A French buyer and a Hong Kong based seller entered into a contract for the sale of telephone boots. Once delivered, the goods were found to be defective, and the seller agreed to have them repaired and returned to the buyer. The buyer paid 30% of the FOB price before the goods were repaired, but the seller never carried out the repairs. The buyer sued the seller, claiming damages.
The Court of Appeal applied Hong Kong law to award the buyer some of the damages it had alleged. The buyer appealed, arguing that CISG should have applied to the merits of the case, since Hong Kong, though administratively autonomous, is not independent from China, i.e. it is not an independent territory according to international law. Since China is a Contracting State to the CISG, the Convention must also apply to Hong Kong.
The Supreme Court pointed out that Art. 93 CISG provides Contracting States which have two or more territorial units in which different systems of law are applicable with the opportunity to declare that CISG is to extend to these territorial units or to one or more of them. During the proceedings, it was established that China, in 1997, made a declaration to the UN in which international conventions that should apply to Hong Kong were indicated; such declaration, which had never been amended, did not include the CISG. Considering that declaration as amounting to a declaration within the meaning of Art. 93 CISG, the Court ruled in favor of the seller, confirming the Court of Appeal's decision as to non-applicability of the Convention.
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