CISG CASE PRESENTATION

United States 6 August 1997 Federal District Court [New York] (Kahn Lucas v. Lark International)
[Cite as: http://cisgw3.law.pace.edu/cases/970806u1.html]

Case Table of Contents

• Case identification
• UNCITRAL abstract
• Classification of issues present
• Editorial remarks
• Citations to case abstracts, texts, and commentaries
• Case text

• Guide to links contained in case presentations

Case identification

DATE OF DECISIONS: 19970811 (11 August 1997)

JURISDICTION: United States [federal court]

TRIBUNAL: U.S. District Court, Southern District of New York [a federal court of 1st instance]

JUDGE(S): Denise Cote

CASE NUMBER/DOCKET NUMBER: 95 Civ. 10506 (DLC)

CASE NAME: Kahn Lucas Lancaster, Inc. v. Lark International Ltd.

CASE HISTORY: 956 F. Supp. 1131 (24 February 1997), reversed, U.S. Court of Appeals (2d Cir. 29 July 1999), 186 F.3d 210

SELLER'S COUNTRY: Hong Kong (defendant)

BUYER'S COUNTRY: U.S. (plaintiff)

GOODS INVOLVED: Clothing

Case abstract

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Classification of issues present

APPLICATION OF CISG: No [Article 1(1)(b)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issues: Article 18(3)

Classification of issues using UNCITRAL classification code numbers:

18C [Acceptance (time and manner): assent by performing an act]

Descriptors: Acceptance of offer

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Editorial remarks

EDITOR: Albert Kritzer

The buyer was from the United States, the seller from Hong Kong. The contract was dated 1995. Hong Kong was at that time a British colony. The United Kingdom has not subscribed to the CISG. The United States has filed an Article 95 declaration, stating that it does not consider itself bound by Article 1(1)(b). The CISG is therefore inapplicable. The sole reference to the CISG is contained at page 16, footnote 8 of the court's opinion:

"In ascertaining the content of the federal law of contracts to apply in cases governed by the Convention [on the Recognition and Enforcement of Foreign Arbitral Awards], at least one court has applied the United Nations Convention on Contracts for the International Sale of Goods ('Sale of Goods Convention'), rather then the Uniform Commercial Code. See Filanto, 789 F. Supp. at 1237. The Sale of Goods Convention has been adopted by the United States, and governs cases involving international commerce where both parties to the contract have places of business in signatory nations. Sale of Goods Convention, Art. 1(1)(a), (b); Filanto, 789 F. Supp. at 1236. Even if the Sale of Goods Convention were applicable, it would very likely lead to the same result reached below, insofar as its provision regarding acceptance by performance is similar to the Uniform Commercial Code adopted in New York. See Sale of Goods Convention Art. 18(3) ('if, by virtue of the offer or as a result of practices which the parties have establishes between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods . . . without notice to the offeror, the acceptance is effective at the moment the act is performed. . . . ')."

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (English): Text presented below; see also 1997 U.S. Dist. LEXIS 11916, 1997 WL 458785 (S.D.N.Y.)

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

English: Bailey, 32 Cornell International Law Journal (1999) nn.102-104, 117-118

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Case text

In an Opinion dated February 24, 1997, this Court held that it lacked personal jurisdiction over Lark except insofar as the purchase orders contained a clause requiring all disputes to be submitted to arbitration in New York. Relying on Merrill Lynch, Pierce, Fenner & Smith Inc. v. Lecopulos, 553 F.2d 842, 844 (2d Cir. 1977), the Court held that such personal jurisdiction, if applicable here, would only permit this Court to compel arbitration -- that is, the Court could not adjudicate the dispute on the merits.[1]

In March 1997, Kahn Lucas moved to compel arbitration. On July 25, 1997, this Court held oral argument, and sua sponte raised the issue of whether the Court had subject matter jurisdiction over the action. On August 1, 1997, the parties submitted additional letter briefs on this issue. Kahn Lucas has moved to convert the complaint and motion to compel into a petition to compel arbitration pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("Convention"). For the reasons set forth below, Kahn Lucas' motion to convert and petition to compel arbitration are granted.

