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CISG CASE PRESENTATION

China 30 August 2005 Shanghai High People's Court [Appellate Court] (Shanghai Nuo Bo Metal Products Ltd. v. Tevel International Trading) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/050830c1.html]

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

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Case identification

DATE OF DECISION: 20050830 (30 August 2005)

JURISDICTION: People's Republic of China

TRIBUNAL: Shanghai High People's Court [Appellate Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Hu Gao Min Si (Shang) Zhong Zi Di No. 44

CASE NAME: Shanghai Nuo Bo Metal Products Ltd. v. Tevel International Trading

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Singapore (plaintiff)

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

GOODS INVOLVED: [-]


Classification of issues present

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

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): Click here for Chinese text of case; see also CISG-China Case [HPC/22]: <http://aff.whu.edu.cn/cisgchina/en/news_view.asp?newsid=79>

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

Shanghai High People's Court [Appellate Court]
Shanghai Nuo Bo Metal Products Ltd. v. Tevel International Trading

30 August 2005

Translation [*] by Zheng Xie [**]

-   Proceedings before the Court of First Instance
-   Position of the parties
-   Ruling of the Appellate Court
-   Judgment

The Appellant, Shanghai Nuo Bo Metal Products Ltd. (the [Buyer]) rejected Shanghai No. 1 Intermediate People's Court's Civil Judgment (2003) Hu Yi Zhong Min Wu (Shang) Chu Zi Di No. 136 on the dispute arising out of a sales contract with the Appellee, Tevel International Trading (the [Seller]), and appealed to this Court. This Court accepted the case on 15 March 2005. A collegial bench was formed according to the relevant law, and held a public court session on 29 June 2005. The [Buyer]'s attorney and the [Seller]'s legal representative and attorney were presented at the court session. This case is now closed.

PROCEEDINGS BEFORE THE COURT OF FIRST INSTANCE

The Court of First Instance identified the following facts:

The [Seller] and the [Buyer] had a long term import and export trade relationship. In the transactions between the parties, the [Buyer] instructed the [Seller] to issue the invoices to the [Buyer], and requested the [Seller] to name J & P Company (not a party in this case), but not the [Seller], as "Shipper." On 30 August 2001, the [Seller] sent a letter to the [Buyer] regarding the [Buyer]'s order, and the [Buyer], in its response, requested the [Seller] to issue invoices to the [Buyer], and not to name the [Seller] as "Shipper."

Thereafter, a dispute on payment arose. On 29 July 2003, a director of the [Seller], Xiao Qiaoqing, sent a letter to the [Buyer]'s legal representative requesting the [Buyer] to make payments by T/T for specified transactions. He enclosed two pro forma invoices, and requested the [Buyer] to arrange payments of US $3,784 and 6,036.45 Euro by T/T. On 31 July of the same year, another director of the [Seller], Ramon Alvarez, on behalf of the [Seller], sent a letter to the [Buyer]'s representative stating that if the [Buyer] did not make the payment in advance, the [Seller] would not deliver the goods. On 11 August, the two directors, Xiao Suqing and Ramon Alvarez, jointly sent a letter to the [Buyer]'s legal representative requesting payment of the contract price and service charges, totaling US $3,900 and 161,000 Euro. The [Buyer]'s legal representative sent a letter to the [Seller]'s two directors, Xiao Qiaoqing and Ramon Alvarez, on 15 August of the same year responding to the [Seller]'s and the directors' letters dated 29, 30, 31 July and 11 August 2003, respectively, and clarifying the transactions between the parties and confirming that from September 2003 on, the [Buyer] would pay US $20,000 per month for the overdue contract price. On 11 September 2003, the [Seller] authorized its attorney to send a demand letter to the [Buyer] with an account statement attached urging the [Buyer] to pay the overdue amount of US $170,849.05. The [Buyer]'s legal representative paid the [Seller] US $20,000 on 13 September.

The Court of First Instance held that as the [Buyer]'s place of business was in the jurisdiction of the Court of First Instance, according to Article 24 of the Law of Civil Procedure of the PRC, the Court had jurisdiction over the case. Because the parties' places of business are in Singapore and China, respectively, and Singapore and China are Contracting States of the United Nations Convention on Contracts for the International Sales of Goods (CISG), the CISG should apply to this case. As to the issues, which CISG does not govern, according to the principle of most proximate connection, the laws of the PRC should apply.

