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CISG CASE PRESENTATION

China 4 April 2001 Wuhan Intermediate People's Court [District Court] of Hubei Province (Korea Hendai General Trade Company v. China Hubei Province Metal Import & Export Company) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010404c1.html]

Primary source(s) of information for case presentation: Case text

Case Table of Contents


Case identification

DATE OF DECISION: 20010404 (4 April 2001)

JURISDICTION: People's Republic of China

TRIBUNAL: Wuhan Intermediate People's Court [District Court] of Hubei Province

JUDGE(S): Li, Yihong (Chief Judge); Ai, Zhihua and Yin, Wei (Agent Judges)

CASE NUMBER/DOCKET NUMBER: Unavailable

CASE NAME: Korea Hendai General Trade Company v. China Hubei Province Metal Import & Export Company

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Republic of Korea (plaintiff)

BUYER'S COUNTRY: People's Republic of China (defendant)

GOODS INVOLVED: Stainless steel coils


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 78

Classification of issues using UNCITRAL classification code numbers:

53A [Buyer's obligation to pay price of goods];

78A [Interest on delay in receiving price or any other sum in arrears]

Descriptors: Price ; Interest

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Chinese): CISG-China Case [IPC/08]: <http://aff.whu.edu.cn/cisgchina/en/news_view.asp?newsid=70>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Wuhan Intermediate People's Court of Hubei Province [4 April 2001]

Korea Hendai General Trade Company v. China Hubei Province Metal Import & Export Company

Translation [*] by Meihua Xu [**]

[PROCEEDINGS]

PARTIES AND COUNSEL. Plaintiff (hereafter, [Seller]): Korea Hendai General Trade Company; Address: 140-2, __, Seoul, Korea; Legal Representative: Zheng, Zaiguan, Representative Director; Attorneys: Xin, Zhengqiang and Liu, Yuge, lawyers of Beijing Yuecheng Law Firm. Defendant: China Hubei Province Metal Import & Export Company (hereafter, [Buyer]); Address: 8 Jianghan North Road, Hankou, Wuhan, Hubei Province, China; Legal Representative: Xiao, Bingyuan, President; Agent: Xiang, Yi, employee of the [Buyer].

The court accepted this case involving a dispute on payment between the [Buyer] and the [Seller], and formed a collegiate bench to hear the case. The agent of the [Seller], Liu, Yuge and the agent of the [Buyer], Xiang, Yi, attended the court session. The case has been concluded.

POSITION OF THE PARTIES

[Seller]'s position

The [Seller] alleges that on 30 October 1995, the [Buyer] and the [Seller] signed a sales contract by which the [Seller] was to provide 300 tons of stainless steel coil to the [Buyer] for a total price of US $770,280 C & F, and the [Buyer] was to make payment within 90 days of the B/L by D/A.

After the conclusion of the contract, the [Seller] delivered goods worth US $776,468.22 to the [Buyer] and provided the entire documents to the [Buyer] after the [Buyer] accepted the payment amount. The [Buyer] made a down payment of US $115,542 but delayed in paying US $99,935 after taking delivery of the goods, with US $560,991.22 being in arrears. On 6 November 1996, the [Buyer] provided a payment plan to the [Seller]. However, the [Buyer] has not paid any further amount. Therefore, the [Seller] asks the court to protect its legal rights and to rule that:

   -    The [Buyer] shall pay to the [Seller] US $400,000, the payment in arrears, and the economic loss incurred by the [Seller], i.e., renminbi [RMB] 300,000;
 
   -    The [Seller] reserves the right to ask for payment of the remaining US $160,991.22.

The [Seller] provided the following evidence to support its claims:

  1. The sales contract signed by the parties on 30 October 1995; and

  2. The payment plan provided by the [Buyer] on 6 November 1996.

[Buyer]'s position

The [Buyer] argued at the court session that:

The [Seller]'s allegation that the [Buyer] delayed in making payment of US $99,935 does not conform to the facts. The [Buyer] actually paid US $200,000. Because of fraud on the part of [Buyer]'s client, Jiangbei Industry and Trade Development Company, Penjiang District, Jiangmen City, Guangdong (hereafter, "Jiangbei Company"), with whom [Buyer] had an import agent relationship, the [Buyer] was unable to make payment to the [Seller] on time. Therefore, the [Buyer] asks the court to add Jiangbei Company as a third party.

The following evidence was provided by the [Buyer].

  1. Two Foreign Currency Exchange forms with the [Buyer] as the purchaser and US $100,000 on each form issued by the International Business Department of China Industry and Commercial Bank Hubei Branch on 14 June 1996 and 23 September 1996, respectively;

  2. The import agent agreement signed by the [Buyer] and Jiangbei Company on 1 September 1995;

  3. The case reporting material submitted by the [Buyer] to Wuhan Public Security Bureau Jianghan Office (hereafter, "Jinghan Government Office") on __ June 1998 (it was indicated as 32 June 1998 in the original text);

  4. The material regarding the case acceptance and investigation on Huang, Bingliang, the legal representative of Jiangbei Company, issued by Jiangbei Government Office on 8 January 2001.

After verifications conducted during the case procedure, the [Buyer] raised no objections to the contract provided by the [Seller], the evidence of the payment plan, and the [Seller]'s statement on the price for the contract, the price for the goods actually delivered, and the payment made in advance. After checking the payment account, the [Seller] has no objection to the fact alleged by the [Buyer] that except for the down payment, the [Buyer] has paid US $200,000 to the [Seller]. The [Seller] expresses that it will not change its claim, however, it will relinquish its statement that the [Seller] reserves the right to ask for the remaining payment. As to the related evidence submitted by the [Buyer] for adding the third party, the [Seller] does not accept this.