Background

Plaintiff's Complaint

According to the Complaint, Kahn Lucas is a New York corporation which is in the children's clothing business. Lark is a Hong Kong corporation which acts as an agent in Asia for United States clothing buyers. In early 1995, Kahn Lucas issued two purchase orders to Lark for finished fleece garments to be imported from the Philippines and sold to Sears in the Fall and Winter of 1995. The sales to Sears were firm orders from Sears for retail sale, and the purchase orders explicitly noted that the goods were intended for sale to Sears.

Kahn Lucas alleges that in performing its agency services, Lark sub-contracted with Philippine manufactures for the production of the garments, arranged for the shipment of the goods to the United States, and inspected the goods prior to shipment. Ultimately there were several problems with the goods. Some of the garments were defective, some of the shipments contained the wrong colors or sizes, and many of the goods were never delivered or were delivered late.

The Arbitration Clause in the Purchase Orders

The two purchase orders at issue in this case, one dated January 25, 1995, and the other dated February 1, 1995, both contain arbitration clauses. Both orders state that the goods are "ordered from" Lark, listing Lark's address in the Philippines at the top of the order. At the bottom of all of the pages of the February 1 order, "Lark International (Agent)" appears as the "seller's firm name," while Kahn Lucas is listed as the buyer. As to the January 25 order, "Agent Lark International" appears as the seller's firm name only on the last page of the form. In any case, no other party -- including the manufacturers of the goods -- is listed on either of the forms.

On the front near the bottom, the forms contains two paragraphs which deal with the effect of the purchase orders. The first paragraph references the additional terms on the reverse side of the form, and specifically calls attention to the arbitration provision:

"This order is given subject to all of the terms and conditions on the face and reverse sides hereof, including the provisions for arbitration . . . all of which are accepted by seller. This order supersedes seller's confirmation form, if any, and constitutes the entire contract between buyer and seller."

The second paragraph stipulates the methods by which the purchase orders may be accepted by the seller and become a binding contract:

"This order shall become a contract for the entire quantity specified above either (a) when signed by seller and returned to buyer, or (b) when seller retains this order without written objection for ten days, or (c) when seller delivers all or any part of the merchandise ordered hereunder or (d) when seller has otherwise manifested assent to the terms and conditions hereof."

At the very bottom of the forms in capital letters, it states, "additional terms and conditions on reverse side."

The reverse side of the forms, which is captioned "additional terms and conditions," contains, among other provisions, an arbitration clause and a choice of law clause. The arbitration clause states:

"Any controversy arising out of or relating to this Order . . . shall be resolved by arbitration in the City of New York, pursuant to the Rules then obtaining of the General Arbitration Council of the Textile Industry. . . . The parties consent to the application of the New York or Federal Arbitration Statutes and to the jurisdiction of the Supreme Court of the State of New York, and of the United States District Court of the Southern District of New York, for all purposes in connection with said arbitration. . . ."

The choice of law clause states:

"The validity of this Order and construction of the provisions hereof, shall be determined in accordance with the laws of the State of New York."

Lark does not dispute that it received the purchase orders and that it did not object to them. In fact, Lark performed under the purchase orders. In conjunction with the manufacturer, Lark arranged for the purchase of raw materials and it oversaw the production schedule and assured quality control by conducting regular inspections. Lark inspected the goods before they were shipped, and arranged for their shipment. Most of the goods were ultimately delivered, although Kahn Lucas contends that they were late or nonconforming in other respects.

In connection with this transaction, Kahn Lucas sent documentation only to Lark, not to any of the manufacturers. In addition, Kahn Lucas paid Lark directly for the goods through letters of credit which listed Lark as sole beneficiary. Lark provided the documentation required by the letters of credit and drew down on them.

