Your Chinese supplier fails to deliver, saying it cannot get the export licence

The case, in five lines

What is brought

A formal demand requiring the supplier to prove the impediment, with an additional period for delivery (art. 47 of the Vienna Convention). Then avoidance, restitution of the advance (arts. 49 and 81(2)) and, if it does not prove exemption under art. 79 or gave late notice, damages, including the price difference on the replacement (arts. 74, 75 and 79(4)).

Before which court

Whichever the contract designates. With an arbitration agreement, the arbitral tribunal of the agreed institution (CIETAC, the China International Economic and Trade Arbitration Commission, the ICC or another). With a clause submitting to the Spanish courts, valid regardless of the supplier's domicile (art. 25 of the Brussels I bis Regulation), the sección civil del Tribunal de Instancia (the civil section of the first-instance court). Without a clause, art. 7 of that Regulation does not reach a supplier domiciled outside the European Union, and Spanish jurisdiction depends on domestic rules; it does reach a European distributor (agreed place of delivery, art. 7(1)(b)). Without an arbitration agreement or an exclusive choice of other courts, suing in China is also possible.

Deadline

There is no single deadline. The supplier must give notice within a reasonable time after it knew or ought to have known of the impediment (art. 79(4)); you set the additional period (art. 47). Without delivery, the Convention puts no time limit on avoidance; after late delivery, it must be declared within a reasonable time after you learn of it (art. 49(2)(a)), and the replacement bought within a reasonable time after avoidance (art. 75). Limitation is set by the law of the contract, not by the Convention: the one chosen or, failing a choice, Chinese law (arts. 3 and 4(1)(a) of the Rome I Regulation). To sue in Spain, the negotiation required by Organic Law 1/2025 is attempted first.

Who can bring it

The buyer that signed the order, against the seller named in it: if you bought from a trading company or a distributor, the claim lies against that seller, not the factory. Only the Chinese exporter applies for the licence, to MOFCOM; you provide the end-user certificate.

Financial risk

If the supplier proves exemption, you may recover the advance but not damages, except those caused by late notice (art. 79(4) and (5)). Avoiding without grounds, or stopping payment without saying so, makes you the party in breach. And whatever is won has to be enforced where the supplier has assets, usually in China, at a cost in time and money: nobody can promise you that you will recover the money.

China withholding the licence is not, on its own, force majeure

Between a company in Spain and one in China, the sale is governed by the 1980 Vienna Convention on Contracts for the International Sale of Goods (CISG), because both countries are parties to it, unless the contract excludes it. The starting point is the contract's force majeure clause, if there is one: which events it covers, how and when notice must be given, and what happens if the impediment drags on. Whatever it does not regulate is decided by art. 79 of the Convention.

Art. 79(1) only exempts the seller if it proves three things: that the impediment was beyond its control, that it could not reasonably be expected to have taken it into account when contracting, and that it could not have avoided or overcome it or its consequences. The burden is the seller's. A MOFCOM decision may be beyond its control, but not if the cause is a late or poorly prepared application, and an email saying ‘they will not give us the licence’ proves nothing.

What nobody tells you is that the date of the contract decides almost everything. China has required a licence for gallium and germanium since 1 August 2023, for graphite since 1 December 2023, for antimony since 15 September 2024 and, under Announcement 18/2025, for seven medium and heavy rare earths and certain magnets since 4 April 2025. A seller that contracted afterwards with a fixed delivery date, without making it conditional on the licence, knew it needed one. In earlier contracts the argument favours the seller, but it must still prove that it applied in time and could not overcome the obstacle.

What China controls today and what the supplier must show you

Before arguing about force majeure, check that your product needs a licence at all. Announcement 18/2025 covers samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium, and samarium-cobalt and neodymium-iron-boron magnets containing terbium or dysprosium; not neodymium magnets without them, and it does not mention products with magnets already fitted. The announcements of 9 October 2025 (more rare earths, lithium batteries, graphite anodes and the 0.1 % value rule for products made outside China, among others) are suspended until 10 November 2026 (Announcement 70/2025), a date that still stands at 15 October 2026. If the supplier relies on a suspended measure or on a product that is not listed, the licence cannot be the impediment.