Regarding the issue of how to determine the parties to the transactions in this case, the Court of First Instance held that the parties to the transactions were the [Seller] and the [Buyer], and that the [Buyer]'s allegation that the parties to the transactions were the [Buyer] and J & P Company (not a party in this case), or the [Seller] and the [Buyer]'s legal representative (not a party in this case) was not established. The reasons were as follows:

   -    First, the [Buyer] sent numerous letters to the [Seller] with respect to the purchase of goods; the [Buyer]'s orders and the [Seller]'s confirmations constituted the necessary offer and acceptance to establish a sales contract. During this process, J & P Company (not a party in this case) did not participate in the negotiations to establish the contract.
 
   -    Second, according to the [Buyer]'s letters to the [Seller], the [Buyer] required the [Seller] to name J & P Company as the Shipper in bills of lading, but this could only prove that J & P Company was the Shipper, but could not deny that the [Seller] was a party to the transactions.
 
   -    Third, in order to prove the transaction relationship between the [Buyer] and J & P Company (not a party in this case), the [Buyer] submitted the sales contract between the [Buyer] and J & P Company (not a party in this case); however, thereafter, the [Buyer] admitted that the signature of Xiao Qiaoqing, the representative of J & P Company (not a party in this case), in the sales contract submitted by the [Buyer], was not signed by Xiao Qiaoqing at all so it could not be identified that the [Buyer] and J & P Company (not a party in this case) had a sales contractual relationship.
 
   -    Fourth, the [Buyer]'s legal representative, on behalf of the [Buyer], contacted the [Seller] regarding the transactions within the authority of its position, so the legal consequences should be borne by the [Buyer]. During the disputes, the [Seller] sent numerous letters to the [Buyer] stating that if the [Buyer] did not make the payments, the [Seller] would not deliver the goods. In addition, the Consignee in the disputed transactions was the [Buyer].

Therefore, as to the transactions disputed in this case, the [Seller] claimed its rights against the [Buyer], but not against J & P Company or the [Buyer]'s legal representative.

With respect to the issue whether the [Buyer] should pay the [Seller] the disputed amount, the Court of First Instance held that although the [Buyer] alleged that it had already paid all of the amount disputed in this case to J & P Company (not a party in this case), but the [Buyer] did not submit any evidence to prove this, so the Court did not sustain this allegation of the [Buyer]. According to Article 53 of CISG, the buyer should pay the contract price as required by the contract and the CISG. Therefore, after the [Seller] completed the obligation of delivery of the goods according to the contract, the [Buyer] should pay the contract price to the [Seller]. The Court therefore sustained the [Seller]'s claim for the contract price.

As to the [Seller]' claim for interest on the overdue amount, the Court of First Instance held that Article 78 of CISG provides:

"If a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it ..."

Accordingly, the [Seller]'s claim for interest was sustained. As to the [Seller]'s claim for translation fee related to this litigation, because this lacked legal basis, the Court did not sustain this claim.

Based on the above reasons and according to Article 8 of the Contract Law of the People's Republic of China, and Article 53 and Article 78 of CISG, the Court of First Instance handed down the following judgment:

   (1)   The [Buyer] should pay the [Seller] the contract price of US $150,849 plus interest (calculated at the US dollar loan interest rate at the same time from 1 October 2003 to the day when the payment was actually made;
   (2)   The [Seller]'s other claims were dismissed.

POSITION OF THE PARTIES

[Buyer]'s basis for appeal

After the above judgment was handed down, the [Buyer] rejected and appealed to this Court requesting this Court to revoke the judgment of first instance and dismiss the [Seller]'s claims. The [Buyer]'s reasons for appeal were as follows.

[Buyer] alleges that:

1. The determination of the Court of First Instance that the [Seller] and the [Buyer] had a sales contractual relationship lacked sufficient evidence. The shipper recorded in the documents including the bills of lading and commercial invoices, which the [Seller] submitted, was J & P Company (not a party in this case); this proved that all transactions were conducted by the [Buyer] and J & P Company. In addition, the company of the [Buyer]'s legal representative, Nuo Bo Development Company, in Singapore had many business transactions with the [Seller], and the disputed transactions in this case were conducted between the [Buyer]'s legal representative's company and the [Seller]. Moreover, the documents submitted by [Buyer] in the first instance could prove the transactions between the [Buyer] and J & P Company.

2. The debt acknowledged by the [Buyer]'s legal representative in the letter dated 15 August 2003 was owed by the legal representative's company in Singapore, and it should not be borne by the [Buyer].

