Typical case in white paper on foreign-related, Hong Kong, Macao and Taiwan-related commercial adjudication (I)

Resolving cross-border appraisal challenges in sales contract disputes

In 2014, a technology company purchased over ten thousand photovoltaic (PV) modules from a business management company. These modules were installed at a power station invested and constructed by the technology company in the Republic of Ghana in Africa. After grid connection, the power output failed to meet the required standards. The technology company alleged that the PV modules provided by the business management company were of substandard quality and filed a lawsuit with the court, demanding that the business management company refund and compensate it. As the parties disputed whether quality issues existed in the PV modules and what caused them, the court organized a cross-border judicial appraisal of the 8,099 modules involved in the case.

The Beijing Fourth Intermediate People's Court, 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 the business management company should compensate the technology company for economic losses amounting to 1,093,585.47 yuan (around $153, 521) plus interest.

The technology company appealed the decision. 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 have increasingly participated in infrastructure construction and industrial cooperation in countries involved in the Belt and Road Initiative through overseas ventures, leading to increased cross-border sales contract disputes.

Cross-border appraisals serve as a "technical key"  in such cases. The appraisal conclusions directly determine the finding any contract breach and  loss allocation, serving as a crucial tool for resolving transnational transaction challenges and balancing the rights of the parties involved.

This case was the first cross-border forensic appraisal case in Beijing. The successful completion of the cross-border appraisal and the smooth adjudication of this case not only resolved a dispute for an enterprise engaged in a strategic emerging industry of national importance, but also provided the court with valuable experience and guidance for organizing future cross-border appraisals. This enhances the confidence of Chinese enterprises in "going global" and effectively promotes the sharing of benefits among countries involved in the Belt and Road Initiative.