China Justice Observer

中司观察

EnglishArabicChinese (Simplified)DutchFrenchGermanHindiItalianJapaneseKoreanPortugueseRussianSpanishSwedishHebrewIndonesianVietnameseThaiTurkishMalay

Chinese Court First Applies CISG Advisory Opinion on Overdue Payment Interest Rate

Tue, 01 Apr 2025
Categories: China Legal Trends

On 13 Feb. 2025, the Shanghai International Commercial Court, which had been established less than two months earlier—concluded a dispute over an international contract for the sale of goods. In resolving the issue of what interest rate to be applied when the breaching party fails to pay on time under the United Nations Convention on Contracts for the International Sale of Goods (CISG), the court, for the first time in China, referenced and applied the CISG Advisory Council Opinion No. 14.

This marks the first case in which a Chinese court has referred to and applied a CISG Advisory Council opinion.

The dispute arose between a German company and a Chinese trading company over an international sale of goods contract, where the German company sold industrial components to the Chinese company. However, despite repeated requests for payment after delivery by the German company, no payment was received. The German company then sued the Chinese company for overdue payment and interest on the late payment.

A key issue in the lawsuit was determining the date from which interest should begin to accrue and the interest rate to be applied once the buyer was in default. Because both China and Germany are contracting states to the CISG and neither party has excluded the application of CISG, the CISG shall be applicable in the dispute.

Although the CISG requires buyers to pay interest for late payments (Article 78), it does not specify interest standards. The Shanghai International Commercial Court, referring to the CISG Advisory Committee Opinion No. 14, directly applied the law of the creditor’s place of business (Germany) to determine the interest rate, rather than following the conflict of laws rules of the forum. This case provides a reference example for global judicial practice and maintains the uniform application of international sales law rules.

 

 

Photo by Mark de Jong on Unsplash

Contributors: CJO Staff Contributors Team

Save as PDF

You might also like

China Enacts Landmark Private Economy Promotion Law

China enacted its landmark first Private Economy Promotion Law, effective May 20, 2025, to guarantee fair competition, streamline market access via a unified negative list, and bolster private enterprises through financing, innovation, and service support.

China Strengthens Criminal IP Protection with New Rules

In April 2025, China’s top court and procuratorate jointly issued a new judicial interpretation to clarify standards for handling criminal intellectual property infringement cases, aiming to strengthen IP protection, particularly in the service sector.

SPC’s 2024 Typical IP Cases Include AI Face-Swap Ruling

In April 2025, China’s Supreme People’s Court released eight typical IP cases, highlighting judicial responses to emerging issues in AI, gaming, and biotech, including a landmark ruling on AI face-swapping copyright infringement.

China Eases Tax Refunds to Boost Inbound Tourist Spending

In 2025, China has lowered its departure tax refund threshold from 500 RMB to 200 RMB and doubled cash refund limits to 20,000 RMB while expanding eligible stores and streamlining processes, aiming to boost inbound tourism spending and promote Chinese products.