In Transmar Commodity Group Ltd. v. Cooperativa Agraria Industrial Naranjillo Ltda. (721 Fed.Appx. 88 (Mem)), the Court of Appeals for the Second Circuit reversed a decision rendered by the Federal District Court that had held that the parties had not agreed to arbitrate their dispute on the grounds that the buyer’s standard contract’s terms containing the arbitration clause had not become part of the contract. According to the Court of Appeals, the District Court had erred in substituting New York law for the United Nations Convention on Contracts for the International Sale of Goods (CISG) for the purpose of determining whether the standard contract terms and, thus, the arbitration clause, had been agreed upon.
Both the District Court’s and the Court of Appeals’ decisions indicate that there is still some confusion about when the CISG applies and how a choice of law clause (in the case at hand in favor of “the laws of the State of New York”) affects its application. The District Court did not examine the CISG’s applicability at all, while the Court of Appeals did so, but rather superficially: it failed to look into whether the parties had excluded the CISG’s application, which, pursuant to CISG Art. 6, they are allowed to do.
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