B&R CasesTM

一带一路案例 TM

ThyssenKrupp Metallurgical Products GmbH, Germany

v. Sinochem International (Overseas) Pte. Ltd.,

A Dispute over a Contract for the International Sale and Purchase of Goods

B&R Typical Case 2 Batch 1 Case 2

(Released by the Supreme People’s Court on July 7, 2015)

CHINA GUIDING CASES PROJECT

March 1, 2018 Edition∗

∗ The citation of this translation of the Typical Case is:《德国蒂森克虏伯冶金产品有限责任公司与中化国

际（新加坡）有限公司国际货物买卖合同纠纷案》(ThyssenKrupp Metallurgical Products GmbH, Germany v. Sinochem International (Overseas) Pte. Ltd., A Dispute over a Contract for the International Sale and Purchase of Goods), STANFORD LAW SCHOOL CHINA GUIDING CASES PROJECT, B&R CasesTM, Typical Case 2 (TC2), Mar. 1, 2018 Edition, http://cgc.law.stanford.edu/belt-and-road/b-and-r-cases/typical-case-2. For the original version of this case, see 人民法院为“一带一路”建设提供司法服务和保障的典型案例 (Typical Cases Concerning Judicial Services and Safeguards Provided by the People’s Courts for the “Belt and Road” Construction),《最高人民法院网》

(WWW.COURT.GOV.CN), July 7, 2015, http://www.court.gov.cn/zixun-xiangqing-14897.html.

This document was primarily prepared by Sean Webb and Dr. Mei Gechlik; it was finalized by Dimitri Phillips and Dr. Mei Gechlik. We thank Wenjie Ou and Zhaoyi Song for their research assistance. Minor editing, such as splitting long paragraphs, adding a few words included in square brackets, and boldfacing the headings, was done to make the piece more comprehensible to readers; all footnotes, unless otherwise noted, have been added by the China Guiding Cases Project. The following text is otherwise a direct translation of the original text released by the Supreme People’s Court.

B&R CasesTM is a serial publication of the China Guiding Cases Project that provides full-text versions and high-quality English translations of court cases in China that are related to the country’s Belt and Road Initiative.

Accurately Applying an International Treaty

Supporting in Accordance with Law the Governing Law Chosen by the Parties

I. Basic Facts of the Case

On April 11, 2008, Sinochem Overseas Company1and ThyssenKrupp Company Germany2 signed the Procurement Contract for the purchase of petroleum coke. In accordance with the contract, Sinochem Overseas Company made the entire payment for the goods, but the HGI number3 of the petroleum coke delivered by ThyssenKrupp Company Germany was only 32. Sinochem Overseas Company claimed that [the conduct of] ThyssenKrupp Company Germany constituted a fundamental breach of the contract and requested [the court] to order the contract avoided4 and ThyssenKrupp Company Germany to return the payment for the goods and pay compensation for losses.

In the first-instance [judgment], the High People’s Court of Jiangsu Province opined:5 According to the relevant provisions of the United Nations Convention on Contracts for the

1 The original text reads “中化新加坡公司” and is translated here as “Sinochem Overseas Company”. In the case name, this party is referred to as “中化国际（新加坡）有限公司”, which is translated here as “Sinochem International (Overseas) Pte. Ltd.” in accordance with the name found on the company’s website, at http://www.sinochemintl.com/about/branchoverseas. 2 The original text reads “德国克虏伯公司” and is translated here as “ThyssenKrupp Company Germany”. In the case name, this party is referred to as “德国蒂森克虏伯冶金产品有限责任公司”, which is translated here as “ThyssenKrupp Metallurgical Products GmbH, Germany”, with “ThyssenKrupp Metallurgical Products GmbH” in accordance with the translated name found in the (2013) Min Si Zhong Zi No. 35 Civil Judgment as well as records of the company pertaining to the time of the Typical Case, though the company currently seems to go by the name “thyssenkrupp Raw Materials GmbH”. See （2013）民四终字第 35 号民事判决 (“(2013) Min Si Zhong Zi No. 35 Civil Judgment”), rendered on June 30, 2014, full text available on the China Guiding Cases Project’s website, at http://cgc.law.stanford.edu/judgments/spc-2013-min-si-zhong-zi-35-civil-judgment [hereinafter Second-Instance Judgment]; see also, e.g., https://www.handelsregister.de/rp_web/welcome.do and http://www.bloomberg.com/research /stocks/private/snapshot.asp?privcapId=20726992. 3 The original text reads “HGI”, which is an abbreviation for the term “Hardgrove Grindability Index”. Named after Ralph M. Hardgrove, the inventor of the measurement procedure, HGI measures the resistance to crushing of materials such as coal and petroleum coke. The smaller the HGI, the harder and less grindable the material. For more information about HGI, see N.C. Sinha, A.K. Moitra, & S. Majumdar, Some Methods for Calculating Hardgrove Grindability Index of Coals, JOURNAL OF MINES, METALS & FUELS, Vol. 10, Issue No. 11 (1962), http://cimfr.csircentral.net/1329. 4 The original text reads “解除合同”, which is translated here as “the contract avoided” in accordance with the expression used in Article 49(1)(a) of the United Nations Convention on Contracts for the International Sale of Goods, infra note 6. According to Article 49(1): “The buyer may declare the contract avoided: (a) if the failure by the seller to perform any of his obligations under the contract or this Convention amounts to a fundamental breach of contract.” 5 As reported by the second-instance judgment of this case, this judgment is （2009）苏民三初字第 0004 号

