The Supreme People’s Court (SPC) has issued a document on Feb 12 on the calculation rules for overdue payment interest in foreign currencies and the currencies of China’s Hong Kong, Macao and Taiwan regions.
In civil and commercial adjudication involving foreign currencies and the currencies of Hong Kong, Macao, and Taiwan—such as in cross-border sales of goods, loans, and contracting disputes—issues regarding the determination of overdue payment interest frequently arise.
In cases where the currency specified in the contract is a foreign currency or a currency from Hong Kong, Macao or Taiwan, but the contract does not explicitly stipulate the calculation method for default interest or damages for overdue payments, the courts handling relevant cases are required to determine the appropriate interest rate in order to calculate the amount of overdue payment interest. The newly released document provides two scenarios for the calculation of overdue payment interest in foreign currencies: one where the parties have made prior agreements or reached a consensus subsequently on the calculation of overdue interest, and the other where there is no agreement or the agreement is ambiguous
In the latter case, the document specifies applicable interest rate rules for commonly used foreign currencies such as the US dollar, Euro and British pound, and suggests referencing the benchmark interest rates for other foreign currencies be determined by reference to the official websites of respective central banks.
News from: Supreme People’s Court of the People’s Republic of China.
