sales law such as Article 2 of the Uniform Commercial Code). As incorporated federal law, the CISG governs disputes in which it is implicated so long as the parties have not elected to exclude its application. CISG art. 6. However, parties seeking to apply a signatory's domestic law in lieu of the CISG mut affirmatively opt-out of the CISG. See Vlero, 373 F.Supp.2d at 482 (agreement to include a provision that New York law governed failed to specifically exclude application of the CISG and therefore the CISG remained applicable); see also BP Oil, 332 F.3d at 337 (holding that "if the parties decide to exclude the [CISG], it should be expressly excluded by language which states that it does not apply"); Ajax Tool Works, Inc. v. Can-Eng Mfg. Ltd., No. 01-5938, 2003 WL 223187, at *8 (N.D.Ill. Jan.30, 2003) (holding that contract stating the agreement shall be governed by the laws of Canada does not exclude the CISG); Asante Techs., Inc. v. PMC-Sierra, Inc., 164 F.Supp.2d 1142, 1150 (N.D.Cal.2001) (holding that a choice of law provision selecting British Columbia law did not "envince a clear intent to opt out of the CISG")."

See also, Chicago Prime Packers, Inc. v. Northam Food Trading Co. 408 F.3d 894; 2005 WL 1243344 (7th Cir. (Ill.)); 2005 U.S. App. LEXIS 9355 (U.S.C.A., 7th Circ.); Genpharm Inc. v. Pliva-Lachema A.S. 2361 F. Supp. 2d 49 (U.S. Dist. Ct. E.D.N.Y) (2005); China North Chemical Industries Corporation v. Beston Chemical Corporation, 2006 WL 295395 (S.D.Tex). passim.

Posted by: Antonin I. Pribetic | Mar 26, 2008 8:21:01 AM

Antonin, thanks for this. I suppose Michael Zimmer might argue that Medellin creates a new, tougher standard for determining whether or not a treaty is self-executing. A Presidential statement and legislative history might not be enough, even if there is a lot of case law from lower courts in support of self-execution.

Do you consider the CISG's status as a self-executing treaty to now be safely beyond peradventure?

Posted by: Jeremy Telman | Mar 26, 2008 9:20:17 AM

Jeremy,

That's a very good question. I am inclined to agree with Michael Zimmer that the majority opinion in Medellin appears to impose a more stringent standard for determining whether a treaty is self-executing. Aside from applying domestic principles of statutory or treaty intepretation, it may be necessary to look beyond any Presidential statements and Senate ratification to legislative history (travaux préparatoires) prior to accession or ratification, primarily from the comments by national delegates or working group or committee members (e.g. UNCITRAL, Hague Conference on Private International Law, etc.).

With particular reference to the CISG, the problem has traditionally been one of judicial oversight (i.e. failure to apply the CISG under Article 1(1)(a) or lack of derogation under Article 6). According to leading American CISG commentators, Article 93 of the CISG (Application to a Part of a State) does not pose a problem (see, e.g. John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed. (1999), pages 537-538,Kluwer Law International, The Hague, available at: http://cisgw3.law.pace.edu/cisg/biblio/ho93.html. For the treaty power of the United States in relation a convention establishing uniform law for international sales see Honnold, 107 U. Pa L. Rev. 207, 304–199. (1959).

However, as you know, the U.S. has made a reservation under Article 95 that it would not be bound by Art. 1(1)(b) which restricts the role of private international law in determining the applicability of the CISG when both contracting parties do not have their relevant places of business in Contracting States. Theoretically, a state court unfamiliar with the fundamental interpretative principles under Article 7 may be receptive to your scenario where "at least one party tries to argue that U.S. law relating to the sale of goods rather than the CISG should govern."

Since the CISG is not foreign law, but rather an international treaty, something more than a state court decision citing Medellin to render the CISG invalid or ineffective as non self-executing is required; perhaps a denunciation under Article 101.

Antonin I. Pribetic

Posted by: Antonin I. Pribetic | Mar 26, 2008 10:01:14 AM

It seems to me that there is very little, if any, room for an argument that the CISG is not self-executing. Chief Justice Roberts' opinion in Medellin does not require express language for self-execution. Indeed, at one point he refers to the intent of the Senate upon giving its consent to treaty ratification. See slip op. at 12 (reasoning in part that the UN Charter was not self-executing because there was no "indicat[ion] that the Senate that ratified the U. N. Charter intended" it to have direct domestic law effect). Moreover, he quoted with approval Judge Boudin's opinion from Igartúa-De La Rosa v. United States, 417 F. 3d 145, 150 (1st Cir. 2005) to the effect that a treaty need merely "convey[] an intention that it be 'self-executing' and [be] ratified on these terms.” Slip op. at 9.

An express self-execution statement by the President in his message to the Senate prior to its granting of consent to a treaty is about as clear of an expression of intent as is possible--short, of course, of a provision in the text.