Lark contends that it was merely Kahn Lucas' buying agent, and that Kahn Lucas' contracts were with the manufacturers themselves. Lark notes that the purchase orders were drafted and signed by Kahn Lucas only. According to Lark, the purchase orders state the terms regarding the purchase of goods from the manufacturers as sellers.

Lark contends that in December 1994, Kahn Lucas employees traveled to the Philippines, met with various manufacturers, and selected those with whom Kahn Lucas would deal. Kahn Lucas personally negotiated with each manufacturer and specified which product styles would be awarded to which manufacturers. According to Kahn Lucas, however, Lark provided it with the list of manufacturers, allowed it to choose among them, arranged the appointments, and provided it with a schedule of the meetings.

In the upper left-hand corner of the purchase orders there is an order number accompanied by text which states that the number "must appear on [the seller's] invoice." The purchase orders also state, near the middle, that the "purchase order number must appear on all invoices -- bills of lading -- cartons or rolls." Lark has submitted invoices from Seven Star Textile Company, one of the manufacturers in this transaction. These invoices and other shipping documents refer to Kahn Lucas' purchase orders by number, and state that they are "sold by order and account and risks of" Kahn Lucas.

Discussion

Subject Matter Jurisdiction

Kahn Lucas' complaint predicated subject matter jurisdiction on diversity of citizenship pursuant to 28 U.S.C. § 1332. Kahn Lucas is a New York corporation, and Lark is a Hong Kong corporation. After the briefing of the motion to compel arbitration, the Second Circuit issued an opinion in which it held that a Hong Kong corporation is not a "citizen or subject" of a "foreign state" for purposes of the diversity statute. Matimak Trading Co. v. Khalily, 1997 U.S. App. LEXIS 16464, 1997 WL 353473, at *1-*11 (2d Cir. 1997). Accordingly, under Matimak, because Lark is a Hong Kong corporation, this Court does not have diversity subject matter jurisdiction over this action.[2]

Kahn Lucas has requested the Court to treat its complaint and motion to compel arbitration as a petition to compel arbitration, arguing that this Court has subject matter jurisdiction through Chapter 2 of the federal Arbitration Act ("the Act"), which implements the Convention. 9 U.S.C. § 201 note.[3] Section 203 of the Act states that "an action or proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States." 9 U.S.C. § 203 The Act defines when an agreement to arbitrate falls under the Convention:

"An arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention. An agreement or award arising out of such a relationship which is entirely between citizens of the United States shall be deemed not to fall under the Convention . . . ." 9 U.S.C. § 202.

In order for this Court to have federal question subject matter jurisdiction, the dispute between Kahn Lucas and Lark must "fall under" the Convention. The Convention requires Contracting States (which include all countries even possibly relevant here -- the United States, the Philippines, the United Kingdom, Hong Kong, and China,[4] to

"recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration." Convention, Art. II(1), reprinted at 9 U.S.C. § 201 note.

Therefore, in order to determine whether the Convention applies, this Court must engage in a four-step analysis:

(1) Is there an agreement in writing to arbitrate the subject of the dispute?

(2) Does the agreement provide for arbitration in the territory of a signatory of the Convention?

(3) Does the agreement arise out of a legal relationship, whether contractual or not, which is considered as commercial?

(4) Is a party to the agreement not an American citizen, or does the commercial relationship have some reasonable relation to one or more foreign states?

Ledee v. Ceramiche Ragno, 684 F.2d 184, 186-87 (1st Cir. 1982). See also Cargill Int'l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1018 (2d Cir. 1993); Pan Atlantic Group, Inc. v. Republic Ins. Co., 878 F. Supp. 630, 638 (S.D.N.Y. 1995) (DLC).

