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| Between November 2004 and May 2005, an Italian company and its New Jersey subsidiary made six shipments of cheese to an individual and several U.S. corporations involved in the business of importing cheese into the U.S. The buyers, who later argued that the cheese was not sold, but rather given to them on consignment, paid approximately Euros 800,000.00. In June 2007, the sellers, claiming an additional Euros 329,000.00, sue the buyers. The latter, besides maintaining that they did not owe any additional money, counterclaimed that some of the cheese received was non-conforming.
As to the applicable law, the Court noted that, although the contract was silent on the issue, CISG automatically applied, since both parties had their places of business in two different Contracting States (Art. 1(1)(a) CISG). Moreover, the Court pointed out that Art. 78 CISG clearly states that in the event of non-payment or delayed payment by a party, the opposing party is entitled to prejudgment interest. However, the CISG drafters had deliberately declined to select a specific rate to be used; consequently, since no general principles is of help in determining the relevant interest rate, international private law rules should apply (art. 7(2) CISG). In this respect, the Court observed that, since the dispute arose out of an international treaty like the CISG, it had federal question jurisdiction, rather than diversity jurisdiction, over the case. As a result, having broad discretion in determining the applicable rate, the Court ruled the rate of interest to be set in accordance with the yield on the U.S. Treasury bill from the applicable time period. Additionally, as to the attorneys’ fees, the Court noted that, having federal question jurisdiction over the case, it had to apply federal common law rules, and remarked that the U.S. legal system deliberately requires the parties to pay their own legal fees in almost all situations. In the Court’s view, as the seller was aware that its products would be sold into the U.S. market, he should have foreseen the use of U.S. law in the event of a dispute. Thus, the Court decided to use U.S. law and concluded that each party was liable for the payment of its own legal fees. |