Only the Chinese exporter can apply for the licence, to MOFCOM, with the contract, the technical description and the end-user certificate (art. 16 of Decree 792, China's dual-use export control regulation). MOFCOM decides within 45 working days of accepting the application, a period suspended while it verifies or consults (art. 17), and the Chinese rules give no effect to its silence. An individual licence covers one export to one end user and lasts up to a year; a general licence covers several exports for up to three years, and only an exporter with an internal compliance system, an export record and stable customers may apply for one (arts. 15 and 16).

That is why the decisive evidence is in the supplier's hands: ask it in writing for the application date, the acceptance, every MOFCOM request and the refusal decision, if there was one, translated, and read the Incoterm, which says who took on the export formalities. If it claims Chinese customs are holding the shipment, remember that customs hold goods when they doubt what was declared (Announcement 18/2025), and an exporter's error is not an impediment beyond its control. And if you bought from a trading company or a European distributor, the factory's problem does not exempt it automatically: it must prove that it too could not overcome it, for example by buying from another licensed exporter (art. 79(1)), and, if it engaged the factory to make the delivery, that the factory would also be exempt (art. 79(2)).

When the delay comes from your side: the end-user certificate

No authority issues the end-user certificate: the end user does (art. 24 of Decree 792), meaning your company if you manufacture or your customer if you resell, and by it undertakes not to change the use or transfer the product without MOFCOM's permission. MOFCOM may also ask for a document issued or certified by a public body in your country: in Spain, the Certificado Internacional de Importación (International Import Certificate) of the Secretaría de Estado de Comercio (the Secretary of State for Trade), which is also issued for goods not subject to control, is applied for on a form your company signs electronically, and is valid for six months, with no possibility of transfer (art. 31 of Royal Decree 679/2014). The rules set no period for issuing it.

This is the defence the supplier has ready: art. 80 of the Convention prevents a party from relying on the other's failure to the extent that it caused it. If your certificate arrived late, stated a vague end use, named a customer on MOFCOM's control list (in 2026, 21 European Union entities, under Announcements 20/2026 and 30/2026) or you did not answer a verification request, the delay is yours to that extent and you cannot claim for it.

Before claiming, therefore, the chronology on your side is reconstructed: when you delivered the certificate and what it said, what else MOFCOM asked for, when the supplier passed it on and what you answered. If you complied and the supplier did not file the application or did not tell you, the delay is the supplier's. And failing to cooperate costs more than this order: MOFCOM may put the importer or the end user on its watch list, after which the exporter can no longer sell to it under a general licence and, for an individual licence, must submit a risk assessment (art. 26 of Decree 792).

Force majeure or not, you can avoid the contract and reclaim the advance

What nobody tells you is that the exemption in art. 79 only protects the supplier against damages: art. 79(5) leaves the buyer's other rights intact. Even if it proves force majeure, you may declare the contract avoided and claim restitution of what you paid (art. 81(2)). And the exemption lasts only as long as the impediment (art. 79(3)): if the licence comes through, the supplier is bound to deliver again, and the contract remains alive if you have not avoided it.

Avoidance requires a fundamental breach, one that substantially deprives you of what you were entitled to expect (arts. 25 and 49(1)(a)), and a delay is open to argument. The safe route is to fix, in writing, a reasonable additional period (art. 47): while it runs you may not resort to other remedies, although you keep damages for the delay, and if it expires without delivery, or the supplier declares that it will not deliver, you may avoid without further debate (art. 49(1)(b)). Set a specific date, reasonable in light of the time MOFCOM still has, and give notice of avoidance by a means that leaves a record.

