Significance for optimizing the ecological environment by court

Basic Case:
A Company is a foreign-invested enterprise established in the Pilot Free Trade Zone, specializing in import and export trade. Hanser Company has signed two sales contracts with Italian Company, which stipulate that Italian Company will purchase crushed leather materials from Italian suppliers for Hanser Company. It is also agreed that if the contract cannot be fulfilled due to customs inspection or other reasons, the corresponding breach of contract liability will be exempted. The goods involved in the case were identified as “leftovers from finished leather, leather products, or recycled leather” after customs inspection and sampling for inspection, and are solid waste prohibited from import in China. The customs imposed penalties on the Italian company. Hanser Company filed a lawsuit to terminate two sales contracts and ordered A Company to return the payment and pay interest on fund occupation.

Judgment result:
The Intermediate People’s Court held in the first instance that the subject matter of the sales contract in question belongs to solid waste that is prohibited from being imported in China. The contract violates the mandatory provisions of laws and administrative regulations, so the contract is invalid. The two companies are aware that the goods involved in the case belong to solid waste prohibited from import in China. Both parties are at fault in the signing and performance of the contract, and should bear responsibility according to their respective faults. The court ruled that A Company would refund Hanser Company the payment. Both parties are dissatisfied and file an appeal. The second instance judgment of the High People’s Court rejected the appeal and upheld the original judgment.

Typical significance:
Both legal protection and supervision are the complete connotation of the legalized business environment in the pilot free trade zone. In recent years, China has deepened the reform of the management system for solid waste and achieved significant results. This case clarifies that the contract for importing solid waste is an invalid contract that violates the laws and regulations of China. It effectively cuts off the entry of foreign waste into China in accordance with the law, regulates and guides domestic and foreign investors to operate in good faith and legally, and is of great significance for optimizing the ecological environment of the free trade pilot zone and protecting people’s physical health.