Data
- Date:
- 13-02-2025
- Country:
- China
- Number:
- --
- Court:
- Shanghai International Commercial Court
- Parties:
- --
Keywords
INTEREST RATE (ART. 78 CISG) - DETERMINED BY LAW OF CREDITOR'S COUNTRY - REFERENCE TO CISG-A.C. OPINION No. 14
Abstract
[Draft abstract prepared by Meng Yichu, Liao Yiliang, Li Yiding, ZUEL-ZUR School of Law and Economics, Wuhan]
A German company sold goods to a Chinese company. After delivery, the Chinese buyer failed to pay the purchase price. The buyer claimed it had already transferred the funds to a bank account in Ukraine, based on an email purportedly sent by the seller with updated payment instructions. After repeated demands for payment, the German seller instructed its legal representatives to initiate legal proceedings before the Shanghai Pudong New District People's Court, seeking recovery of the outstanding payment and interest for late payment.
As both parties had their places of business in CISG Contracting States and had not excluded the Convention, the Court applied it to the merits of the dispute. In doing so, the Court considered that, under Arts 53 and 54, the buyer is obliged to pay the price for the goods, while Art. 78 entitles the seller to interest on overdue payments. Since the CISG does not prescribe a specific interest rate, the court referred to the German Civil Code, which provides a higher interest rate for delayed payments than Chinese law.
The buyer argued for the application of Chinese law and cited several precedents. However, the seller successfully invoked CISG Advisory Council Opinion No. 14, which supports applying the law of the creditor’s country to determine the interest rate. The court accepted this reasoning and ruled in favor of the German seller, applying German law to calculate the interest.
Additionally, the buyer presented email correspondence to support its claim of payment. However, the seller demonstrated that the email directing payment to the Ukrainian account had been sent by a fraudster. The email domain differed from the seller’s official address, and further investigation revealed it originated from the United States. The method used—intercepting and manipulating legitimate email threads—was consistent with known cross-border fraud schemes.
Finally, the buyer requested that the case be suspended pending the outcome of the fraud investigation. The Court rejected this request, holding that the alleged fraud was a separate matter and did not preclude resolution of the commercial dispute. The trial proceeded, and judgment was rendered in favor of the German seller.
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