Overlooking the CISG

The United Nations Convention on Contracts for the International Sale of Goods (CISG) entered into force in 1988. Its stated goal is to harmonize the law of sales across many different countries, thereby making it unnecessary for courts in these countries to perform a choice-of-law analysis when the dispute involves an international sales contract. The United States is a party to the CISG—along with 97 other countries—and U.S. courts are routinely called upon to apply it. Every now and then, however, courts and litigants in the United States forget that the treaty exists. This is precisely what happened in a recent case, Salteña S.A.U. v. Ercomar Imports Internacional Corporation, decided in the U.S. District Court for the Eastern District of New York (Judge Kiyu Matsumoto).

The plaintiffs were Argentine corporations with their principal places of business in Argentina. The defendant was a U.S. company incorporated in Florida with an office in New York. In 2020, the defendant ordered roughly $100,000 worth of food products—yerba mate and empanada dough—from the plaintiffs. The goods were delivered but payment was never made. The Argentine plaintiffs sued the U.S. defendant in federal court in New York for breach of contract and unjust enrichment.

The U.S. defendant answered the complaint and filed counterclaims for breach of contract, material misrepresentation, and tortious interference. Shortly thereafter, the attorney for the defendant withdrew. After the defendant declined to engage new counsel, the plaintiffs filed an unopposed motion for a default judgment. In deciding whether to grant the motion, the court had to determine whether the “allegations provide a basis for liability and relief.” To this end, the court performed a choice-of-law analysis to determine the governing law. The court applied the “grouping of contacts” test devised by the state courts in New York to conclude that the contract was, in fact, governed by New York law.

This analysis was unnecessary. Argentina and the United States are both parties to the CISG. Because the contract involved the international sale of goods, that treaty provided the governing law with respect to issues relating to formation, breach, and damages. The CISG is nowhere mentioned, however, in the litigation documents or in the court’s decision entering a default judgment in favor of the plaintiffs. Everyone involved in this litigation was seemingly unaware of the treaty’s existence.

This is not to suggest that the court made an error in not applying the CISG. The parties are free under U.S. law to waive the application of the CISG by briefing the court on the national sales law of a U.S. state without mentioning the treaty. And when the parties do not raise the CISG, the court is under no obligation to apply it. The fact that everyone involved in this case seems to have completely overlooked the CISG’s applicability, however, does little to counter the persistent narrative that U.S. litigants frequently ignore or opt out of this particular instrument.