In the meantime, the balance of the price can wait: art. 71 allows a party to suspend its own performance when, after the contract is concluded, it becomes apparent that the other will not perform a substantial part of its obligations owing to a serious deficiency in its ability to perform, provided it gives immediate notice and performs if the supplier provides adequate assurance. If the goods arrive late before you avoid, you can only do so within a reasonable time after learning of the delivery (art. 49(2)(a)). And avoidance does not free you from the arbitration or jurisdiction clause, which survives (art. 81(1)).

Damages and the replacement purchase: when they are recoverable

If the supplier does not prove exemption, it is liable for the loss suffered and the profit lost, but only up to what it foresaw or ought to have foreseen, when contracting, as a possible consequence of the breach (art. 74). That is why what it knew about your use matters: that the material was for your production line, that your customer had penalty clauses, that there was no other quick source. What appears in emails and orders before signature is worth more than any later explanation. And avoiding the contract does not cost you your damages (art. 45(2)).

The replacement purchase has its own rule: once the contract is avoided, if you buy from someone else in a reasonable manner and within a reasonable time, you may recover the price difference and any further damages (art. 75). The order matters: first avoid, then buy. If you buy first, the difference has to be argued under the general rule in art. 74, and if the licence comes through you may end up with two deliveries. If the new supplier is also Chinese, it will need its own licence and another end-user certificate, and that counts when measuring what time was reasonable.

Even if the supplier is exempt, there is one head of loss it cannot escape: late notice. If you do not receive notice of the impediment and its effects within a reasonable time after it knew or ought to have known of it, the supplier is liable for the damage caused by that lack of notice (art. 79(4)). If it knew weeks earlier that MOFCOM had not accepted the application and told you on the day of shipment, the higher cost of the replacement and the penalty you would have avoided with time may be claimed.

Which law, which court and what can really be recovered

What the Convention does not govern, such as limitation, is governed by the law of the contract: the law chosen by the parties (art. 3 of the Rome I Regulation) or, failing a choice, the law of the seller's country of habitual residence (art. 4(1)(a)), that is, Chinese law, unless the contract is manifestly more closely connected with another country (art. 4(3)). If the contract excluded the Convention and chose Spanish law, force majeure is measured by art. 1105 of the Spanish Civil Code: nobody is liable for what could not be foreseen or, if foreseen, was unavoidable, unless the law or the contract provides otherwise.

The forum is set by the contract. With an arbitration agreement (CIETAC, the ICC or another institution), the dispute goes to arbitration. If the parties chose the Spanish courts, that choice is valid regardless of the supplier's domicile and is exclusive unless otherwise agreed (art. 25 of the Brussels I bis Regulation): the claim is brought before the sección civil del Tribunal de Instancia, after attempting the negotiation required by Organic Law 1/2025. Without a clause, art. 7 of that Regulation is of no use against a Chinese supplier, because it only covers those domiciled in a Member State; it does work against a European distributor, at the agreed place of delivery (art. 7(1)(b)).

Winning is not collecting: the judgment or award has to be recognised and enforced where the supplier has assets, usually in China, at a cost in time and money. That is why the best leverage usually lies before any proceedings: the part of the price you have not yet paid (art. 71), a formal demand that leaves the supplier without the force majeure excuse, and a concrete way out, repayment of the advance or delivery on a fixed date with the licence proved. Nobody can guarantee that you will recover the money; what can be done is to make sure you do not lose it through a missed deadline or a false step.

How we run the case, step by step

1. 1

   Read the contract and pin down the dates

   With the purchase order, the standard terms and the correspondence, we establish the signature date against the date of each Chinese announcement, the delivery date, the Incoterm, the force majeure clause, the governing law and the forum, and when you delivered the end-user certificate and what it said.

2. 2

   Demand proof of the impediment

   A written demand to the supplier: application date, acceptance, requests and MOFCOM decision, with a translation; whether it works under an individual or a general licence; and the composition of the grade it sells you. With an express reservation of all your rights.

