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Transmar Commodity Group Ltd. v. Cooperativa Agraria Industrial Naranjillo Ltda., No. 16-3532-cv (2d Cir. May 9, 2018) [click for opinion]

In 2013, Transmar Commodity Group Ltd. (“Transmar”) and Cooperativa Agraria Industrial Naranjillo Ltda. (“Naranjillo”) entered into six nearly identical contracts for the delivery of cocoa butter. A dispute arose when Naranjillo defaulted on its obligations under the agreements. An arbitral tribunal was convened to resolve the dispute pursuant to the Cocoa Merchants’ Association of America, Inc. (the “CMAA”), which issued an award on February 4, 2016.

Naranjillo petitioned the district court to vacate the award, which it did on September 22, 2016. The district court, applying New York law, relied primarily on the face of the contracts to find that Transmar and Naranjillo had not actually agreed to arbitrate their disputes before the CMAA or anywhere else. The district court thus held that the CMAA did not have the power to decide the dispute and vacated the award pursuant to the Federal Arbitration Act, 9 U.S.C. § 10(a)(4), which allows for vacatur, in relevant part, “where the arbitrators exceeded their powers.”

On review, the circuit court disagreed. The circuit court held that the interpretation of the contracts, as international contracts for the sale of goods, should have been governed not by New York law, but by the United Nations Convention on Contracts for the International Sale of Goods (“CISG“). The circuit court noted in its decision that, while there may be little case law interpreting the CISG, that fact alone did not warrant substituting New York law for the CISG.

The circuit court further noted that New York law differs from the CISG in several important respects. In particular, Article 8(3) requires courts to give “due consideration” to extrinsic evidence of the reasonable expectations of the parties, and Article 9(2) evinces a “strong preference for obligations and representations customarily relied upon by others in the industry.” The CISG provides, thus, for the consideration of parol evidence. This is in stark contrast to the New York “four corners rule” that prohibits extrinsic evidence unless the face of the document is ambiguous.

The circuit court therefore remanded the case to the district court with instructions to conduct additional fact finding to adduce extrinsic evidence of the meaning of the parties’ agreements pursuant to the CISG.

A version of this post originally appeared in the July 2018 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Grant Hanessian.


Andrew Riccio is an associate in the Dispute Resolution group at Baker McKenzie in New York. Mr. Riccio focuses his practice on international arbitration. He has represented private parties in commercial disputes, as well as states and investors arbitrating investor-state disputes. He has experience representing clients in domestic, international and commercial litigation in federal and state courts. Mr. Riccio has also advised clients in Spanish. Prior to joining Baker & McKenzie, Mr. Riccio served both as a lawyer at a boutique litigation firm as well as outside general counsel at an organic foods company. Andrew Riccio can be reached at [email protected] and +1 212-626-4229.


Grant Hanessian is a member of the Dispute Resolution team at Baker McKenzie New York. Grant Hanessian serves as global co-chair of the Firm’s International Arbitration Group. He chaired the Litigation Department of the Firm’s New York office from 2003 to 2012. Mr. Hanessian is the US alternate member of the ICC International Court of Arbitration in Paris, vice chairman of the Arbitration Committee of the US Council for International Business (US national committee of the ICC), and a member of the ICC’s Commission on Arbitration and its Task Forces on Arbitration Involving States or State Entities and on Financial Institutions and International Arbitration (leader of Investment Arbitration and Banking & Finance work stream). He is also a member of the American Arbitration Association—International Centre for Dispute Resolution’s International Advisory Committee and its Advisory Committee on Brazil, the International Arbitration Club of New York, the Arbitration Committee of the International Institute for Conflict Prevention and Resolution, the New York City Bar Association's Committee on International Commercial Disputes and Club Español del Arbitraje, and is a founding board member of the New York International Arbitration Center. Grant Hanessian can be reached at [email protected] and +1 212 891 3986.