JUNE 2015
  • Transfer of Sovereignty and Application of an
    iInternational Convention: CISG in China
    in the Context of “One Country, Two Systems”

    John Shijian Mo

The transfer of sovereignty over the former British colony of Hong Kong and the former Portuguese colony of Macau to China has given rise to an interesting question regarding the application of the United Nations Convention on Contracts for the International Sale of Goods (CISG) to Hong Kong and Macau, the two Special Administrative Regions (SARs) of China. The question is whether CISG extends to these two SARs by virtue of China’s membership of CISG. This article examines the pivotal treaty provision, art.93, and concludes that CISG has not been extended to Hong Kong and Macau. It argues that the more important provision is the one in the Hong Kong Basic Law, reproduced in Macau, which recognises the power of China to extend a treaty of the CISG type where it considers it appropriate to do so and in consultation with the relevant SAR. It concludes by urging China to put an end to the prevailing uncertainty by making a declaration of extension.

CISG; UNCITRAL; conflict of laws; Vienna Convention on the Law of Treaties; Basic Laws of Hong Kong and Macau; People’s Republic of China
Click here to read extracts of the article

The United Nations Convention on Contracts for the International Sale of Goods (CISG), a multilateral treaty developed by the UN Commission on International Trade Law (UNCITRAL) for the purpose of unifying contract law for international sale of goods, is one of the most successful international conventions 1 and provides a common legal framework for international sales transactions with a view to promoting greater efficiency in commercial activities. 2 As of March 2015, there were 83 contracting states to the convention.3 Most developed countries are members of the CISG with perhaps the exception of the United Kingdom (UK) and Portugal. Members of the CISG belong to diverse legal traditions, including both the common law tradition to which UK belongs and the civil law tradition to which Portugal belongs, suggesting that some inconsistency between civil or common law jurisprudence with the CISG philosophy is not the reason for their non-participation.

Perhaps because Hong Kong and Macau were colonies of the UK and Portugal, respectively, until 1997 and 1999, these two territories too remained outside the CISG regime. The return of these two territories to the People’s Republic of China (PRC) when colonial rule came to an end has not led to their participation in CISG, notwithstanding that the PRC has been a participating member of the CISG since 1988. 4

Unlike other local administrative regions (units) of China, which operate directly under administration of the Central Government, the Hong Kong Special Administrative Region (HKSAR) and the Macau Special Administrative Region (MSAR) enjoy a high degree of autonomy. 5 The Basic Law of both Hong Kong and Macau reserve jurisdiction in relation to foreign affairs and defence to the Central People’s Government of China. 6 Importantly, however, both Hong Kong and Macau are allowed to participate, in the name of “Hong Kong, China” or “Macau, China”, in certain international activities and organisations where sovereignty is not a prerequisite for participation. 7 Thus, by authorising the two administrative regions to exercise some functions which, as a matter of constitutional principle, are reserved to the Chinese Central Government, the two basic laws give effect to the unique political philosophy of “One Country, Two Systems”. It is in the context of such relationship that we can best understand problems and challenges in extending the CISG to Hong Kong and Macau.

China resumed sovereignty over Hong Kong in 1997 and Macau in 1999. Had CISG been implemented by the British and Portuguese governments during their colonial administration, they would have continued to be operational in Hong Kong and Macau, surviving the return of the two territories to China. 8 Being a member of the CISG since 1988, China has the constitutional power to extend the CISG to Hong Kong and Macau, if it so wishes, 9 but the Chinese Central Government has not taken any action to do so. In the next three sections of this article, we will discuss issues concerning the possible extension of the CISG to Hong Kong and Macau. Section II examines the relationship between the CISG and the two SARs, explaining how the CISG may affect the interests of a contracting party from a nonCISG member state. Section III reviews the relationship between the Basic Law and the application of the CISG in the two SARs. The author discusses the view that CISG is already part of the law of Hong Kong and Macau and will argue that this view is unsupportable. Section IV discusses arguments for and against extending the CISG to the SARs, explores possible reasons why the UK and Portugal still remain outside the CISG and makes the case why the Chinese central government should consider extending CISG to Hong Kong and Macau.