• Case of disputes over contract of carriage of goods by sea between AIG UNION Y DESARROLLO, S. A. and Guangzhou Ocean Shipping Company

    2018-01-26

               The Higher People’s Court of Guangdong Province                 The People’s Republic of China                    Civil Judgment                               (2011) Yue Gao Fa Min Si Zhong Zi No. 24 Appellant (Plaintiff of first instance): AIG UNION Y DESARROLLO, S. A. Address: Calle Loma Linda No.265, San Salvador, El Salvador, C.A. Legal representative: Francisco P. R. De Sola,chairman Agent ad Litem: Sun Jing Liang, male, the Han nationality, born on 15th May 1974,ID No.440301197405156975, residing at Rm304, Building 1, Shekou Binhai Garden, Nanshan District, Shenzhen, the P. R. C. Appellee (Defendant of first instance): Guangzhou Ocean Shipping Company Address: 412 Huanshi Avenue East, Guangzhou, the P.R.C Legal representative: Xu Hui Xing, general manager  Agents ad Litem: Huang Hui / Zhang Jing, lawyers of Huang & Huang Co. Law Firm By virtue of dissatisfaction with Civil Judgment under ref: (2008) Guang Hai Fa Chu Zi No.101 issued by Guangzhou Maritime Court (“the court of first instance”) with respect to the case arising f rom disputes over a contract of carriage of goods by sea lodged by the appellant AIG UNION Y DESARROLLO, S. A. (“AIG”) against the appellee Guangzhou Ocean Shipping Company (“Ocean Shipping”), AIG filed an appeal against the aforesaid judgment before this court. A collegial panel was duly formed by this court to try the case which has now been concluded.  AIG at the first instance claimed that: In July 2001, three lots of cargo insured by the AIG were carried by M.V. “Heng Shan” owned by Ocean Shipping who issued B/L No.F-02, B/L No.S202 and B/L No.S203 accordingly. During the course of carriage, the cargo under B/L No.S203 and B/L No.S202 suffered a total loss. AIG paid a indemnity sum of USD479,187.00 for such loss and cargo disposal fee of USD1,365.41 to the insured. Meantime, AIG effected payment of USD14,638.57 as general average contribution to Ocean Shipping for the cargo under B/L No.F-02 in accordance with the Adjustment Report issued by Richards Hogg Lindley. After issuing the bills of lading in question, Ocean Shipping was under the obligation to properly and carefully stow and care for the cargo as well as deliver the cargo in the same condition as specified on the bills of lading at the port of destination. Now Ocean Shipping failed to perform such obligation, causing the holders of the bills of lading to incur losses as a result. AIG as the insurer of the goods in question, after indemnifying the holders of B/L No.S202 and B/L No,203 for loss of goods according to the insurance policy and paying the adjusted general average contribution on the part of the holder of B/L No. F-02 has been duly subrogated to the insured’s right of recovery against the Ocean Shipping and therefore requested the court of first instance to adjudge and order: (1) Ocean Shipping to indemnify AIG for loss of goods in the amount of USD480,552.41 (equivalent to RMB3,433,643.08 as per the USD-RMB exchange rate on 20th February 2008) and interest thereon (calculated on a principal of RMB3,433,643.08 as per the short-term (half to one year) lending rate promulgated by People’s Bank of China over the corresponding period counting f rom 5th April 2002 to the date of actual payment,); (2) Ocean Shipping to pay AIG the general average contribution in the amount of USD14,638.57 (equivalent to RMB104,595.51 as per the USD-RMB exchange rate on 20th February 2008) and the corresponding interest (calculated on a principal of RMB104,595.51 as per the short-term (half to one year) lending rate promulgated by People’s Bank of China over the corresponding period counting f rom 13th July 2004 to the date of actual payment); and (3) Ocean Shipping to bear the court fees and other legal costs pertaining to this case. AIG submitted the following evidences to the court of first instance: Evidence No.1 - documents of insurance claims, to prove payment of indemnity sums regarding the goods in question; Evidence No.2 - Survey Report on Fire Incident on M/V “Heng Shan” issued by GWF Franklin, S. A., to prove that the fire in question taking place in hold No.2 of M/V “Heng Shan” has led to a total loss of the cargo under B/L No.S202 and B/L No.S203 and to prove the value of the cargo; Evidence No.3 - Adjustment Report issued by Richards Hogg Lindley, to prove that the goods under B/L No.F-02 had to contribute 25.606% of its value to the general average losses; Evidence No.4 - Charter