## Facts

- A Romanian buyer contracted with a U.S. seller to purchase 112 containers of frozen chicken leg quarters for shipment to Bucharest, Romania.
- The contracts were governed by the CISG and included an arbitration clause requiring AAA-ICDR arbitration seated in New York.
- The contracts set shipment windows culminating in a latest shipment date of May 29, 2006.
- After contracting, chicken prices rose sharply and the seller faced supplier shortfalls; the seller also allocated available product to other shipments.
- By May 29, 2006, the seller had failed to ship a substantial portion of the goods.
- On June 2, 2006, Romania announced that, effective June 7, 2006, chicken could not be imported unless certified by that date, making later importation unlawful.
- Between June 2 and June 7, the seller shipped 20 of the remaining 62 containers; 42 containers remained unshipped and could not be imported into Romania after June 7.
- The buyer requested shipment of the remaining goods to an alternative, non-Romanian port; the seller refused and sold the goods elsewhere at higher prices.

## Issues

1. Whether the seller breached the CISG-governed contracts by failing to ship all goods by the contractual deadline.
2. Whether the Romanian import ban excused the seller’s non-performance under CISG Article 79.
3. Whether the seller was required to tender commercially reasonable substitute performance (e.g., shipment to an alternative port) when delivery into Romania became impossible.
4. Whether the buyer could recover lost profits under CISG Article 74 measured by the Romanian market, and whether such damages were foreseeable at contract formation.

## Decision

- The arbitrator found the seller breached by failing to ship all goods by May 29, 2006.
- The arbitrator held the seller was not exempt under CISG Article 79 because performance remained reasonably possible through substitute delivery.
- Applying CISG Article 7(2) gap-filling, the arbitrator relied on U.C.C. § 2-614(1) to require commercially reasonable substitute performance once the agreed delivery method failed due to supervening contingency.
- The arbitrator awarded the buyer lost-profit damages measured by the intended Romanian market, plus costs and attorneys’ fees (addressed in the final award following the interim liability ruling).
- In subsequent confirmation proceedings, a federal district court confirmed the award and rejected vacatur arguments; the court of appeals affirmed, finding at least a “barely colorable” justification for the arbitrator’s analysis.

## Legal Principles

- Under CISG Article 33, failure to ship within the contractually required time constitutes breach, even if trade practice tolerates limited delivery flexibility.
- CISG Article 79 does not excuse non-performance when the obligor can reasonably avoid or overcome the impediment by an available alternative method of performance.
- Under CISG Article 7(2), where the CISG does not expressly resolve the consequences of a failed agreed delivery method, a tribunal may use an appropriate domestic sales-law rule as a gap-filler; U.C.C. § 2-614(1) supports a duty to tender commercially reasonable substitute performance when the agreed manner of delivery becomes unavailable due to unforeseen contingency.
- Under CISG Article 74, lost profits are recoverable if foreseeable at contract formation; foreseeability operates as a cap on recoverable loss rather than requiring damages to be recalculated by reference to a substitute market selected after breach.

## Conclusion

The arbitrator held the seller liable under the CISG for late and incomplete shipment, rejected an Article 79 exemption because substitute delivery was reasonably available, imposed a duty of commercially reasonable substitute performance through CISG gap-filling, and awarded foreseeable lost profits measured by the buyer’s intended Romanian market; later courts confirmed the award under deferential review.


Macromex Srl v. Globex Int’l, Inc., AAA-ICDR Case No. 50181T 0036406 (Interim Award Oct. 23, 2007)