Michael Van Alstine

Posted by: Michael Van Alstine | Mar 26, 2008 12:09:19 PM

Michael Van Alstine's point is reinforced by Chief Justice Roberts' distinction in Medellin, slip op. at p. 15, to the effect that the ICJ, by limiting disputes to those involving nations, not individuals, and by specifiying that ICJ decisions have no binding force except between those nations, provides further evidence that the Avena judgment does not automatically constitute federal law enforceable in U.S. courts.

By contrast, in an earlier portion of the majority decision at p. 9, fn. 3, Chief Justice Roberts observes:

"Even when treaties are self-executing in the sense that they create federal law, the background presumption is that '[i]nternational agreements, even those directly benefiting private persons, generally do not create private rights or provide for a private cause of action in domestic courts.' 2 Restatement (third of Foreign Relations Law of the United States §907, Comment a, p. 395 (1986) (hereinafter Restatement). Accordingly, a number of the Courts of Appeals have presumed that treaties do not create privately enforceable rights in the absence of express language to the contrary. [citations omitted]."

Clearly, the CISG does "create private rights" or does "provide for a private cause of action", in circumstances where both parties are from Contracting States (CISG, Art. 1(1)(a)) and the pre-requisites of applicability, internationality and territoriality are otherwise met (Art. 2-6).

Antonin I. Pribetic

Posted by: Antonin I. Pribetic | Mar 26, 2008 1:18:59 PM

With or without justification, the CISG is often ignored.

"One measure of the CISG's use and influence in the United States is court adjucations. Two years ago, an appellate court noted that
"[d]espite the CISG's broad scope, surprisingly few cases have applied the Convention in the United States." MCC-Marble Ceramic
Center, Inc. v. Ceramica Nuova D'Agostino, S.p.A., 114 F.3d 1384, 1389 (11th Cir. 1998). That may be an understatement. Another
court's observation is probably more accurate:

"There is virtually no case law under the Convention." Delchi Carrier S.p.A. v. Rotorex Corp., 71 F.3d 1024, 1027-28 (2nd Cir. 1995). As of October 2000 a computerized search of United States legal databases established: (1) there are no reported legal decisions concerning the CISG ever issued by a Colorado State Court (ie. District Court for the City and County of Denver and Colorado Supreme Court); (2) there are no reported legal decisions concerning the CISG ever issued by a Colorado Federal Court (ie. the United States District Court for the District of Colorado); (3) there are no reported legal decisions concerning the CISG ever issued by the United States Court of Appeals for the Tenth Circuit (which encompasses Colorado); and (4) there are no reported legal decisions concerning the CISG ever issued by the United States Supreme Court. Nationwide, only two State Courts have ever even mentioned the Convention. Nationwide, only 20 reported decisions from the Federal Courts refer to the CISG. In more than half of those cases, the Federal Courts simply mentioned the CISG in passing as not applicable. The final result is that after more than a decade only a handful (literally) of court decisions nationwide have construed the Convention. In comparison, during just the first 10 months of the year 2000, the United States domestic sales law was adjudicated in reported decisions from at least 300 Federal Courts and 300 State Courts, including many in Colorado.

These statistics may be criticized somewhat as underestimating the use of the CISG since approximately 80% to 90% of international commercial transactions contain mandatory alternative dispute resolution provisions for mediation, conciliation and/or arbitration. As a result, many CISG disputes may never make it to court. Many arbitration proceedings are informal, private and confidential. Even recognizing the significant place of arbitration in transnational commerce, the United States still lags well-behind in CISG use and adjudication. For example, as of 1998, a world-wide CISG database reported 250 adjudicated CISG decisions (including some arbitrations) around the world in the 10 years from 1988 to 1998. Of these, more than 100 were in Germany. An additional 100 were equally split between Switzerland, France and the Netherlands. In the entire rest of the world (including the United States) there were only about 50 additional CISG cases."

Posted by: ohwilleke | Apr 2, 2008 4:01:00 PM

The good news is that more countries are adopting the CISG. Unfortunately, it is rarely applied in domestic courts. I believe this is attributable to the fact that states are allowed to opt out, and revert to "the rules of private international law". Another problem I see is that most judges and U.S. lawyers do not have a good grasp of the treaty, and do not have a desire to engage with the language of the treaty, or the scholarly writings. I advocate a course on the CISG in the basic law school contract course. so far, I am among the fortunate few, who participated in the Willem C. Vis international moot court, fell in love with the treaty, had Professors Brand and Flechtner from the University of Pittsburgh, and took the course in International Business Transactions. Most law students, lawyers, and judges have never heard of this treaty. Conclusion: the CISG is in danger of losing its feeble grasp in the realm of international commerce.

Posted by: Glenys Spence | May 29, 2008 8:37:23 AM

Post a comment