Collectibles Import Dispute with Chinese Seller: Rules on Non-Conforming Goods Under CISG

Tribunal	CIETAC (China International Economic and Trade Arbitration Commission)
Date of Award	2000-00-00
Docket No.	CISG/2000/17
Parties	Chinese Buyer (Claimant) v. Hong Kong ( Seller (Respondent)
Goods/Sector	Souvenir coins
Key Issues	Negotiable instruments or money; Autonomy of parties; Scope of Convention; Exculpatory clauses; Avoidance; Fundamental breach Conformity of goods; Examination of goods; Lack of conformity notice, timeliness
CISG Articles	Art. 2, 4, 6, 25, 35, 38, 39, 46

Facts

In 1999 when Macao returned to China, Macao's government decided to issue circulating coin sets to celebrate the return. Each set consists of seven metal coins which were minted by Canada Royal Minting Bureau with the authorization of Macao's government. After minting the coins, Macao's government and the Canada Royal Minting Bureau signed a description and authentication certificate in Chinese, English and Portuguese for the circulating coin sets. The Claimant, International Coins (HK) Ltd. ...

Legal Issues

This case raised the following questions under the CISG:

• Did the breach constitute a "fundamental breach" under CISG Art. 25? The tribunal assessed whether the non-performance substantially deprived the injured party of its contractual expectations — the threshold for invoking avoidance remedies.

• Was the injured party entitled to avoid the contract? Under CISG Art. 49/64, avoidance requires both a fundamental breach and proper notice under Art. 26. The tribunal examined whether these preconditions were met.

• Did the goods conform to the contract? The tribunal examined whether the delivered goods met the contractual specifications, quality standards, and fitness requirements under CISG Art. 35.

Practical Takeaways for International Businesses

1. Define breach thresholds in your contract. CIETAC applies the Art. 25 "fundamental breach" test strictly. Explicit remedies and termination triggers reduce ambiguity and protect both parties.

2. Avoidance requires proper notice. Under CISG Art. 26, a declaration of avoidance must be communicated to the other party. Failing to give timely notice can forfeit your right to terminate, even if the breach is fundamental.