The CISG was adopted in Vienna in 1980 and has so far been ratified by over 90 contracting states (Contracting States), including 12 of Hong Kong’s top 20 trading partners (accounting for more than 75 per cent of the total trading value in Hong Kong), such as Mainland China, the United States, Singapore and South Korea.
The Hong Kong Legislative Council passed the Sale of Goods (United Nations Convention) Ordinance (Cap. 641) (Ordinance) on 29 September 2021, and according to the Sale of Goods (United Nations Convention) Ordinance (Commencement) Notice dated 24 June 2022, the CISG will come into effect on 1 December 2022.
Application of CISG
The CISG will automatically apply to contracts concluded on or after 1 December 2022, if the following three requirements are satisfied:
1. There must be a contract for the sale of goods;
2. The contract must be “international”, i.e., concluded between parties whose places of business are in different States; and
3. The contract must relate to the CISG. In other words, the contract must be:
- Concluded between parties whose places of business are in different Contracting States (Article 1(1)(a)). It is noted that the CISG does not currently automatically apply to Mainland China–Hong Kong sales transactions, but a mutual arrangement is under discussion to achieve this effect in due course;1 or
- Governed by the law of a Contracting State according to the rules of private international law (Article 1(1)(b)). For example, after the Ordinance has come into effect, if an Indian seller and an English buyer have chosen for their contract to be governed by Hong Kong law and any disputes arising out of the contract are to be heard by the Hong Kong courts, since the CISG is applicable to Hong Kong by declaration and notification of the Central People’s Government of the People’s Republic of China as a Contracting State, the CISG will apply (even though neither India nor the UK is a Contracting State).
The parties may also choose the CISG as the governing law in choice of law agreements. After the CISG comes into effect in Hong Kong, choice of law clauses adopting Hong Kong law as the governing law will entail the applicability of the CISG.