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CISG CASE PRESENTATION

China 9 September 2002 Wuhan Intermediate People's Court [District Court] of Hubei Province (WS China Packaging Import & Export Company Hubei Office v. Russia Phoenix Company and Hubei Province Silk Import & Export Company) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020909c3.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20020909 (9 September 2002)

JURISDICTION: People's Republic of China

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

JUDGE(S): Chen, Jun (Chief Judge); Wan, Xiaoxia (Judge); Ai, Zhihua (Agent Judge)

CASE NUMBER/DOCKET NUMBER: Unavailable

CASE NAME: China Packaging Import & Export Company Hubei Office v. Russia Phoenix Company and Hubei Province Silk Import & Export Company

CASE HISTORY: Unavailable

SELLER'S COUNTRY: People's Republic of China (plaintiff)

BUYER'S COUNTRY: Russian Federation and PRC (defendant)

GOODS INVOLVED: Pigskin coats


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 62

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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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/09]: <http://aff.whu.edu.cn/cisgchina/en/news_view.asp?newsid=69>

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 [9 September 2002]

China Packaging Import & Export Company v. Russia Phoenix Company & Hubei Silk Import & Export Company

Translation [*] by Meihua Xu [**]

[PROCEEDINGS]

PARTIES AND COUNSEL. Plaintiff (hereafter, [Seller]): China Packaging Import & Export Company Hubei Office; Address: 158 Qintai Road, Hanyang, Wuhan, China; Legal Representative: Wang, Jiping, President; Attorney: Gu, Fei, attorney of Hubei Tianyuan Brothers Law Firm; Defendant: Russia Phoenix Company (hereafter, [Buyer]); Address: 5/11 __ Road, Moscow; Legal Representative: Chen, Shigang, manager. Defendant: Hubei Silk Import & Export Company (hereafter, S Company); Address: 36 Lihuangpo Road, Wuhan, China; Legal Representative: Luo, Lianggang, President; Agent: Tan, Chengming, employee of S Company.

This court accepted this case involving a dispute on delayed payment between the [Buyer], S Company, and the [Seller], and formed a collegiate bench to hear the case. The attorney of the [Seller], Gu, Fei, and the agent of S Company, Tan, Chengming, attended the court session. A subpoena has been sent to the [Buyer] legally, however, the [Buyer] refused to present at the court without proper reasons.

This court processed this case by default, and this case has been concluded.

POSITION OF THE PARTIES

[Seller]'s position

The [Seller] alleges that:

On 7 December 1998, the [Buyer] and the [Seller] signed two contracts, Contracts 98CPH-201A, and 98CPH-201B, with the following terms:

-  Goods: 1,018 pigskin coats;
-  Shipping deadline: 12 December 1998;
-  Delivery place: Beijing;
-  Payment term: 30 days forward T/T;
-  Price: US $100,779.05.

On 23 December 1998, the [Seller] delivered the goods to Beijing and handed them over to the [Buyer]. However, the [Buyer] failed to make payment after receiving the goods. After being urged by the [Seller] on 24 June 1999, 6 September 1999, 19 November 1999, 11 July 2000, and 24 September 2001, respectively, the [Buyer] promised to make payment and bear the entire civil liability. However, the [Buyer] actually closed its company and stopped its business in 1999. Since the two employees S Company sent to Russia to run the business came back to China in 1999, the [Buyer] lost its ability to pay the debt. As the entity that started the [Buyer]'s company, S Company failed to perform its liquidation obligation, therefore, the [Seller] asks the court to rule that:

   -    The [Buyer] is obligated to make payment of US $100,779.05 to the [Seller] immediately; and
   -    S Company shall bear the [Buyer]'s debt.

To support its allegation, the [Seller] provides the following evidence to the court:

  1. Contracts 98CPH-201A, and 98CPH-201B, signed by the [Buyer] and the [Seller] on 7 December 1998;
  2. Two releasing permissions issued by Hubei Import & Export Commodity Inspection Bureau on 8 February 1999;
  3. Five payment guarantee letters issued by the [Buyer] from June 1999 to September 2001;
  4. An entrustment letter issued by S Company to Chen, Shigang on 6 August 1999, entrusting Chen, Shigang to be the legal representative of the [Buyer];
  5. Chen, Shigang's testimony issued on 16 April, proving the financial and business condition of the [Buyer].