Party dated 28th June 2001,to prove the Ocean Shipping and the shipper were both parties to the charter party which was incorporated into the bills of lading in question; Evidence No5 - Ship Declaration Form, to prove that Ocean Shipping willfully concealed the actual quantity of the dangerous goods carried; and Evidence No.6 - Dangerous Cargo List, to prove that Ocean Shipping misrepresented the quantity of the dangerous goods and thus was at fault for the fire incident. Among the evidences above, except for Open Policy No.042866, Insurance Certificate No.035031, the Extended Terms and Conditions in Evidence No.1, as well as Evidence No.3 that were certified to be in the conformity with the originals, all others are merely duplicated copies. Ocean Shipping contended in the hearing held by the court of first instance that: (1) AIG was not a proper plaintiff and had no title to lodge this lawsuit. The so-called insurance policy submitted by AIG was in fact unilaterally issued by AIG itself, instead of an insurance contract. AIG failed to discharge the burden of proving that the insured it alleged were legal holders of the bills of lading in question or consignees of the goods in question who had an insurable interest in the goods at the material time. (2) AIG’s claims had already been time-barred, AIG was deprived of the right to win and therefore its litigation requests shall be rejected accordingly. (3) AIG failed to adduce evidence to prove that the goods under B/Ls No.S202 and B/LNo.S203 had become a total loss and thus had no right to claim for the alleged loss against Ocean Shipping. (4) Even if the goods under B/Ls No.S202 and B/L No.S203 had indeed become a total loss, the carrier shall be exonerated f rom all liability for such loss caused by fire in accordance with the law and hence shall not bear any liability for compensation. (5) The incident that gave rise to general average was caused by fire for which the carrier was entitled to exoneration f rom the liability for compensation, thus AIG had no title to claim against Ocean Shipping for its general average contribution. In view of the above, Ocean Shipping requested the court of first instance to reject AIG’s claims and/or submissions against Ocean Shipping and order AIG to bear the court costs. Ocean Shipping submitted the following evidences to the court of first instance: Evidence No.1 – ship certificates of M/V “Heng Shan” (including Cargo Ship Safety Construction Certificate, Cargo Ship Safety Equipment Certificate, International Oil Prevention Certificate, Hull Classification Certificate, Classification Certificate by China Classification Society, Minimum Safe Manning Certificate), a name list of crew members on the voyage in question, Document of Compliance, Maintenance and Inspection Report by China Classification Society and Statutory Survey Report, etc. to prove that the seaworthiness of M/V “Heng Shan” on the voyage in question; Evidence No.2 - Deck Logbook of M/V “Heng Shan”, to prove Ocean Shipping has discharged the obligations of properly and carefully keeping and caring for the goods carried; Evidence No.3 - Cargo Survey Report, to prove that no damage to the goods under B/L No.S202 and B/L No.S203 was found after completion of the discharge operations; Evidence No.4 - Certificate of Survey (extract), Attachment 6 of the Adjustment Report issued by Richards Hogg Lindley, to prove that no damage was incurred by the goods under B/L No.S202 and B/L No.S203; Evidence No.5 – Survey Report, Attachment 3 of the Adjustment Report issued by Richards Hogg Lindley, to prove that no damage was incurred by the goods in question; and Evidence No.6 - Survey Report on Fire Incident on MV “Heng Shan” issued by Burgoyne Incorporated Dated 22nd August 2001, to prove that the carrier of the goods in question was not at fault or negligent for the fire. Evidence No.2, No.3 and No.6 were certified to be in conformity with the originals,while others are duplicated copies.              