Construction Industry Participants Beware: CISG and CISOP and Their Impact on Overseas Procurement

In this blog post, authors Glenn Haley and Horace Pang (Bryan Cave) discuss the implications of Hong Kong’s adoption of the United Nations Convention on Contracts for the International Sale of Goods (CISG), which came into force in December 2022 through the Sale of Goods (United Nations Convention) Ordinance (Cap. 641). The CISG, a widely adopted international treaty governing cross-border sales contracts, introduces a substantive legal framework that now directly affects Hong Kong-based construction industry players and others who source goods internationally. As a result, parties selecting Hong Kong law may inadvertently trigger the application of the CISG unless they explicitly opt out.

The CISG’s application depends on several factors, including the territorial and transactional scope of the contract. It covers agreements between parties in different contracting states or where a contracting state’s law applies under private international law. Notably, even when dealing with non-signatory countries, choosing Hong Kong law can result in CISG application. However, the CISG excludes certain types of transactions, such as consumer goods or contracts where services predominate, which is especially relevant to construction supply contracts that often involve mixed obligations. The authors recommend that contracting parties clarify the intended applicability of the CISG to avoid unintended legal consequences.

The subject matter scope of the CISG is limited to the formation of contracts and the obligations and remedies of buyers and sellers. However, its interaction with domestic Hong Kong law can create legal ambiguity, particularly in areas not governed by the CISG—such as contract validity, property transfer, or liability for personal injury. The Hong Kong Department of Justice has raised concerns about potential incompatibilities, especially regarding misrepresentation and penalty clauses. These unresolved issues highlight the importance of careful contract drafting and legal foresight when dealing with cross-border sales under Hong Kong law post-CISG adoption…

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