On 12 Feb. 2025, China’s Supreme People’s Court (SPC) issued an “Reply Regarding the Standards of Calculating Interests on Overdue Payment in Foreign, Hong Kong, Macau, and Taiwan Currency” (关于外币及港澳台货币逾期付款利息计算标准的批复, hereinafter the “Reply”), which came into force on 13 Feb. 2025.
Since May 2015, interest rates on foreign currency loans and deposits have been fully marketized, with the People’s Bank of China no longer publishing unified foreign currency lending and deposit rates. As a result, there has been inconsistency in how courts at all levels nationwide calculate interests on overdue payments in foreign, Hong Kong, Macau, and Taiwan currencies. To standardize judicial practice, the SPC has issued this Reply to unify the calculation standards.
The Reply distinguishes between two situations: where there is an agreement between the parties and where there is no agreement. If the parties have agreed to an interest rate on overdue payment that exceeds the applicable legal limit in the governing law, the excess part will not be supported. If there is no agreement, the Reply specifies interest rate standards for common foreign currencies such as the US dollar, Euro, and British pound. For other foreign currencies, the rate can be based on the benchmark rate published by the central bank of the relevant country.
For instance, for the calculation standard of overdue payment interest in US dollars, reference may be made to the average interest rates for US dollar loans within 3 months, 3 to 6 months (inclusive), 6 to 12 months (inclusive), 1 year, and over 1 year, as published in the appendices of the “China Monetary Policy Execution Report”(中国货币政策执行报告) , which is regularly released on the official website of the People’s Bank of China. The specific interest rate shall be determined by the People’s Court based on the circumstances of the case.
With regard to the calculation standard of overdue payment interest in Euros, British Pounds, Japanese Yen, Australian Dollars, Swiss Francs, Canadian Dollars, New Zealand Dollars, and Singapore Dollars, reference may be made to the Euro Interbank Offered Rate (EURIBOR), the Sterling Overnight Index Average (SONIA), the Tokyo Overnight Average Rate (TONA), the Australian Bank Bill Swap Rate (BBSW), the Swiss Average Rate Overnight (SARON), the Canadian Overnight Repo Rate Average (CORRA), the New Zealand Bank Bill Benchmark (BKBM), and the Singapore Overnight Rate Average (SORA), respectively.
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