CCTV News: On February 12, the Supreme People's Court issued the "Reply of the Supreme People's Court on the Calculation of Interest on Overdue Payment of Foreign Currencies and Hong Kong, Macao and Taiwan Currencies" (hereinafter referred to as the "Reply"). In order to better understand and apply the "Reply", the head of the Fourth Civil Division of the Supreme People's Court answered a reporter's question.

1. Can you briefly introduce the background, drafting process and significance of the release of the "Approval"?

In the foreign-related and civil and commercial trial practices involving Hong Kong, Macao and Taiwan, various contract disputes such as cross-border goods purchase, loan, and contracting often involve the identification of overdue payment interest. When the currency agreed in the contract is foreign currency and Hong Kong, Macao and Taiwan currencies, but the contract does not clearly stipulate the calculation method of liquidated damages or breach of contract losses for overdue payments, the people's court needs to calculate the amount of interest on overdue payments by determining the interest rate standards of foreign currency and Hong Kong, Macao and Taiwan currencies. With the advancement of the pace of deepening the reform of foreign currency interest rates in the marketization of foreign currency interest rates, the People's Bank of China has no longer announced a unified foreign currency deposit and loan interest rate to the public since May 2015. Therefore, the calculation standards for overdue payment interest on foreign currencies and Hong Kong, Macao and Taiwan currencies in court trial practices in various places are inconsistent, which is not conducive to the unity of the judgment standards and needs to be regulated urgently. Some Higher People's Courts also filed a request to the Supreme People's Court on this issue.

Based on in-depth research and soliciting opinions from the legislative body, interest rate authority, foreign exchange administration authority, commerce authority, etc., we have made clear provisions on the calculation standards for overdue payment interest in foreign currencies. In addition, when hearing civil and commercial cases involving Hong Kong, Macao and Taiwan, how to determine the calculation standards for overdue payment interest in Hong Kong, Macao and NTD is also a very common problem in judicial practice. To this end, the "Approval" specifically stipulates the calculation standards for overdue payment interest in Hong Kong dollars, Macau dollars and Taiwan dollars.

2. What is the main content of the "Approval"? How are the calculation standards for the interest on overdue payments in foreign currencies determined?

The "Reply" calculates the interest on overdue payments in foreign currencies, which are divided into two situations: parties have agreements and no agreements. First, if the parties have agreed in advance the calculation standards for the overdue interest rate or reached an agreement on it later, the overdue payment interest shall be calculated according to the principle of respecting the autonomy of the parties' will and the agreement of the parties. Since different legal laws may apply to foreign-related civil and commercial disputes, the laws of different countries have different provisions on interest on late payments, and many countries have restrictions on the highest interest rate. Therefore, Article 1 of the "Reply" stipulates that the agreed calculation standard for overdue interest rates exceeds the upper limit of the applicable legal provisions of the disputes involved in the case, the excess will not be supported.

Secondly, for the parties that do not agree on the calculation standards for the overdue interest rate or the agreement is unclear, the "Reply" determines the applicable interest rate standards for the calculation standards for the overdue interest rate for common foreign currencies such as the US dollar, euro, and pound; for the calculation standards for the calculation standards for the overdue interest rate for other foreign currencies, it is stipulated that the benchmark interest rate for the currency published on the official website of the central bank of the relevant countries can be determined.

When choosing the applicable interest rate standard for overdue payment interest in foreign currency currencies, factors such as the authority, breadth of application, and convenience of execution are mainly considered. Taking the common US dollar as an example, the current interest rate standards for US dollar are: (1) The average interest rate for US dollar loans published in the appendix to the "China Monetary Policy Implementation Report" regularly published by the official website of the People's Bank of China. The term of this interest rate is relatively complete, divided into five different terms: within 3 months, 3 (inclusive) to 6 months, 6 (inclusive) to 12 months, 1 year, and more than 1 year. The interest rate standard is closer to the actual loan interest rate that enterprises can obtain. (2) The US dollar-guaranteed overnight financing rate (SOFR), is a new benchmark interest rate jointly compiled by the Federal Reserve Bank of New York and the U.S. Treasury Office of Financial Research. (3) Domestic US dollar interbank release reference rate (CIROR), calculated and published by the China Foreign Exchange Trading Center based on the quotations of banks with high credit ratings and strong foreign currency pricing capabilities. It is an interest-based, unsecured, wholesale foreign currency release interest rate. It is a commonly used US dollar interest rate price in the domestic interbank market and a reference price for the internal US dollar capital cost pricing of domestic banks. It is released on the official website of the China Foreign Exchange Trading Center on a daily basis. After comprehensive consideration and referring to the recommendations of the People's Bank of China, the first interest rate, namely the average interest rate for US dollar loans, is used as the calculation standard for interest on overdue US dollar payments.

Because there are many foreign currencies, it is impossible to list them one by one. For foreign currencies that are not clearly mentioned, the "Reply" clearly states that the calculation of their overdue payment interest can be determined by referring to the benchmark interest rate of the currency published on the official website of the central bank of the relevant countries. The Supreme People's Court will contact the relevant foreign currency interest rate authorities regularly according to the needs of foreign-related trial practices and publish the query website on the relevant website of the Supreme People's Court in a timely manner.

3. The approval stipulates the calculation standards for overdue payment interest in Hong Kong dollars, Macau patacas and Taiwan dollars. How to understand and grasp this regulation?

Article 3 of the "Approval" specifically stipulates the calculation standards for overdue payment interest on Hong Kong dollars, Macau dollars and Taiwan dollars. If the parties have an agreement, it shall be implemented in accordance with the provisions of Article 1 of the "Approval", that is, if the parties agree that priority is given, but the interest rate calculation standard agreed by the parties exceeds the upper limit of the applicable law for the dispute in question, the excess shall not be supported. If the parties have no agreement on the calculation of the interest on late payments or the agreement is unclear, the Hong Kong interbank lending rate, Macau pataca comprehensive interest rate, and Taiwan dollar basic loan interest rate shall be determined respectively.