On 20th March 2010, China Marine Shipping Agency Co., Ltd Tianjin Branch, who acted as agent for Malaysia International Shipping Corporation Berhad (hereinafter “MISC Berhad”), issued an original bill of lading MISCKHI000020873 titled “MISC Berhad”, on which indicated: SHIPPER Aspen Global Trading Inc.; CONSIGNEE/NOTIFY PARTY Shandong Laigang Group Yongfeng Steel Ltd (hereinafter “Yongfeng Steel”); VESSEL NAME/VOYAGE “BUNGA RAYA SEMBILAN”/104E; PLACE OF RECEIPT/PORT OF LOADING Karachi, Pakistan, PLACE OF DELIVERY/PORT OF DESTINATION Qingdao, China; CARGO DESCREPTION 132 20′GP containers of bulk oxidized iron scale; GROSS WEIGHT 3675.875 tons; DATE OF SHIPMENT 20th March 2010; ADVANCE FREIGHT; also included in the B/L were the case number, weight, gross weight, and seal number of the containers. Terms continued on back thereof were standard terms in printing, Article 2 of which prescribed “the terms of Carrier’s applicable Tariff are incorporated herein. Particular attention is drawn to the terms therein relating to Container and vehicle demurrage. Copies of the relevant provisions of the applicable Tariff are obtainable from the Carrier or his agents upon request in the case of inconsistency between this Bill of Lading and the applicable Tariff, this Bill of Lading shall prevail.” Also prescribed in Article 13 Paragraph 4 thereof was: “If containers supplied by or on behalf of the Carrier are unpacked at the Merchant’s premises, the Merchant is responsible for returning the empty Containers, with interiors brushed and clean, to the point or place designated by the Carrier, his servant or agents, within the time prescribed. Should a Container not be returned within the prescribed time, the Merchants should be liable for any demurrage, loss or expenses, which may arise from such non-return. ”

On 4th April 2010, “BUNGA RAYA SEMBILAN” arrived at the Port of Qingdao and discharged the cargo concerned at Qingdao Qianwan Container Terminal. On 6th April 2010, the designated consignee Yongfeng Steel, through the agent Qingdao Ocean Shipping Agency, obtained the Delivery Order against the presentation of the original bill of lading.

On 30th April 2010, AQSIQ Huangdao Bureau inspected the cargo concerned and issued a Quarantine Treatment Advice for the date, by which it notified Qingdao Customs to return the cargo because the cargo concerned failed to meet the requirements provided in the Notice of the Five Ministries on Adjustments to Management Category of Imported Waste (2009/No.36). Yongfeng Steel was later informed of the AQSIQ notice, but the specific time was not known. As a result, the containers were unpacked and restowed at the terminal, and were finally returned.

According to the Statement of Expenses concerning Import Containers prepared by Qiangdao Ocean Shipping Agency, the 132 containers involved arrived on 4th April 2010. Of these containers, 91 were empty and returned on 6th November 2010 with 207 days overdue, and the rest 41 returned on 7th November 2010 with 208 days overdue.

According to the tariff of import container at Qingdao Port which was published on MISC Berhad’s website: 20 TEU dry container is free for use for 10 days; demurrage begins to count at 5 USD/day for the 11th-20th day, at 10 USD/day for the 21th-40th day, and at 20 USD/day beyond the 40th day.

Qiangdao Xin Dong Fang Container Storage & Transportation Co., Ltd issued the Estimate of Repair Cost for Dry Containers for the 124 containers on 6th and 7th November 2010, on which the container number, vessel’s name and the B/L number were in line with that of the subject containers. The repair cost was estimated at 7059.15 USD.