It is only the first of these questions, whether there is an agreement in writing, that is seriously in dispute here.[5] The Convention defines "agreement in writing" as including "an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams." Convention, Art. II(2). As the Fifth Circuit has held, this definition includes either:

"(1) an arbitral clause in a contract or

"(2) an arbitration agreement, (a) signed by the parties or (b) contained in an exchange of letters or telegrams." Sphere Drake Ins. PLC. v. Marine Towing, Inc., 16 F.3d 666, 669 (5th Cir. 1994).

Thus, an arbitral clause in a contract is sufficient to implicate the Convention. That is, an "agreement in writing" does not necessarily have to be either signed by the parties or contained in an exchange of letters or telegrams, as long as the Court is otherwise able to find "an arbitral clause in a contract."[6] If there is an arbitral clause in a contract between Kahn Lucas and Lark, then the Convention applies, and this Court has subject matter jurisdiction. Consequently, under the Convention and its implementing legislation, this Court would have the power to compel arbitration. 9 U.S.C. § 206.

Lark also cites Severonickel v. Gaston Reymenants, 115 F.3d 265 (4th Cir. 1997). In that case the agreement allegedly containing the arbitration clause was not introduced into evidence and one of the parties declined to stipulate even to the existence of the document. Id. at 266. In these circumstances, the court found that the party claiming the existence of federal jurisdiction under the Convention had failed to establish the existence of an arbitration agreement. Id. at 268.

While neither Kahn Lucas' Complaint nor its motion to confirm arbitration asserts a claim under the Convention, Kahn Lucas has moved this Court to deem its Complaint amended accordingly and to convert the Complaint and motion to a Petition to Compel Arbitration. This motion is granted. There is no unfairness to Lark since the key issue still remains whether there is an agreement to arbitrate between the parties.

Existence of a Contract to Arbitrate Between the Parties

Kahn Lucas argues that its two purchase orders constitute a contract between it and Lark wherein the parties agreed to arbitrate any dispute arising out of the transactions contemplated by the forms. In deciding whether a contract to arbitrate exists, the Court must engage in a two-step process. First, the court must determine whether the parties agreed to arbitrate their dispute. Second, the court must assess "whether the scope of that agreement encompasses the asserted claims." David L. Threlkeld & Co. v. Metallgesellschaft Ltd. (London), 923 F.2d 245, 249 (2d Cir. 1991). The Second Circuit has made clear that "federal policy strongly favors arbitration as an alternative dispute resolution process." Id. at 248. This policy is "even stronger in the context of international business transactions," id., such as the transaction at issue here.

As a threshold issue, this Court must ascertain what body of substantive law to apply. In an ordinary case under the Act, the question of whether a contract to arbitrate was created is governed by state law. Perry v. Thomas, 482 U.S. 483, 492 n.9, 96 L. Ed. 2d 426, 107 S. Ct. 2520 (1987); Progressive Casualty Ins. Co. v. C.A. Reaseguradora Nacional De Venezuela, 991 F.2d 42, 45-46 (2d Cir. 1993). But see Genesco, Inc. v. T. Kakiuchi & Co., Ltd., 815 F.2d 840, 845 (2d Cir. 1987) (stating that contract formation "is determined under federal law"). In disputes governed by the Convention, however, federal law applies.[7] See, e.g., David L. Threlkeld, 923 F.2d at 249-50; Filanto, S.p.A. v. Chilewich Int'l Corp., 789 F. Supp. 1229, 1234-36 (S.D.N.Y. 1992), app. dismissed, 984 F.2d 58 (2d Cir. 1993).[8]

Lark raises several arguments as to why it should not be bound by the arbitration clause in the purchase orders. Lark first contends that it is not a party to the purchase orders because it was not the "seller" or "manufacturer" in the actual transaction, and that therefore the purchase orders' references to it as "seller" are "erroneous." Lark argues that it acted as Kahn Lucas' buying agent, not as a seller, and that the manufacturers who ultimately shipped the goods directly to Kahn Lucas are the "sellers" contemplated by the purchase orders. In support of this position, Lark cites cases which hold that an agent is not liable on a contract it signs on behalf of a disclosed principal. See, e.g., Lerner v. Amalgamated Clothing & Textile Wkrs. Union, 938 F.2d 2 (2d Cir. 1991) (holding president of corporation not bound to arbitrate personally where he signed contract in official capacity as corporate officer).