At the court session, the dispute between the [Buyer] and the [Seller]'s focused on the following issue:

The [Buyer] and Jiangbei Company signed an import agent contract, and in order to perform this contract, the [Buyer] and the [Seller] signed the international sales of goods contract in this case. The issue in dispute that the [Buyer] has raised is whether, in order to recover the payment, the [Seller] must add Jiangbei Company as a third party to this case.

The [Seller] alleges that [Buyer]'s relationship with Jiangbei Company is a separate legal relationship which should not be processed together with this case. On the other hand, the [Buyer] argues that based on the Regulations on International Trade Agency of the PRC, the client shall bear civil liability to the supplier of the sales contract. Therefore, adding Jiangbei Company as a third party is beneficial for the [Seller] to recover payment.

The court ascertained after investigation that on 30 October 1995, the [Buyer] and the [Seller] signed a sales contract with the following terms:

   -    Goods: The [Seller] was to provide 300 tons of stainless steel coil to the [Buyer];
   -    Price: The total price for the goods was US $770,280 C&F;
   -    Payment: The transaction adopts the international payment method of having the bank as the consignee, providing documents after the acceptance of payment and respecting business reputation; the expiration date of the business money order was within 90 days after the [Buyer] receives the B/L;
   -    Other terms: The contract has stipulations on other main terms of the contract, including the name of the goods, specifications, transportation method, and destination port, however, there was no stipulation on the applicable law.

After the conclusion of the contract, the [Seller] issued its business invoice and sent it together with the B/L to the bank, asking the bank to collect payment from the [Buyer]. The [Buyer] paid US $115,542 in advance. After accepting the payment amount, the [Buyer] obtained the documents from the accepting bank, by providing which, the [Buyer] took delivery of the goods with an actual value of US $776,468.22.

After the business money order expired, the [Buyer] failed to make payment. Afterward, the [Buyer] paid US $200,000 late with US $460,926.22 in arrears. On 6 November 1996, the [Buyer] provided a payment plan to the [Seller], promising that the [Buyer] would make the payment in arrears before 31 May 1997 by installment payment. However, the [Buyer] has not made any payment, which leads to the dispute in this case.

It is also ascertained that on 1 September 1995, the [Buyer] and Jiangbei Company signed an import agent contract, by which Jiangbei Company entrusted the [Buyer] to import 450 tons of stainless steel coil. In order to perform the aforesaid contract, the [Buyer] signed the contract in this case with the [Seller]. After the goods delivered by the [Seller] arrived at the destination port, the [Buyer] completed the customs application and the procedures for taking delivery of the goods and delivered the goods to Jiangbei Company. However, because Jiangbei Company misappropriated the price for the goods, and failed to make payment to the [Buyer] as stipulated in the agent contract, the result was that the [Buyer] was unable to make payment to the [Seller] on time. The [Buyer] has reported the case to Jiangbei Government Office due to Jiangbei Company's fraud, and that case is being investigated.

RULING OF THE COPURT

This court holds that the [Buyer] and the [Seller] have an international sale of goods relationship, and that the contract entered into by them is in accord with the relevant provisions of the CISG and the trade terms and payment method conform to international trade usages, which reflect the true minds of the two parties. Therefore, the contract is effective.

The [Buyer] failed to make payment in accordance with the contract. Therefore, it shall take the responsibility for breach of contract and this court accepts the [Seller]'s claim to have the [Buyer] responsible for the payment in arrears and the interest on the delayed payment. The court accepts the [Seller]'s decision to relinquish its right on the remaining payment.

The parties failed to stipulate the applicable law at the time of the conclusion of their contract. The places of business of the [Buyer] and the [Seller], China and Korea, are Contracting States of the CISG. Therefore, based on article 1(1)(a) of the CISG, the CISG is applicable to the contract in this case.

The "Regulations on International Trade Agency" (hereafter, the "Regulations") issued by the PRC regulate the rights and obligations of the consignor and consignee. Article 11 of the Regulations stipulates that if the contract is delayed due to the nonperformance of the consignor as stipulated in the agent contract, the consignor shall bear the entire consequences incurred thereof by the consignee. This stipulation is in accord with the [Buyer]'s obligation to make payment to the [Seller] under their international sales contract. Thus, the court does not accept the [Buyer]'s request to assign Jiangbei Company as a third party to bear civil liability to the [Seller].

Based on articles 53 and 78 of the CISG and article 128 of the Civil Procedure Law of the PRC, the court rules that:

The [Buyer] shall pay US $400,000 to the [Seller] and the interest on the aforesaid delayed payment (calculate from 6 November 1996 to the day of actual payment based on bank loan interest rate on US dollars at the same time. This interest shall be paid within ___ after being exchanged into RMB).

The case acceptance fee for this case is RMB 28,110, which shall be borne by the [Buyer].

To file objection to this decision, the Plaintiff [Seller] must appeal within thirty days and the Defendant [Buyer] must appeal within fifteen days with Hubei Higher People's Court after receipt of the award with copies for the parties.

Chief Judge: Li, Yihong; Agent Judge: Ai, Zhihua; Agent Judge: Yin, Wei; Clerk: Fu, Jianqing

4 April 2001


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of the Republic of Korea is referred to as [Seller] and Defendant of the People's Republic of China is referred to as [Buyer]. Amounts in the currency of the United States (dollars) are indicated as [US $]; amounts in the currency of the People's Republic of China (renminbi) are indicated as [RMB].

** Meihua Xu, LL.M. University of Pittsburgh School of Law on an Alcoa Scholarship. She received her Bachelor of Law degree, with the receipt of Scholarship granted by the Ministry of Education, Japan, from Waseda University, Tokyo, Japan. Her focus is on International Business Law and International Business related case study.

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Pace Law School Institute of International Commercial Law - Last updated May 11, 2010
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