Both parties submitted the pertinent extracts of the International Maritime Dangerous Goods Code, 2000 (“IMDG Code 2000”). After investigation and examination, the court of first instance ascertained that the followings: 1. With regard to the carriage and loss/damage condition of the goods in question MANUCHAR chartered M/V “Heng Shan” f rom Ocean Shipping on GENCON form on 28th June 2001 (“Charter Party”). In July, M/V “Heng Shan” owned by Ocean Shipping loaded goods f rom Shanghai and Tianjin among some other places in China for discharge at ports including El Salvador Port. On 13th July, Ocean Shipping issued B/L No.S203, naming MANUCHAR as the shipper, “ To Order Of” as the consignee and INDUSTRIAS UNISOLA S.A as the notify party, for carriage of a cargo of 800 kilograms of trimetric sodium phosphate packed into 800 bags. On 14th July, Ocean Shipping issued B/L No.S202, specifying MANUCHAR as the shipper, “To Order of LEVER DE EL SALVADOR,S.A.” as the consignee and LEVER DE HONDURAS S.A. as the notify party, for carriage of a cargo of 200 tons of sodium tripolyphosphate Ⅱ packed into 4000 bags with each weighing 50 kilograms. The port of loading under B/L No.S202 and B/L No.S203 was Shanghai, China. On 19th July, Ocean Shipping issued B/L No.F-02, naming MANUCHAR as the shipper, INDUSTRIAS UNISOLA S.A. as the notify party and Tianjin Port of China as the port of loading,for a cargo of 1 ton of sodium sulphate packed into 500 bags. B/L No.S202, B/L No.S203 and B/L No.F-02 covering the three lots of cargo mentioned above all named Port of Acajutla, El Salvador as the port of destination and the Charter Party concluded on 28th June 2001 was incorporated into the bills of lading in question. At 1425 hours of 20th August 2001, M/V “Heng Shan” arrived at Port of Manzanillo, Mexico, and cargo discharge operations were commenced at 1700 hours of the same day. At 0730 hours of 22nd August, hold No.2 of the ship was on fire whereupon the ship was shifted to anchorage to extinguish the fire. At 1420 hours of 24th August, the fire was put out, followed by removal of explosive/toxic gases f rom hold No.2. On 31st August, Ocean Shipping declared General Average. The discharge operations were resumed on 20th September and finished on 11th October whereupon the ship left Port of Manzanillo, Mexico for the next scheduled port. Richards Hogg Lindley, as the general average adjuster issued the Adjustment Report on 30th January 2004. Though Ocean Shipping refused to recognize the Adjustment Report, it quoted the said report’s attachments to support its defence and confirmed the general average loss therein. Hence the court of first instance recognized the report which stated that the cargo under B/L No.F-02 contributed 25.606% of its value to the general average losses. AIG paid USD14,638.57, as the general average contribution to the adjuster on behalf of its insured INDUSTRIAS UNISOLA S.A. under B/L No.F-02. Ocean Shipping confirmed receipt of the above sum of money through the adjuster. After arrival at Port of Acajutla, El Salvador, the goods in question were surveyed by GWF Franklin S.A. who issued the Survey Report of Fire Incident on M/V “Heng Shan” No. 0110-131. Ocean Shipping rejected the said survey report on the grounds that it was provided in copies without availability of the original for verification and submitted the Cargo Survey Report and attachments of the Adjustment Report as evidence to the contrary. The court of first instance held that although the three reports above all contained a statement to the effect that the cargo was in apparent good order and condition, they also mentioned that the cargo was fumigated. The Survey Report and attachments of the Adjustment Report furnished by Ocean Shipping gave no mention of any possible impact of the fumigation on the intended application of the goods or how to dispose of the fumigated cargo, while the survey report provided by the AIG further contained that the goods in question became a constructive total loss, since they had lost their intended use as a result of being fumigated. Some facts stated in the reports were corroborated with each other and no contradictions were found yet. Thus, the Survey Report and attachments of the Adjustment Report furnished by Ocean Shipping were admitted by the court of first instance, and the contents therein were confirmed by the court accordingly. According to the Survey Report submitted by Ocean Shipping, the attending surveyor witnessed the discharge operations on 18th October 2001 at the port of discharge and found that although the goods were contaminated, they sustained no substantial damage. So the Survey Report concluded that all goods in question were discharged, inspected and found to be in good order and condition, without any appearance of damage, expect for some stains. According to Adjustment Report, some unknown residues was found on the top of packages stowed the bottom compartment of hold No.2, and the cargo packed in unsealed bags may have been contaminated by the carbon dioxide or other gases produced during the fire accident However, the conditions of goods inside sealed bags remained unknown and must be ascertained