On February 12, 2025, the Supreme People's Court (SPC) issued a new interpretation on the calculation of overdue payment interest in foreign currencies, as well as those of Hong Kong/Macao/Taiwan. This interpretation is aimed at resolving inconsistent judicial practice whereby different courts applied different standards in such calculations, which engendered uncertainty in commercial disputes. The new interpretation provides for a unified approach to ensure consistency in handling overdue payment interest in cross-border transactions.
Under the new interpretation, if the parties have agreed on an overdue interest rate, the agreed rate will be applied – provided it does not exceed the maximum limit set by the applicable law. Any part of the agreed interest rate that exceeds the legal limit will not be enforceable, but the portion within the legal limit will remain valid.
If no agreement exists, or the agreed terms are unclear, overdue interest will be calculated based on the following benchmark rates:
|
Currency |
Benchmark Rate |
|
A. Interest Calculation for Other Foreign Currencies |
|
|
U.S. Dollar (USD) |
Based on the average loan interest rates for different maturities (less than 3 months, 3-6 months, 6-12 months, over 1 year) as published in the appendix of the China Monetary Policy Implementation Report by the People's Bank of China. |
|
Euro (EUR) |
EURIBOR (Euro Interbank Offered Rate) |
|
British Pound (GBP) |
SONIA (Sterling Overnight Index Average) |
|
Japanese Yen (JPY) |
TONA (Tokyo Overnight Average Rate) |
|
Australian Dollar (AUD) |
BBSW (Bank Bill Swap Rate) |
|
Swiss Franc (CHF) |
SARON (Swiss Average Rate Overnight) |
|
Canadian Dollar (CAD) |
CORRA (Canadian Overnight Repo Rate Average) |
|
New Zealand Dollar (NZD) |
BKBM (Bank Bill Benchmark Rate) |
|
Singapore Dollar (SGD) |
SORA (Singapore Overnight Rate Average) |
|
B. Interest Calculation for HK/Macao/Taiwan Currencies |
|
|
Hong Kong Dollar (HKD) |
HIBOR (Hong Kong Interbank Offered Rate) |
|
Macao Pataca (MOP) |
Macao Comprehensive Interest Rate |
|
New Taiwan Dollar (TWD) |
Taiwan Basic Lending Rate |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