[Seller]'s response

In the court session, the [Seller] alleged that the Court of First Instance correctly identified the facts and applied the law because of the following reasons:

1. In the documents for the transactions between the parties, there is not only the [Buyer]'s legal representative's signature but also the name of the [Buyer]; the consignee recorded by the pro forma invoices issued by the [Seller] and the bills of lading was the [Buyer]; in addition, it was at the [Buyer]'s request that the issuer and shipper in the commercial invoices and bills of lading should be read as J & P Company. Therefore, the parties to transactions disputed in this case were the [Seller] and the [Buyer], respectively.

2. The [Seller] mentioned that the [Buyer] owed the relevant contract price to the [Seller] in the correspondence dated 29, 30 and 31 July, and 11 August 2003, and the [Buyer] acknowledged that it owed the contract price to the [Seller] in its letter dated 15 August 2003.

3. The seven sets of documents submitted by the [Buyer] were not related to this case; in addition, the legal representative of J & P Company did not sign the contracts corresponding to these documents, so these documents should not be admitted to decide this case.

RULING OF THE APPELLATE COURT

After hearing the case, this Appellate Court held that the Court of First Instance correctly identified the facts.

This Court held that the parties established a long time sales relationship by correspondence, delivery and taking delivery. After the disputes on payment of the contract price arose, the parties negotiated and confirmed the indebtedness through correspondence. Therefore, the [Buyer] should pay the [Seller] the overdue contract price and should compensate the [Seller] for the loss.

The [Buyer] alleged that the facts identified by the Court of First Instance lacked sufficient evidence. This Court noted that although the shipper recorded in the documents, including bills of lading and commercial invoices submitted by the [Seller], was J & P Company (not a party in this case), the orders and pro forma invoices showed that the parties to the transactions were the [Seller] and the [Buyer]. Thereafter, in the letters dated 29, 30 and 31 July, and 11 August 2003, the [Seller] expressed that the [Buyer] owed the contract price to the [Seller]. In the responding letter dated 15 August 2003, the [Buyer]'s legal representative stated:

"In response to your facsimiles/letters dated 29, 30 and 31 July, and 11 August 2003, we clarified the facts as follows ..."

In Item 6 of the above letter, it was expressly stated:

"Payment Schedule for the Overdue Amount: from September 2003: We will pay US $20,000 per month for the overdue amount."

This proved that the overdue amount described in the [Buyer]'s representative's letter referred to that stated in the [Seller]'s correspondence. Thus, the documents and correspondence submitted by the [Seller] could prove the [Seller]'s allegation. On the contrary, the documents submitted by the [Buyer] to prove that the transactions were conducted by the [Buyer] and J & P Company (not a party in this case) could not be admitted in deciding the case according to the relevant law, because the Court of First Instance noted that the signature of J & P Company's legal representative, Xiao Qiaoqing, was not signed by Xiao Qiaoqing at all, and Xiao Qiaoqing denied the effect of this signature. Accordingly, this Court holds that it was not inappropriate for the Court of First Instance to rule that the parties to the transactions were the [Seller] and the [Buyer].

As to the [Buyer]'s allegation that the parties to the transactions were the [Buyer]'s legal representative and the [Seller], because the [Buyer]'s legal representative did not express that its activities were on its own behalf when doing the transactions, this allegation was not established. According to the relevant law of the PRC, the conduct of the [Buyer]'s legal representative is deemed that of the [Buyer]'s.

In sum, this Court did not sustain the [Buyer]'s reasons for the appeal.

The [Buyer] alleged that the debt, which the [Buyer]'s legal representative admitted in the letter dated 15 August 2003, referred to that owed by the legal representative's personal company in Singapore, and should not be borne by the [Buyer]. As stated above, because this letter was in response to the [Seller]'s letters, the debt described in these letters should refer to the same one, i.e., the overdue contract price owed by the [Buyer] to the [Seller]. Therefore, this Court does not sustain the [Buyer]'s appeal.

JUDGMENT

In conclusion, the Court of First Instance correctly identified the facts and applied the law. According to Article 153(1) and Article 158 of the Law of Civil Procedure of the PRC, this Court handed down the following judgment:

   (1)   The appeal is dismissed, and the judgment of the first instance is sustained.
 
   (2)   The litigation fee for the second instance is RMB 16,328, which should be paid by the [Buyer].

This is the final judgment.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellee of Singapore is referred to as [Seller]; Defendant-Appellant 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].

** Zheng Xie, LL.M. Washington University in St. Louis, LL.M., BA in Economics, University of International Business and Economics, Beijing.

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Pace Law School Institute of International Commercial Law - Last updated May 12, 2010
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