I find that the purchase orders embody an agreement between Kahn Lucas and Lark for the sale of goods, as opposed to an agreement between Kahn Lucas and the manufacturers. Kahn Lucas and Lark are the only parties referenced in the purchase orders. Lark is specifically identified as the entity from which the goods were ordered.[9] Kahn Lucas paid only Lark, and no other party, for the goods referenced in the purchase orders. Lark's position that the purchase orders are contracts between Kahn Lucas and the manufacturers is belied by the fact that the only parties which could possibly be bound by the purchase orders are the only parties listed -- Kahn Lucas and Lark.[10]

The next issue is whether the purchase orders create a binding contract between the parties.[11] In this case, the purchase orders were offers to buy, which Lark accepted when it performed pursuant to the orders. The orders themselves state on their face that they can be accepted by failure to object within ten days, by delivering all or part of the goods, or by otherwise manifesting assent. Lark accepted the offer embodied in the purchase orders by ordering the goods from the manufacturers, overseeing production, complying with the other terms of the letters of credit, and arranging for the shipment of the goods. Section 2-206(1)(a) of the Uniform Commercial Code states that:

"an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable under the circumstances."

The following subsection, Section 2-206(1)(b) states that:

"an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods. . . ."

Other courts have reached similar results under U.C.C. § 2-206. See, e.g., Avila Group, Inc. v. Norma J. of California, 426 F. Supp. 537, 542-43 (S.D.N.Y. 1977) (Weinfeld, J.) (holding, in part, that under U.C.C. 2-206(1)(b), shipping of part of goods was acceptance of "offer" embodied in purchase order which contained arbitration clause). [12]

Several other cases, while not relying specifically on U.C.C. § 2-206, also have permitted arbitration under analogous circumstances. In Pervel Indus., Inc. v. T M Wallcovering, Inc., 871 F.2d 7 (2d Cir. 1989), for example, the seller sent a confirmation form which contained an arbitration clause. The buyer signed some of the forms and returned them, but did not sign others. The Second Circuit held that

"Where, as here, a manufacture has a well established custom of sending purchase order confirmations containing an arbitration clause, a buyer who has made numerous purchases over a period of time, receiving in each instance a standard confirmation form which it either signed and returned or retained without objection, is bound by the arbitration provision." Pervel Indus., 871 F.2d at 8.

This is especially so, the court held, "in industries such as fabrics and textiles where the specialized nature of the produce has led to the widespread use of arbitration clauses and knowledgeable arbitrators." Id. In fact, in another case, the Second Circuit acknowledged the "widespread use of arbitration clauses in the textile industry," and held that this fact should put a party "on notice that its agreement probably contains such a clause." Genesco, Inc., 815 F.2d at 846.

Lark argues that it did not sign the purchase orders, and that therefore it should not be bound by them. But the mere fact that Lark did not sign the forms is insufficient to show that there is no binding contract between the parties.

"It is well-established that a party may be bound by an agreement to arbitrate even absent a signature. Further, while the [Federal Arbitration] Act requires a writing, it does not require that the writing be signed by the parties." Genesco, Inc., 815 F.2d at 846. See also Brett Fabrics, Inc. v. Garan, Inc., 170 A.D.2d 253, 565 N.Y.S.2d 521, 521 (App. Div. 1st Dep't 1991).

In addition, as noted above, this same conclusion is compelled by the language of the Convention's definition of "agreement in writing." See Sphere Drake Ins., 16 F.3d at 669.

