Hong Kong’s Status as a Contracting State under the CISG in the United States of America

Abstract

Currently, the applicability of the Covenant on Contracts for the International Sale of Goods (CISG) to Hong Kong is unsettled law in the United States legal system. This is a problem because of the amount of trade Hong Kong and the United States engage in, as well as the fact that the point of the CISG is to create uniformity in the application of laws to international contracts. The split authority in the American court systems creates confusion for merchants who wish to do business in Hong Kong. The American court system needs to examine the law of the CISG and determine if the CISG applies to Hong Kong based on China’s signing of the treaty. This means that the different interpretations of Hong Kong’s status under the CISG must be analyzed to determine which approach is appropriate. There are two main court decisions in the United States that have dealt with the issue of Hong Kong, the CNA and Innotex decisions. CNA found that Hong Kong is bound by the CISG, while Innotex was persuaded by a French court decision and stated that Hong Kong is not bound by the CISG. This paper examines the reasoning of both of those court decisions, as well as the less important decisions in the United States, evaluating the authorities relied on by the courts and other scholarship and legal authorities available to decide what is the correct interpretation of Hong Kong’s status under the CISG. By examining the available scholarship, Hong Kong’s legal status in regards to China, the language of the CISG itself and the reasons given by the courts, it seems clear that the CISG must apply to transactions involving Hong Kong parties, meaning that subsequent legal decisions in the United States must follow the reasoning of CNA and that the legal reasoning in Innotex must be abandoned.