- (2005) ShaoZhongFaMinErChuZi n.8
- Shaoguan Intermediate People’s Court
- Hengxing Company v. Guangdong Petrochemical Subsidiary Company
LONG-TERM CONTRACTS - LEASE CONTRACT - BETWEEN TWO CHINESE COMPANIES - GOVERNED BY CHINESE LAW - CONTRACT TERMINATED ON ACCOUNT OF HARDSHIP - REFERENCE TO RELEVANT PROVISIONS OF UNIDROIT PRINCIPLES
The Shaoguan Intermediate People’s Court, in terminating a lease contract between Hengxing Business Ltd. (plaintiff) and Guangdong Petroleum Co. of China Petrochemical Co., Ltd. (defendant) on account of hardship, took into account the relevant provisions contained in the UNIDROIT Principles of International Commercial Contracts. On appeal, the defendant challenged the decision on the ground that the court at first instance had erred in referring to the Principles because (a) the Principles are not legally binding under Chinese law; (b) the two parties were domestic companies and hence their relationship should not be subject to the Principles; (c) the parties made no choice of the Principles. The appellate court affirmed the decision on the termination of the contract based on the Contract Law of the People’s Republic of China without touching upon the issue as to whether the reference to the Principles were justified.