- Henan Luoyang Jianxi District People’s Court
- Luoyang Singnal Fire Ltd. v. Luoyang LYC Bearing Corp. (Group)
LONG-TERM CONTRACTS - LEASE CONTRACT - BETWEEN TWO CHINESE COMPANIES - GOVERNED BY CHINESE LAW
"COMMENTS" BY CHINESE JUDGES ON THEIR DECISIONS - NOT LEGALLY BINDING - DECISION AWARDING DAMAGES FOR FUNDAMENTAL BREACH - REFERENCE TO UNIDROIT PRINCIPLES, CISG AND PRINCIPLES OF EUROPEAN CONTRACT LAW IN A "COMMENT" WRITTEN BY MEMBERS OF THE COURT
Luoyang Singnal Fire Ltd. filed a case against Luoyang LYC Bearing Corp. (Group) before Henan Luoyang Jianxi District People’s Court, claming damages for the defendant’s breach of a purely domestic lease contract between these two Chinese parties. The court referred to the Contract Law of the People’s Republic of China and ruled that the plaintiff should be fully compensated.
This case was later selected for a 'case comment' written by the judges who rendered the judgment. In this 'comment', the judges relied upon the UNIDROIT Principles, the CISG and the PECL - none of which were expressly mentioned in the judgment - to support their decision on damages. Moreover, the three sets of rules were invoked in general without reference to the specific articles. Here, it is not clear whether the UNIDROIT Principles were indeed taken into account by the judges in making their decision, or were referred to by the authors of the 'comment' for the purpose of increasing the persuasiveness of the 'comment' (and the decision). In any case, the reference to the UNIDROIT Principles in the 'comment' indicates that the Principles have attracted the attention of the judges, and are considered as having some degree of persuasive value. Finally, although 'case comments' of this type are circulated among the courts, often published and intended as guidelines to the judges (particularly those of lower courts) who may be in charge of similar cases, it should be noted that they are not legally binding under Chinese law.