From: Judiciary answers to 14 DifficultQuestions about Foreign-related Commercial Trials By Ningbo Intermediate People's Court, Zhejiang Province, PRC

Question: In the hearing of a dispute over a contract for the international sale of goods, if both parties' countries of business are parties to the United Nations Convention on Contracts for the International Sale of Goods (“Convention”), and the parties have not agreed on the applicable law of the dispute in the contract, nor have they reached an agreement on the application of the applicable law in the litigation, should the dispute automatically apply to the Convention? Can the court determine the applicable law according to the principle of the closest connection?

Answer: Article 236 of the Civil Procedure Law of the People's Republic of China stipulates that "if the international treaty concluded or acceded to by the People's Republic of China has different provisions from this Law, the provisions of the international treaty shall apply, except for the provisions on which the People's Republic of China has declared reservations", Article 1, paragraph 1 (a), of the Convention stipulates that "this Convention applies to contracts for the sale of goods concluded between parties whose places of business are in different countries, if those countries are Contracting States", and Article 6 of the Convention stipulates that "the parties may not apply this Convention, or derogate from any provision of this Convention or change its effect under the conditions of Article 12". Therefore, in strict accordance with the above provisions, the arbitrariness of the application of the Convention is only reflected in the fact that the parties can exclude its application by agreement. In the case that the parties have not agreed on the applicable law of the dispute in advance and have not reached consensus on the application of the applicable law in the litigation, as long as the countries where the business places of both parties to the international goods purchase and sale contract are both parties to the Convention and there is no situation specified in Article 2 of the Convention, Then the dispute should automatically apply the Convention, and no other applicable law should be determined based on the principle of the closest connection.