Moreover, it is irrelevant that there is no evidence that the parties specifically discussed the arbitration clause itself. In Genesco, Inc., the Second Circuit rejected this argument, stating that "we focus not on whether there was subjective agreement as to each clause in the contract, but on whether there was an objective agreement with respect to the entire contract." Genesco, Inc., 815 F.2d at 846. See also Just In-Materials Designs, Ltd. v. I.T.A.D. Assoc., Inc., 61 N.Y.2d 882, 474 N.Y.S.2d 470, 471, 462 N.E.2d 1188 (N.Y. 1984) (retention of broker's sales note and seller's contract form, both containing arbitration clauses, and acceptance and payment for goods is ratification of contract and arbitration clause, "even though the latter provision had never been expressly discussed with either party"); Astor Chocolate Corp. v. Mikroverk Ltd., 704 F. Supp. 30, 34 (E.D.N.Y. 1989). Lark manifested its assent to the purchase orders when it performed pursuant to their terms and drew down payment on the letter of credit.

Finally, this case is not a case involving a "battle of the forms," governed by U.C.C. § 2-207, where the parties exchange written forms which contain conflicting terms, or where an oral agreement is reached which is confirmed by a writing containing additional terms. See, e.g., Supak & Sons Mfg Co. v. Pervel Indus., Inc., 593 F.2d 135 (4th Cir. 1979); Schubtex, Inc. v. Allen Snyder, Inc., 49 N.Y.2d 1, 424 N.Y.S.2d 133, 399 N.E.2d 1154 (N.Y. 1979); Marlene Indus. Corp. v. Carnac Textiles, Inc., 45 N.Y.2d 327, 408 N.Y.S.2d 410, 380 N.E.2d 239 (N.Y. 1978). Here, there is only one writing evidencing the agreement between the parties, and it contains an arbitration clause. Nor is this a case in which a party is sought to be bound simply because it failed to object to a written confirmation form or purchase order. Here, evidence of an express intention to be bound by the writing can be gleaned from Lark's performance under the purchase orders.

The second step in determining whether to compel arbitration is to ascertain whether the dispute between the parties is within the scope of the arbitration clause. The clauses at issue here require arbitration of "any controversy arising out of or relating to" the purchase orders. Lark does not contest that Kahn Lucas' claims that the goods were nonconforming, delivered late, or not delivered at all, arise out of or relate to the purchase orders.

Conclusion

This Court grants Kahn Lucas' motion to convert the present motion to compel into a petition to compel based on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Because there is an "agreement in writing" to arbitrate between Kahn Lucas and Lark, the Convention applies to this case. Accordingly, this Court has subject matter jurisdiction, and the power to compel arbitration pursuant to the Convention. Therefore, Kahn Lucas' petition to compel arbitration is granted. The Clerk of Court shall enter Judgment for the petitioner Kahn Lucas.

SO ORDERED:

Dated: New York, New York

August 6, 1997

Denise Cote

United States District Judge

FOOTNOTES

1. Contrary to Kahn Lucas' argument, this Court did not decide in the February 24 Opinion that Lark was bound by a contract to arbitrate.

2. The Matimak opinion was based on the status of Hong Kong as a British colony. On July 1, 1997, however, Hong Kong reverted to Chinese rule. Matimak, 1997 U.S. App. LEXIS 16464, 1997 WL 353473, at *1. Nevertheless, this change of events does not affect the relevance of Matimak to this case because diversity of citizenship "is determined as of the commencement of an action." Id.

3. Subject matter jurisdiction is not available under Chapter 1 of the Arbitration Act for two reasons. First, insofar as this is an international transaction involving one party who is not a U.S. citizen, Chapter 2 of the Act applies, rather than Chapter 1. Second, in any event, Chapter 1 of the Act does not provide an independent basis for federal subject matter jurisdiction. 9 U.S.C. § 4; Moses H. Cone Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n. 32, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983).