by experts. The adjuster failed to give a detailed description on the extent of damage to each cargo stowed in hold No.2, which was left to be ascertained by each consignee at the time of taking delivery of the cargo. According to the survey report issued by GWF Franklin S.A., on 24th October 2001, its attending surveyor, at the application of AIG proceeded to survey the cargo in question that were stored in warehouse No.1 at Port of Acajutla, EL Salvador after arrival on 16th October 2001, followed by discharge which was completed on 22nd October. In light of the stowage plan in question, the goods under B/L No.S202 and B/L No.S203 were stowed in the bottom compartment of hold No.2, while those under B/L No.F-02 were stowed on the upper compartment of hold No.1. Paraffin wax together with some other goods was stowed on the upper compartment of hold No.2. The goods under B/L No.S203 were placed in the bottom compartment of hold No.2, while the goods under B/L No.S202 were stored on top of those under B/L No.S203. Pertinent information showed that the fire broke out in hold No.2, which accorded with the surveyors’ findings, but it seemed that the fire took place in upper compartment of hold No.2. Though the goods under B/L No.S202 and B/L No.S203 were found to be in apparent good order and condition, they were actually fumigated, and some were damaged as a result. As test results by independent labs would be affected by such varying factors as sample sources, visible condition of the goods and other results hard to be explained,the test results provided by the consignees shall be the most reliable ones. The test results provided by the consignees showed that the goods were under specifications in respect of size and density, etc.. On 11th February 2002, representatives of different companies concerned, including the consignees LEVER DE EL SALVADOR, S.A., INDUSTRIAS UNISOLA S.A. and the insurer AIG held a meeting at a factory in EL Salvador, during which, the consignees claimed that the smoky flavor was the major problem for the goods which were intended to be used as the basic ingredient to produce detergent. It was estimated that the re-processing fees, counting out all fringe costs and other incurred during transportation, would amount to USD447,100 approximately, and by taking into consideration of other factors regarding the claims, the consignees’ surveyors concluded that the goods under B/L No.S203 and B/L No.S202 constituted a total loss. The CIF invoice value of the goods under B/L No.S203 was USD386,400.00, while the CIF invoice value of the goods under B/L No.S202 was USD97,600, resulting in a total of USD484,000. Since the goods under B/L No.F-02 were stowed in hold No.1 and not affected by the fire, they were duly delivered upon arrival at the port of destination. Moreover, though AIG refused to recognize the ship’s certificates and some other documents produced by Ocean Shipping on the grounds that they were duplicated copies, the court of first instance found that those certificates and documents corroborated with one another. Therefore in the circumstances that there was no any evidence to the contrary, those certificates and documents were admitted by the court of first instance as effective evidence. It was ascertained that MV “Heng Shan” owned by Ocean Shipping was a multi-purposed steeled cargo ship, built in 1983, with registration No.84D1113, IMO No.8225357, gross tonnage 12,448, net tonnage 6,548, her certificates such as Minimum Safe Manning Certificate and Cargo Ship Safety Equipment Certificate remained valid at the material time and that her voyage in question satisfied the requirements regarding minimum safe manning. China Classification issued the Survey Report to certify that the ship’s carbon dioxide system was in a satisfactory condition upon survey by a company accredited by members of the International Association of Classification Societies. By clause 12 of the Charter Party dated 28th June 2001, Ocean Shipping guaranteed that when loaded to capacity, the ship was able carry at least 12,500 metric tons of goods including chemicals, steel materials and paraffin wax, among which, her deck was able to stow not more than 230 metric tons of dangerous cargo and her holds not more than 1000 metric tons of dangerous cargo, while clause 28 of the Charter Party stipulated that Master was responsible for making stowage plans and supervising the transshipment, stowage and discharge operations.  