The [Seller] also submitted related evidence showing the supply channels of the contract goods.

The [Buyer] failed to submit a defense.

S Company's position

S Company argues that:

Even though S Company invested money in the [Buyer]'s business, the [Buyer] is an independent legal entity, and is responsible for its own debt and credit. Even though the [Buyer]'s company has been closed, S Company should not be liable for its debt.

S Company did not provide evidence to the court.

After verifying the evidence provided by the [Seller] to the court, S Company alleges that:

  1. Except for evidence item 5, S Company does not have objection to the other evidence provided by the [Seller];
  2. However, the aforesaid evidence of [Seller] cannot prove S Company's mistake or liability.

FACTS ASCERTAINED BY THE COURT

After examination, it is discovered that on 7 December 1998, the [Seller] and the [Buyer] signed Contracts 98CPH-201A and 98CPH-201B with the following terms:

-  Goods: 1,018 pigskin coats;
-  Price: US $100,779.05;
-  Payment term: FOB Beijing;
-  Shipping deadline: 11 December 1998

After the conclusion of the contract, the [Seller] ordered the 1,018 pigskin coats from Wuhan Xiongying Coat Factory and delivered them to the [Buyer] on 23 December 1998. On 24 June 1999, the [Buyer] sent a letter to the [Seller] stating that it was sorry it not made payment in time and promised to pay the price by the end of October 1999. Later, the [Buyer] sent four payment guarantee letters to the [Seller] with the last letter issued on 24 September 2001, stating that the [Buyer] promised again to deliver the payment in arrears or to provide goods to set off the debt to the [Seller] by 15 October 2001.

It was also ascertained that the [Buyer] was a company invested in by S Company with a registration place in Russia. Based on statements made by the [Buyer] and the [Seller], the [Buyer]'s company was closed in 1999.

This court deems that the contracts in this case are international sales contracts. Since there is no stipulation on the applicable law regulating the rights and obligations of the parties, based on article 142(2) of the Civil Law of the PRC, which stipulates that international trade usages have priority to be applied, and the fact that the countries of both the [Buyer] and the [Seller] are Contracting States of the CISG, the CISG shall be applied to this case.

The [Buyer] failed to make payment to the [Seller] after accepting the goods, which has violated article 53 of the CISG, stating that:

"The [Buyer] must pay the price for the goods and take delivery of them as required by the contract and this Convention."

Thus, the [Seller]'s claim to have the [Buyer] pay the price for the goods under the contract can be established, which the court accepts.

As to the issue of whether S Company shall be liable for the [Buyer]'s debt as the investor of the [Buyer], based on article 184(1) of "opinions on questions regarding the application of the Civil Law of the PRC" issued by the Supreme Court of the PRC, "for a foreign entity, the law of the country of registration shall be its domestic law, and its legal capacity shall be determined by its domestic law."

The [Buyer] was registered in Russia. Therefore, its cancellation and liquidation shall be based on Russian law. Since the two parties failed to provide related Russian law, the [Seller]'s allegation that S Company shall be liable for the debt and credit of the [Buyer] after liquidation has no basis and this allegation cannot be established.

RULLING OF THE COURT

In accordance with article 1(1) and article 62 of the CISG, article 184(1) of "opinions on questions regarding the application of the Civil Law of the PRC" issued by the Supreme Court of the PRC, and article 130 of the Civil Procedure Law of the PRC, the court rules that:

  1. [Buyer] shall make the payment in arrears, i.e., US $100,779.05, to the [Seller] within 30 days of the effective date of this award;
  2. [Seller]'s other claims are dismissed.

The case acceptance fee for this case is renminbi [RMB] 13,364, which shall be borne by the [Buyer].

For objections to this decision, the [Seller] and S Company shall file application for appeal with Hubei Higher People's Court with copies for the parties within 15 days of the arrival of this award and the [Buyer] shall do that within 15 days.

Chief Judge: Chen, Jun; Judge: Wan, Xiaoxia; Agent Judge: Ai, Zhihua


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of the People's Republic of China is referred to as [Seller] and Defendant of Russia 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 March 16, 2010
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