4. The United States, the Philippines, the United Kingdom, and China are all listed as having agreed to the Convention. The footnote to the listing for the United Kingdom indicates that Hong Kong is also governed by the Convention. Lark suggests in its letter brief that Hong Kong is currently not governed by the Arbitration Convention because China's formal notice to the U.N. that Hong Kong continues to be covered does not take effect until ninety days after the notice. Whether Hong Kong's coverage has "lapsed" is irrelevant because the United States is a signatory to the Convention, and its obligation to enforce arbitration agreements remains. Accordingly, the Convention applies here.

5. The other three questions may all be answered in the affirmative. First, the arbitration clause at issue here provides for arbitration in New York, which, as part of the United States, is in the territory of a signatory to the Convention. Second, the relationship here no doubt is a commercial one. Third, one of the parties to the "agreement," if one is found, is Lark, which is not an American citizen.

6. To the extent Sen Mar, Inc. v. Tiger Petroleum Corp., 774 F. Supp. 879, 882-83 (S.D.N.Y. 1991), reaches a different conclusion regarding the proper reading of this provision of the Convention, this Court declines to follow it.

7. The parties have assumed that New York law governs and have relied almost exclusively on New York precedent. In addition, the purchase orders contain a choice of law clause designating New York law as governing their validity and construction.

8. In ascertaining the content of the federal law of contracts to apply in cases governed by the Convention, at least one court has applied the United Nations Convention on Contracts for the International Sale of Goods ("Sale of Goods Convention"), rather than the Uniform Commercial Code. See Filanto, 789 F. Supp. at 1237. The Sale of Goods Convention has been adopted by the United States, and governs cases involving international commerce where both parties to the contract have places of business in signatory nations. Sale of Goods Convention, Art. 1(1)(a), (b); Filanto, 789 F. Supp. at 1236. Even if the Sale of Goods Convention were applicable, it would very likely lead to the same result reached below, insofar as its provision regarding acceptance by performance is similar to the Uniform Commercial Code adopted in New York. See Sale of Goods Convention, Art. 18(3) ("if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods . . . without notice to the offeror, the acceptance is effective at the moment the act is performed. . . .").

9. As noted by Lark, this Court, in its prior opinion on the personal jurisdiction issue, stated in dicta that "Lark is not a seller or manufacturer." Kahn Lucas Lancaster, Inc. v. Lark Int'l Ltd., 956 F. Supp. 1131, 1133 (S.D.N.Y. 1997). While Lark may not be a manufacturer of clothing or the original seller, here it was functioning as a seller of the clothing, as evidenced by (1) the purchase orders, (2) the fact that Lark performed pursuant to them, and (3) the fact that Kahn Lucas paid Lark directly for the full value of the goods.

10. Under this construction of the document, Lark's agency cases are irrelevant. Lark does not contend, and the evidence does not support, that it was an agent for the seller. That is, this is not a case where Kahn Lucas is trying to hold Lark (the seller's agent) to the contract despite the fact that its "principal" (the manufacturer) is disclosed.

11. The Second Circuit has held that New York's requirement that a contract to arbitrate be proven by "express, unequivocal agreement" is preempted by the Act because New York's rule is a more stringent standard than the preponderance of the evidence standard New York applies to other contracts, and federal law does not permit discriminatory treatment of arbitration agreements. Progressive Casualty, 991 F.2d at 46.

12. In an apparent attempt to argue that the U.C.C. does not apply to this case because the transaction was not for the sale of goods, Lark cites F.W. Woolworth Co. v. Ad-Mat, Inc., 177 A.D.2d 302, 576 N.Y.S.2d 23, 24 (1st Dep't 1991), for the proposition that a contract to provide agency services is not governed by the U.C.C. statute of limitations. But here, unlike in Woolworth, the purchase orders are a contract for the sale of goods. Pursuant to that contract, Lark arranged for the production and shipment of the goods, and was paid for them. While Lark did also provide agency services, the aim of the purchase orders was to purchase goods. The purchase orders, therefore, are contracts for the sale of goods.