2. With regard to the causes of the alleged loss of cargo Ocean Shipping submitted the Survey Report on Fire Incident on M/V “Heng Shan” issued by Burgoyne Incorporated and the vessel’s Deck Logbook to contend that it had fulfilled its obligations as the carrier. The entries of the deck logbook were consistent with the contents of the survey report which stated that Burgoyne Incorporated was instructed by the ship’s P&I club to handle the matter and investigate the causes of the fire. MV “Heng Shan” extended 157.64 meters in length, 22.90 meters in width, 12.995 meters in depth f rom her bottom to the upper deck. The ship had 4 cargo holds, each owning a tweendeck and a bottom compartment. The tweendeck of hold No.2 was divided into left part and right part. The left part had a capacity of 1608.3 cubic meters, the right party 1669.8 cubic meters, and the bottom compartment 4729 cubic meters. All cargo space was equipped with a total flooding carbon dioxide system and suction-type smoke detectors as well. The fire broke out in hold No.2 of MV “Heng Shan” on voyage No.26 when discharge of cargo shipped f rom China was in progress after arrival at Port of Manzanillo, Mexico. All details regarding the loading and unloading operations as well as crew members’ observations on the fire were obtained through interviews with different crew members onboard at the material time. The vessel on the material voyage commenced loading of goods at Shanghai on 13th July. The goods loaded first into the bottom of hold No.2 were trimetric sodium phosphate for discharge at Guayaquil and Acajutla, followed by ascorbic acid, neotocite and trimetric sodium phosphate. After that, a cargo of paraffin wax was loaded into hold No.2 as well. On 18th July, loading began in the tweendeck of hold No 2. The goods loaded first were several bags of paraffin wax, followed by some buckets of sodium sulfite and a few more bags of paraffin wax and pig lead. On 21st July, a cargo of paraffin wax was loaded into the tweendeck of hold No.2 at Dalian Port for discharge at Manzanillo of Mexico. The sea was calm and tranquil during the material voyage, all ventilation baffles of the cargo holds were open, and the pressure ventilation system was at work to air the cargo holds. No one had ever entered into the tweendeck or bottom of hold No.2 during the material voyage. The cargo holds’ smoke detection system installed on the bridge remained in working condition all the time and was checked and examined every 4 hours. During the discharge operations at the port of discharge, apart f rom the crew members executing standard supervision and monitoring,no other crew entered into the tweendeck or bottom of hold No.2 or engaged in the discharge operations. The discharge operations in hold No.2 began with the unloading of bagged paraffin wax, which was still in progress at 0730 hours of 22nd August when the fire was first discovered in hold No.2. It is said that before the fire, no other goods except for the paraffin wax were discharged f rom hold No.2, and no strange smell was detected. At 0730 hours of 22nd August when a crew member on patrol took out the headlight f rom the tweendeck of hold No.2 on the starboard, he noticed a mass of red light with some smoke in the bottom compartment of the hold through the seam on the tweendeck hatch. The chief engineer immediately brought out a 6-kilogram dry powder fire extinguisher f rom boatswain’s storeroom to hold No.2 to fight the fire, and found a small flame shooting out through the seam on the tweendeck hatch. It was then determined that the flame was located at the right front part of the tweendeck, just a little bit in front of the buckets of sodium sulfite. And it turned out the fire was too fierce to put under control with the fire extinguisher, then the hatch of hold No.2 was closed and the ventilation system switched off. Four fire hoses were used to cool the hatch’s edge on the right. After that, hold No.2 was flooded with carbon dioxide. Shortly after the fire broke out, several tugboats came near the ship and assisted in cooling the hatch cover with fire-fighting monitors. At about 1333 hours, the ship was shifted to anchorage. The above information obtained f rom the crew members concluded that the fire broke out in hold No.2, and the goods involved included the bucketed sodium sulfate and bagged paraffin wax. After a series of efforts, including of closing the hold’s hatch, flooding the hold with carbon dioxide, and applying fire hoses to cool the hatch’s edge, the fire was put under control in the end. Then inert gas generators were used to remove all toxic and combustible gases f rom hold No.2. Later, the hatch was opened and the discharge