LaSalle's rights to the Steel Shipments stemming from Article 2
are preempted by CISG. Looking at Article 4(b) of the CISG,
Usinor argues that the State Department position is that the
CISG would not preempt law governing property interests in the
Steel Shipments arising prior to Usinor's sale of the steel to
Leeco. Usinor argues that LaSalle had no interest in the Steel
before it was sold, and that LaSalle's interest entirely arises
out of the existence of the sales contract between Leeco and
Usinor, and that contract is governed by CISG. Therefore, Usinor
argues, LaSalle's rights are also governed by the CISG.
Leeco argues that the UCC, not the CISG, governs the
transaction, and that replevin is not a cause of action allowed
to the seller under the UCC, only reclamation within 10 days,
and that those 10 days have passed. Leeco asserts that Usinor
has only a reservation of a security interest, per Section
2-401(a) of the UCC. Leeco states that Usinor never perfected a
purchase money security interest in the steel sold to Leeco, and
that therefore, its rights are subordinate to those of LaSalle,
which has a perfected security interest. Leeco argues that the
CISG does not govern because "it has no application to disputes
concerning the goods themselves which are sold in international
trade, but governs instead only the obligations of buyers and
sellers." Leeco argues that since this case involves the rights
of two secured parties, LaSalle as a perfected secured creditor
and Usinor as an unperfected secured creditor, Article 9 of the
UCC governs the relative rights of LaSalle and Usinor in the
steel. Leeco states that Usinor has no right to replevin
because, since it lacks a perfected security interest in the
steel, it has no title or right to immediate possession of the
steel, and moreover, the UCC does not list replevin as a remedy
available to a seller.
Similarly, LaSalle argues that given that there is no evidence
that Usinor perfected its security interest in the steel,
LaSalle's demonstrated prior security interest remains superior.
LaSalle argues that since Usinor has not demonstrated a
probability of ultimately prevailing on the underlying claim of
possession, it therefore is not entitled to relief under the
Illinois Replevin Act.
The conflict that the Court must face in its determination is
one between maintaining the purpose of the CISG and the purpose
of the UCC. As Usinor correctly argues, Article 7 of the CISG
states "[i]n the interpretation of this Convention, regard is to
be had to its international character and to the need to promote
uniformity in its application and the observance of good faith
in international trade." Usinor argues that applying Article 2
of the UCC would increase the burden on parties to examine local
sales law, which would not promote the purposes of the CISG.
Application of the UCC, on the other hand, requires parties to
bear the burden of inspecting the local law of wherever the
goods involved in the contract might be shipped.
However, the effectiveness of the UCC also depends on courts'
uniformity of application, of the ability of parties to be able
to rely on the dependency of filed financing statements on
record with the Secretary of State's Office.
To recover under replevin, Usinor must have the right to
possession, or title, in the Steel Shipments. The issue of first
impression facing the Court is whether the CISG applies to a
transaction between a buyer and seller when a third party has an
interest in the goods. The Court needs to determine whether or
not when a third party is involved, if local law, the UCC,
preempts the interest given to the seller by the CISG.
A. The CISG governs the transaction between buyer and
The CISG was ratified by the United States on December 11,
1986, and became effective on January 1, 1988. See
15 U.S.C.A.App. at 332 (1998). The CISG was adopted for the purpose
of establishing "substantive provisions of law to govern the
formation of international sales contracts and the rights and
obligations of the buyer and the seller." U.S. Ratification of
1980 United Nations Convention on Contracts for the
International Sale of Goods: Official English Text,
15 U.S.C.A.App. at 52 (1997). The CISG applies "to contracts of
sale of goods between parties whose places of business are in
different States . . . when the States are Contracting States."
15 U.S.C.A.App. Art 1(a). Here the buyer and seller are parties
who place of business are France and the U.S., both signatories
to the CISG.
U.S. federal caselaw interpreting and applying the CISG is
scant. See Claudia v. Olivieri Footwear Ltd., 1998 WL 164824,
*4 (S.D.N.Y. 1998). As one court put it, "[d]espite the CISG's
broad scope, surprisingly few cases have applied the Convention
in the United States." See MCC-Marble Ceramic Center, Inc. v.
Ceramica Nuova d'Agostino, S.p.A., 144 F.3d 1384, 1389 (11th
Cir. 1998). While there are few cases in the U.S. dealing with
the CISG, it is clear that the CISG governs the transaction
between Usinor and Leeco such that if LaSalle were not a party
to this controversy, the resolution would be clear: under the
Supremacy Clause of the United States Constitution, the
Convention, would displace any contrary state sales law such as
the UCC. See Sunil R. Harjani, The Convention on Contracts
for the International Sale of Goods in United States Courts, 23
Hou. J. of Int'l L. 49, 53 (2000).
B. The CISG pre-empts the UCC when there is only a seller
Many commentators have written that when the CISG applies, it
pre-empts domestic sales law that otherwise would govern the
contract, such as Article 2 of the UCC. See, e.g., Richard E.
Speidel, The Revision of UCC Article 2, Sales in Light of the
United Nations Convention on Contracts for the International
Sale of Goods, 16 N.W. J. Int'l L. & Bus. 165, 166 (1995)
(stating that "[i]n the United States, [the CISG] is a
self-executing treaty with the preemptive force of federal
law."). See also Michael A. Tessitore, The U.N. Convention on
International Sales and the Seller's Ineffective Right of
Reclamation Under the U.S. Bankruptcy Code, 35 Willamette
L.Rev. 367 (1999). At the time of contracting, the parties have
the opportunity to opt-out, and decide that the UCC, or other
domestic law, applies. Here, the parties did not opt out of the
CISG in the Agreement.