In its claims raised with Qingdao Maritime Court, MISC Berhad alleged that the Defendant Yongfeng Steel, who was the consignee designated in the B/L, obtained the Delivery Order by presenting the original bill of lading to the Claimant on 6th April 2010. But the Defendant did not take delivery of the cargo as planned. It was not until 6th and 7th November 2010 that the Defendant returned the 132 empty containers, resulting in a loss of 501,100 USD to the Claimant. Moreover, the containers used for carriage of the cargo concern suffered some damages during the voyage, for which the Claimant had to spend 7059.15 USD on the repair. Therefore, the Claimant requested the court to rule: (1) the Defendant to pay 501,100 USD plus interest for the demurrage; (2) the Defendant to pay 7059.15 USD plus interest for container damage; (3) the Defendant to bear the litigation fee and other legal expenses arising from the subject case.

The Defendant defended for itself before the court on the following grounds: (1) the Defendant was not liable for the loss alleged by the Claimant since the non-pickup of the cargo concern totally resulted from the Claimant’s failure to inspect the cargo before the shipment of solid waste; (2) As regards the claim for demurrage based on the overleaf terms of the B/L, such claim was apparently unfair since the Claimant did never remind or inform the Defendant of such terms in an explicit way, and the loss occurred might not exceed the amount of rent for containers of the same voyage and type; (3) the claim for repair expense of the containers was groundless because the Claimant could not provide evidence to prove the degree or causes of damage occurred to the containers, or provide vouchers or invoices for the repair, thereby forming no ground for such complaint; AND (4) the Claimant shall be liable for the increased loss arising from the Claimant’s failure in taking appropriate measures to stop the loss. Therefore, the Defendant requested the court to overrule the claims raised by the Claimant.

On hearing the case, Qingdao Maritime Court held that Article 78 Paragraph 1 of the Maritime Law of the People’s Republic of China, which reads “The relationship between the carrier and the holder of the bill of lading with respect to their rights and obligations shall be defined by the clauses of the bill of lading”, did not require such clauses to appear on the front page or on the overleaf, nor did it require such clauses to be consented or agreed between the carrier and the consignee/holder of the bill of lading. Therefore, these clauses shall be effective and valid as long as they were not made so as to cut the carrier’s responsibilities and not running against the provisions of Section Four of the PRC Maritime Law and other mandatory regulations of Chinese laws. As regards the explanation that the Defendant shall not be bounded by the clauses on back of the bill of lading because the Claimant and the Defendant had not reached agreement on such clauses, this court did not accept such defense. For the subject case, certain conditions should be met if the consignee is to undertake the demurrage liability. That is, the carrier or its agent should be the one to provide the containers, the containers should be unpacked at the premise of the merchant, and the carrier should prescribe the time and place for the return of empty containers. Actually, the containers involved were unpacked at the terminal rather than being unpacked in the storage yard or the premise of the merchant, and the Claimant also confirmed not prescribing a specific time and place for the return of empty containers. This court therefore held that Article 13.4 concerning the charge of demurrage was not applicable to the Defendant and the court did not support the Claimant’s request in this respect.

After obtaining the Delivery Order, the Defendant should have gone through the delivery formalities in time. Yet the Defendant did not take delivery of the cargo. Rather, it held the Claimant’s containers for a long time, hence obstructing the normal circulation of the containers and causing heavy loss to the Claimant. Therefore, the Defendant shall compensate the Claimant for the losses occurred. However, the Claimant could not provide evidence to prove the specific damage resulting from the Defendant’s failure in timely returning the containers. Moreover, in the condition that the containers could not be recalled and put into circulation, the Claimant might as well rend containers of the same type to put into operation so as to prevent the loss becoming serious. But the Claimant did not take such steps to stop the loss. Therefore, the Claimant had no right to claim compensation for the increased portion of losses. As regards the Defendant’s proposal that calculation of the loss arising from the Defendant’s failure in taking timely delivery and returning the containers to the Claimant shall refer to the rent for containers of the same voyage, type and amount, this court held that it was in line with the laws, regulations, and practice to calculate the loss on such criterion and the court supported the Defendant’s proposal in this respect.

Given that the Claimant could not prove the relevance, validity and rationality of the container repair expense it had paid and the carriage of the cargo concerned, the court did not support the Claimant’s request for the repair costs.

In summary, the court adjudged the Defendant to pay the Claimant 48315.7 USD for the demurrage and overruled other claims made by the Claimant.