operations were resumed. Upon investigation, it was found that the fire initially started on the top of goods stored at the right front part of the bottom of hold No.2 and flames were first discovered through of the seam on the tweendeck hatch. Relevant surveys showed that no equipment/device of the ship installed in hold No.2 was responsible for the fire. There was no physical evidence that could immediately lead to the true cause of the fire. Upon investigation, it was ascertained that the fire was not attributed to any defect or functional failure of the ship’s equipment, devices or systems. Nor was there any evidence proving that the fire arose f rom any act or omission of the crew. By exclusion, only the following causes may lead to the fire: the fire might have something to do with the damage to or spillage of sodium sulfate during the discharge operations at Port of Manzanillo, Mexico, or the hot particles generated by the diesel-driven forklift used by stevedores to discharge the goods in hold No.2. In light of all information available at the present stage, the most possible cause was the spillage and combustion of sodium sulfate, because a lit cigarette or hot particles could hardly set fire to the bags that contained the paraffin wax. However, AIG did not accept such cause mentioned above. AIG argued that Ocean Shipping misrepresented the quantity of the dangerous cargo carried on MV “Heng Shan” to the port authority of Manzanillo, Mexico, causing the port authority and stevedores company to fail to exercise due supervision and caution over the discharge operations; the stowage of the dangerous goods in question was improper and failed to satisfy the requirements of the IMDG Code 2000 regarding stowage of dangerous goods; and that the ship was not equipped with fire-fighting system, which led to the loss of the cargo in question. To support its above arguments, AIG provided copies of the Ship Declaration Form issued by the Navigation and Supervision Bureau of Manzanillo, Mexico. However, Ocean Shipping refused to recognize such evidence. The court of first instance held that the vessel’s name on the copies of the declaration form was revised while the ship’s number thereon was not in accord with that shown on the ship’s certificates provided by Ocean Shipping; Master’s signature and stamp were illegible; no relevant evidence was available for corroboration, and therefore the said declaration form was not recognized by the court of first instance. 3. With regard to the trading and insurance of the cargo in question Such insurance documents as Open Policy No.042866, Insurance Certificate No.035031, the Extended Terms and Conditions submitted by AIG to the court of first instance to evidence its settlement of claims with MANUCHAR regarding the cargo in question were the originals, while invoices and other similar documents issued by MANUCHAR were duplicated copies. The carriage particulars shown on the invoices agreed with those on the bills of lading, and the Open Policy, Insurance Certificate and other insurance documents mutually corroborated with one another. Therefore the above evidence was recognized by the court of first instance in the circumstances of no evidence to the contrary. In light of the above evidence in this paragraph, the court of first instance ascertained the following facts: LEVER DE HONDURAS S.A. purchased the cargo under B/L No.S202 at a total price of USD97,600.00, CFR Acajutla, f rom MANUCHAR in Belgium. LEVER DE EL SALVADOR, S.A. took out marine cargo (import/export) insurance and inland transit insurance on the goods under B/L No.202 and AIG as the insurer, issued Insurance Certificate No.035351 dated 20th November 2001 to LEVER DE EL SALVADOR, S.A., one of the insurance certificates under Open Policy No.044479. By the said insurance certificate, the insured goods were shipped by several suppliers for delivery to LEVER DE EL SALVADOR, S.A., carried by M/V “Heng Shan” by sea to Central America and Panama. According to the Notice of Insurance Claim dated 31st October 2001, the insurance period was f rom warehouse to warehouse. By the said notice, the goods in question were the raw materials purchased by LEVER DE EL SALVADOR, S.A. f rom a subsidiary company of LEVER in October 2001. And according to AIG, the shipment was purchased by LEVER DE EL SALVADOR, S.A. f rom LEVER DE HONDURAS S.A., a subsidiary company of LEVER GROUP. Since the insured first learned the damage to the shipment after its arrival at Salvador in October 2001, it integrated the damage to the notice dated October. In April 