Hong Kong to Reap Even More Benefits Thanks to international Trade Law
Hong Kong has always been hailed as one of Asia’s top trading hubs. With the implementation of the international trade law, there are even more benefits to be gained.
The Most Successful Universal Commercial Law Convention
Hong Kong’s standing as an international commerce centre is supported by the National 14th Five-Year Plan. The United Nations Convention on Contracts for the International Sale of Commodities (CISG) has been dubbed “the most successful substantive universal commercial law convention” in the international sale of goods.
Despite the fact that China has been a signatory to the CISG since 1988, the CISG currently does not apply to the Hong Kong Special Administrative Region. It is in Hong Kong’s best interests to implement the CISG in accordance with international practice and the National 14th Five-Year Plan.
The Legislative Council enacted the Sale of Goods (United Nations Convention) Ordinance in September this year, allowing the CISG to be applied to the Hong Kong SAR. In the third quarter of 2022, the ordinance is expected to go into force. Businesses and their legal advisors should prepare for this significant change in our legislation governing foreign sales of products.
At the moment, the CISG has 94 signatories, including more than half of Hong Kong’s top 20 trading partners in terms of overall trade value. Hong Kong businesses must be knowledgeable with and capable of using the CISG as the guiding guidelines for their sale of goods contracts since it ensures a level playing field. This would also eliminate the issue of choice of law when doing business with multiple commercial law regimes.
The Benefits of the Belt and Road Initiative
Apart from the National 14th Five-Year Plan, the government has also launched the Belt and Road Initiative. Around 45 percent of nations and areas involved in the Belt and Road Initiative are also CISG contracting partners.
As a result, the CISG’s extension to Hong Kong provides for a standard legislation to regulate the vast majority of Hong Kong enterprises’ foreign sales transactions, bringing more clarity and predictability to the process, facilitating more deals and transactions.
Parties to an international sale of commodities must choose the law that controls the transaction if the CISG is not adopted. The answer will almost certainly be one of the parties’ domestic sales legislation. The necessity to cope with a variety of regulations from several countries will drive up legal expenses and commercial hazards. By establishing a contemporary and standard system for contracts with many nations for international sales of commodities, the CISG is able to address the applicable law issue.
International Trade Law Leads to Even Greater Development
With national laws explicitly promoting Hong Kong’s development as a leading centre for international legal and dispute resolution services, demand for practitioners able to advise on international commercial transactions is expected to rise.
In the context of enforcing arbitral awards under the New York Convention, this method has proved effective. The addition of Hong Kong to the CISG will encourage more practitioners to improve their capacity to handle international trade disputes, bolstering our position as a global legal centre.