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Posted: October 28, 2015

Court Analyzes Application of UN Convention on Contracts for International Sale of Goods

On October 14, 2015, Justice Ramos of the New York County Commercial Division issued a decision in Thyssenkrupp Metallurgical Products GmbH v. Energy Coal, S.p.A., 2015 NY Slip Op. 31922(U), analyzing the application of the UN Convention on Contracts for International Sale of Goods (“CISG”) to CPLR 202, which “measures the timeliness of [a] claim according to the statute of limitations of the place where the claim arose, if shorter than New York’s.”

In Thyssenkrupp Metallurgical Products, the plaintiff brought an action for indemnification and breach of contract relating to losses it suffered in connection with a purchase of petroleum coke (petcoke) from the defendant. The defendant moved to dismiss on statute of limitations grounds, arguing that because the plaintiff “is a German company, its claims accrued in Germany and, as the parties’ contract is governed by New York law, CPLR 202 requires the application of Germany’s three-year statute of limitations.” The plaintiff argued “that the United Nations Convention on Contracts for the International Sale of Goods (CISG) governs the parties’ contract and hence this action [and] that the Court apply New York’s” four year “statute of limitations for the sale of goods” under UCC ยง 2-275.

The court declined to dismiss on statute of limitations grounds, explaining:

When a transaction involves a sale of goods between parties whose places of business are in different countries and those countries are parties to the CISG, the transaction will automatically be governed by the CISG. . . . .

The CISG is a self-executing treaty; unless parties explicitly opt out of it, it is binding on them. If parties do not want the CISG to govern their transaction, they must clearly and unequivocally say so in their contract.

. . .

As a treaty, the CISG is incorporated into United States federal law and, thus, is a part of New York law. While the contract in this case calls for New York law to apply, such provision does not exclude the CISG.

. . . As federal law, the CISG preempts the domestic law that otherwise would govern the contract, to the extent that the causes of action fall within the scope of the CISG. The CISG does not preempt a private contract between parties; instead, it provides a statutory authority from which contract provisions are interpreted, fills gaps in contract language, and governs issues not addressed by the contract. Parties may agree to derogate from or vary the effect of any of the CISG’s provisions.

(Internal quotations and citations omitted) (emphasis added).

After explaining that courts’ interpretations of the CISG can be informed by interpretations of analogous provisions of the UCC, the court went on to address the question of the statute of limitations under the CISG:

As the CISG does not contain a statute of limitations, the question of when an action must be brought must be determined according to the law of the forum. . . . Therefore, New York law applies the issue of statute of limitations. Under New York law, when a claim accrues outside New York and the plaintiff is a nonresident, CPLR 202 measures the timeliness of the claim according to the statute of limitations of the place where the claim arose, if shorter than New York’s.

(Internal quotations and citations omitted) (emphasis added).

Having determined that, the court went on to hold that under CPLR 202, the German statute of limitations applied and that there were factual questions regarding the accrual and tolling of the statute of limitations that prevented the court from deciding the issue on a motion to dismiss.

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