Case from BFIPC selected among typical cases involving Belt and Road cooperation

On Sept 25, the Supreme People's Court released the fifth group of typical cases related to Belt and Road cooperation. A case concluded by the Beijing Fourth Intermediate People's Court (BFIPC) was among them.

In 2014, Beijing Xiaocheng Technology Co Ltd (hereinafter referred to as "Xiaocheng") purchased photovoltaic (PV) modules from Jiangsu Zhonghuan Enterprise Management Co Ltd (hereinafter referred to as "Zhonghuan") for installation in a power station it invested and constructed in the Republic of Ghana, Africa.

After grid connection, the power output failed to meet the required standards. Xiaocheng alleged that the PV modules supplied by Zhonghuan were of substandard quality and filed a lawsuit with the BFIPC, demanding that Zhonghuan refund the payment, pay penalties for breach of contract and compensate for its economic losses.

As the parties disputed the existence and cause of quality issues in the PV modules, the court arranged for a cross-border judicial appraisal on the 8,099 modules in question.

The BFIPC, after hearing the case, held that conducting individual tests on all 8,099 modules was practically impossible due to the vast scope, overseas location and complex environment of the site.

After consultation with both parties and the appraisal agency, the court ultimately chose to adopt an appraisal method combining on-site testing in Ghana with laboratory analysis in China, extrapolating overall quality from the samples tested.

Following the technical appraisal and a cost appraisal commissioned by the court, it was ultimately determined that Zhonghuan should compensate Xiaocheng for economic losses amounting to 1,093,585.47 yuan (around $153, 521) plus interest.

Xiaocheng appealed the decision. On Jan 7, 2025, the Beijing High People's Court issued a second-instance judgment, dismissing the appeal and upholding the original judgment.

In recent years, domestic new energy enterprises frequently collaborate with countries involved in the Belt and Road Initiative in infrastructure projects to promote high-quality Belt and Road cooperation. When courts handle disputes arising from such cooperation, cross-border appraisals of related projects or equipment are necessary, which act as a "technical key" in handling such cases. The appraisal conclusions play a critical role in accurately identifying any breach of contract and fairly allocating losses. They serve as a crucial tool for resolving challenges in transnational transactions and balancing the interests of the parties involved.

This case is the first in Beijing to involve cross-border judicial appraisal. The BFIPC (also serving as the Beijing International Commercial Tribunal) organized the parties to carefully study the appraisal plan and bridged the technical gap, providing judicial services and guarantees for Chinese enterprises going global.

The successful execution of this cross-border appraisal and the smooth conclusion of the case serves as an exemplary model for cross-border appraisals. It has demonstrated the role of the judiciary in promoting shared benefits among countries involved in Belt and Road cooperation.