3. 3

   Additional period and payments on hold

   In the same letter, an additional period with a fixed date (art. 47 of the Vienna Convention) and immediate notice that you are suspending the rest of the payment until there is a licence (art. 71). If the supplier is not going to deliver, it should say so in writing.

4. 4

   Avoid the contract and claim back the advance

   Once the period expires, or upon refusal, a declaration of avoidance (art. 49) requesting restitution of what was paid (art. 81(2)) and, if there is no exemption or notice came late, damages (arts. 74 and 79(4)).

5. 5

   Make the replacement purchase with the file in order

   After avoidance, a reasonable, documented purchase: the quotes requested, the one chosen, dates and price, so that the difference can be claimed (art. 75). If you buy from another Chinese exporter, we prepare the end-user certificate for your company to sign; that supplier files with MOFCOM.

6. 6

   Negotiate and, failing agreement, claim in the contractual forum

   Framed as a request to negotiate with a clearly defined subject matter, the formal demand also serves as the prior attempt that Organic Law 1/2025 requires before suing in Spain. Without agreement, a claim before the sección civil del Tribunal de Instancia or a request for arbitration, as the contract provides. And in future orders, the licence as a condition of delivery.

The law that applies

• Arts. 79 y 80 de la Convención de Viena de 1980. It exempts the party in breach that proves an impediment beyond its control which it could not be expected to have taken into account when contracting, or to have avoided or overcome; if it engaged a third party to perform, that party must also be exempt. The exemption lasts as long as the impediment, requires notice within a reasonable time and only excludes damages. No party may rely on the other's failure to the extent that it caused it. BOE-A-1991-2552
• Arts. 25, 47 y 49 de la Convención de Viena de 1980. A breach is fundamental when it substantially deprives the other party of what it was entitled to expect. The buyer may fix a reasonable additional period, during which it resorts to no other remedy though it keeps damages for delay, and may avoid if the breach is fundamental or if the seller fails to deliver within that period or declares that it will not; after late delivery, it must avoid within a reasonable time. BOE-A-1991-2552
• Arts. 45, 71 y 81 de la Convención de Viena de 1980. The buyer keeps damages even when it resorts to other remedies, and neither the judge nor the arbitrator may grant the seller a period of grace. Either party may suspend its performance if it is apparent that the other will not perform a substantial part, giving immediate notice. Avoidance releases both parties, save for damages and dispute clauses, and allows what was paid to be claimed back. BOE-A-1991-2552
• Arts. 74 y 75 de la Convención de Viena de 1980. Damages cover the loss suffered and the profit lost, up to what the party in breach foresaw or ought to have foreseen when contracting. Once the contract is avoided, a replacement purchase made in a reasonable manner and within a reasonable time allows the price difference and any further damages to be recovered. BOE-A-1991-2552
• Arts. 3 y 4 del Reglamento Roma I. The law chosen by the parties, expressly or unambiguously, governs; failing a choice, a sale of goods is governed by the law of the seller's country of habitual residence, unless the contract is manifestly more closely connected with another country. 32008R0593
• Arts. 7 y 25 del Reglamento Bruselas I bis. A person domiciled in a Member State may be sued in another before the court for the place where, under the contract, the goods were or should have been delivered. The parties, regardless of their domicile, may choose the courts of a Member State in writing or by durable electronic means, with exclusive jurisdiction unless otherwise agreed. 32012R1215
• Art. 1105 del Código Civil. Except in the cases expressly mentioned by law and those in which the obligation so provides, nobody is liable for events that could not be foreseen or which, if foreseen, were unavoidable. BOE-A-1889-4763
• Art. 31 del RD 679/2014. It sets the control documents for foreign trade in defence material, other material and dual-use items, among them the International Import Certificate issued by the Secretaría de Estado de Comercio for dual-use imports (annex VI.17). They may not be transferred and are valid for six months for submission in the country of origin. BOE-A-2014-8926

Each article checked against the consolidated text published in the BOE (the Spanish official gazette).

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