2002, AIG indemnified the insured LEVER DE EL SALVADOR, S.A. USD976,624.00 in accordance with the insurance contract, and the insured then issued a receipt to confirm receipt of the said indemnity sum. The cargo under B/L No.S203 was purchased by INDUSTRIAS UNISOLA S.A. f rom MANUCHAR in Belgium, at a total price of USD386,400.00, C&F Acajutla, El Salvador. GROUP UNISOLA took out marine cargo (import/export) insurance and inland transit insurance on the goods under B/L No.203, with Group UNISOLA and its subsidiary companies in Central America as the insured, while AIG, as the insurer, issued Open Policy No. DM-42866 to cover the goods owned or kept by or under the supervision and control of the insured against risk of loss while in transit f rom warehouse to warehouse during the period f rom 1st May 2001 to 30th April 2002. By the insurance policy, the insured shall declare monthly the value and movement of the insured goods, and the deductibles for loss of unfrozen goods carried by sea was 1% of the value of the goods. On 25th September 2001, AIG issued Insurance Certificate No.035031 to the insured, naming INDUSTRIAS UNISOLA S.A. as the insured and several supplies as the shipper, goods to be delivered to INDUSTRIAS UNISOLA S.A., carried by M/V “Heng Shan” f rom places including America and Mexico to places including Salvador. In the Notice of Insurance Claim dated 31st August 2001, “Belgium” was filled in the box “place of loading”, for which, AIG explained that the seller of the goods was a company established in Belgium and no distinguishment in this regard was made in the scope of cover under the open policy insurance. In April 2002, AIG indemnified the insured INDUSTRIAS UNISOLA S.A. USD382,563.00 in accordance with the insurance contract. The insured then issued a receipt to confirm receipt of the said indemnity sum. In addition, AIG and Ocean Shipping confirmed that the damaged goods should have been delivered on 29th December 2001, and failed to determine the date on which general average adjustment was completed. AIG alleged that it instituted legal proceedings in the Second Maritime Court of Panama against Ocean Shipping on 15th October 2002, and on 17th October, Ocean Shipping provided a security to the court through its P&I club. On 22nd May 2003, the 2nd Maritime Court of Panama ruled that the dispute shall be handed over to the jurisdiction of the court of first instance and thereby ordered to suspend the proceedings. However, AIG’s such allegation was rejected by Ocean Shipping on the grounds that AIG failed to submit any evidence in support. Pending the hearing of first instance, AIG filed an application before the court of first instance for a separate decision regarding the issue of limitation period alone, which was challenged by Ocean Shipping. Both parties agreed that the disputes over the contract of carriage of goods by sea shall be subject to Chinese law. The court of first instance held: this was a case arising f rom disputes over the contract of carriage of goods by sea and lodged by an insurer who was subrogated to the rights of the insured under bills of lading incorporating the said contract of carriage of goods by sea after indemnifying the insured for loss of goods and general average contribution in accordance with insurance contracts which covered the goods; at all material times, AIG was/is a company incorporated in EL Salvador, and goods in question were shipped f rom China to places including EL Salvador, so this was a case involving foreign-related elements; Under Article 6.2.2 of the Special Maritime Procedure Law of the People’s Republic of China and Article 28 of the Civil Procedure Law of the People’s Republic of China, the lawsuit instituted by AIG arose f rom dispute over carriage of goods by sea and thus shall be under the exclusive jurisdiction of maritime courts, and considering that the place of shipment under the contract in question and the place where the domicile of Ocean Shipping was/is located are within the scope of jurisdiction of the court of first instance, the court of first instance has jurisdiction over this case. Both parties concerned selected Chinese law to settle the disputes in this case and therefore in accordance with the provisions of Article 269 of the Maritime Code of the People’s Republic of China, Chinese law shall apply to this case. With regard to AIG’s right of subrogation and the limitation period 1. AIG’s right of subrogation AIG as the insurer indemnified the insured LEVER DE EL SALVADOR, S.A. and INDUSTRIAS UNISOLA S.A. for loss of the cargo in question and