民事判决 (“(2009) Su Min San Chu Zi No. 0004 Civil Judgment”), rendered on December 19, 2012. See Second-Instance Judgment, supra note 2.

International Sale of Goods,6 the HGI [value] of the petroleum coke provided by ThyssenKrupp Company Germany was far below the standard agreed upon in the contract, making it difficult to sell the petroleum coke in [China’s7] domestic market. The purposes anticipated at the signing of the sale and purchase contract could not be accomplished and, therefore, the conduct of ThyssenKrupp Company Germany constituted a fundamental breach of the contract. [The court] decided to support the litigation requests of Sinochem Overseas Company. ThyssenKrupp Company Germany appealed to the Supreme People’s Court.

II. Results of the Adjudication

The Supreme People’s Court handled the case and opined:8 The places of business of the two parties of the case involving the dispute over a contract for the international sale and purchase of goods were located in Singapore and Germany. These two countries are both contracting states to the United Nations Convention on Contracts for the International Sale of Goods and the parties did not exclude the application of the Convention. Therefore, in the handling of this case, the Convention applied first. With respect to issues involved in the handling of this case that were not regulated by provisions of the Convention, such as the issue of the validity of the contract and the issue of the transfer of ownership, [the court] should apply the law of the United States as chosen by the parties. According to the provisions of the United Nations Convention on Contracts for the International Sale of Goods, the goods delivered by ThyssenKrupp Company Germany were not in conformity with the contract and [this conduct] constituted a breach of the contract. However, Sinochem Overseas Company 9 was able to resell the goods for a reasonable price and [this situation] fell outside the circumstances that constituted a fundamental breach of contract as provided by the Convention.10 On June 30, 2014 and on this basis, the judgment of the final-

6 United Nations Convention on Contracts for the International Sale of Goods, Apr. 11, 1980, S. Treaty Doc. No. 98-9 (1983), 1489 U.N.T.S. 3, http://www.uncitral.org/pdf/english/texts/sales/cisg/V1056997-CISG-e-book.pdf. The Chinese version is available at https://www.uncitral.org/pdf/chinese/texts/sales/cisg/V1056996-CISG-c.pdf. The Arabic, Chinese, English, French, Russian, and Spanish texts of the Convention are equally authentic. 7 The original text reads “国内市场” (“domestic market”), which, according to the second-instance judgment of this case, refers to “中国市场” (“China’s market”). See Second-Instance Judgment, supra note 2. 8 See Second-Instance Judgment, supra note 2. 9 The original text reads “新加坡石化公司”, which translates literally to “Singaporean Petrochemical Company”. This is likely a typographical error because, in the Second-Instance Judgment, the Supreme People’s Court reports that “中化新加坡公司” (“Sinochem Overseas Company”) resold the goods for a reasonable price. Therefore, we translate “新加坡石化公司” as “Sinochem Overseas Company”, using our translation for “中化新加坡

公司”. 10 See United Nations Convention on Contracts for the International Sale of Goods, supra note 6, Article 25:

A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result. (“一方当事人违反合同的结果，如使另一方当事人蒙受损害，以至于实际上剥夺了他根据合同规定有权期待得到的东西，即为 根本违反合同，除非违反合同

instance [court] was rendered, revoking the original judgment and amending the holding [to require] that ThyssenKrupp Company Germany be responsible for part of the payment for the goods and losses [associated with] the storage charges.

III. Typical Significance

This case accurately applies an international treaty and, where matters are not regulated by the international treaty, supports in accordance with law the governing law chosen by the parties. This case clarifies the standard for determining a fundamental breach of contract [when] the United Nations Convention on Contracts for the International Sale of Goods applies, strengthens the uniformity, stability, and predictability of the application of conventions in China’s11 judicial practice, and strongly safeguards the orderly carrying-out of international trade.

一方并不预知而且一个同等资格、 通情达理的人处于相同情况中也没有理由预知会发生这种结果。”)

11 The original text reads “我国” (“my/our country”) and is translated here as “China”.