Chinese Supreme Court applies Arts. 30 and 34 CISG

On 29 September 2019, the Supreme Court of the People’s Republic of China (中华人民共和国最高人民法院) rendered a decision in the matter Tsuwa Club Ltd. v. CECEP (Tianjin) Investment Group Co., Ltd. The decision’s full text, originally in Chinese, has been translated into English by Jie Ouyang, a law student at Peking University Law School (China). We are very grateful for this translation that can be accessed via the case presentation about CISG-online 4836 (below).

The dispute underlying the decision arose from a CISG contract for the sale of mixed scrap metal concluded between a Japenese seller (Tsuwa Club Ltd.) and a Chinese buyer (CECEP (Tianjin) Investment Group Co., Ltd.). The seller delivered the goods to a third party which allegedly acted as an agent of the buyer. It also handed over the documents required for customs declarations to this third party. The buyer argued that the seller had breached its obligations under Arts. 30 and 34 CISG by doing so. Thus, it declared the contract avoided under Art. 49(1)(a) CISG and demanded to be discharged from its obligation to pay the purchase price. On the other hand, the seller argued that it had complied with its obligations and thus requested that the buyer should be ordered to pay the outstanding purchase price for the goods delivered.

In its decision the Chinese Supreme Court held that the buyer had complied with its obligation to deliver goods and handy over any documents relating to them in accordance with Art. 30 CISG: The seller indeed submitted documents relating to the goods, in particular for customs declarations, to a third party. However, this third party was authorized to act as an agent of the buyer based on a sealed letter of authorization issued by the buyer. Moreover, the Court stated that there was an Import Agency Agreement between the third party and the buyer authorizing the former to take delivery of the goods.

As a consequence, the Supreme Court upheld the previous decision which found that the seller had performed its obligations to deliver goods and hand over any documents relating to them. Ultimately, the Court ordered the buyer to pay the outstanding purchase price under Arts. 61 and 62 CISG. Furthermore, it ordered the buyer to pay interest under Art. 78 CISG.