was accordingly subrogated to the rights of recovery of the foregoing two companies regarding the cargo in question. The court of first instance heard contractual relationship with respect to carriage of the cargo in question between the insured and the carrier, while the issue that whether the consignees had insurable interest in the cargo in question at the time of the insured event did not fall within the hearing scope of the present case and thus was not heard by the court of first instance. By the bills of lading in question and the Charter Party, Ocean Shipping was as the carrier of the cargo in question. B/L No.S202 named “To Order of LEVER DE EL SALVADOR, S.A.” as the consignee, while B/L No.203 and B/L No. F-02 named “To Order of” as the consignee. The notify parties named by the three sets of bills of lading were LEVER DE EL SALVADOR, S.A. and INDUSTRIAS UNISOLA S.A. respectively. Although the bills of lading submitted by AIG contained no terms and conditions on the reverse, they together with the insurance certificates whose contents were in conformity with those shown on the aforesaid bills of lading, demonstrated that the consignees of the two shipments in question carried by Ocean Shipping were LEVER DE EL SALVADOR, S.A. and INDUSTRIAS UNISOLA S.A. After the accident, the Cargo Survey Report issued by GWF Franklin S.A. also stated that the two companies participated in handling the matters related to the loss of the cargo in question as the consignees, which is a preliminary indication that LEVER DE EL SALVADOR, S.A. and INDUSTRIAS UNISOLA S.A. were the legitimate holders of the three bills in question. Ocean Shipping, as the carrier of the goods carried, was obliged to deliver to the goods, which usually would be evidenced by relevant documents. Since Ocean Shipping failed to provide any evidence to the contrary in this regard, the court of first instance ascertained that LEVER DE EL SALVADOR, S.A. was the consignee under B/L No.S202, while INDUSTRIAS UNISOLA S.A. was the consignee under B/L No.S203 and B/L No.F-02. In view of the above, AIG was entitled to exercise the rights of the consignees under the three bills of lading which it had been duly subrogated to against Ocean Shipping, and therefore the submission of Ocean Shipping in this respect was dismissed accordingly.          2. With respect to the limitation of action Pursuant to the provisions of Article 257.1 of the Maritime Code of the People’s Republic of China, the limitation period for an action lodged by AIG after being subrogated to the consignees’ rights under the bills of lading in question with regard to the contract of carriage of goods by sea is one year, counting f rom the day on which the goods were delivered or should have been delivered by the carrier. In the present case, it was confirmed by both parties concerned that the date when the goods under B/L No.S202 and B/L No.S203 should have been delivered was 29th November 2001 and the limitation period should run f rom that day. Thus the action filed by AIG against the carrier for the alleged loss of goods under B/L No.S202 and B/L No.S203 became time-barred on 29th November 2002, while the time limit for AIG to institute a recourse claim against the carrier Ocean Shipping after obtaining the right of subrogation by paying the adjusted general average contribution is one year as well running f rom the day on which the adjustment was finished according to the provisions of Article 263 of the Maritime Code of the People’s Republic of China. Neither AIG nor Ocean Shipping could determine when the adjustment completed, while the Adjustment Report was issued after completion of the adjustment, thus it is appropriate to select its issuance date, i.e. 30th January 2004 as the beginning date of the limitation period for this recourse claim which accordingly became time-barred on 30th January 2005. In view of the above, the action instituted by AIG against Ocean Shipping before the court of first instance on 22nd February 2008 for loss of cargo and general average contribution was time-barred. AIG failed to discharge the burden of proving that causes of discontinuance or suspension of the limitation period as provided for by Article 267 of the Maritime Code of the People’s Republic of China existed in this case, and therefore AIG’s claims for loss of cargo and general average contribution in this case shall be dismissed in accordance with the law.  3. With regard to other issues (1) As to whether the goods under B/L No.S202 and B/L No.S203 became an actual total loss The Adjustment Report and Cargo Survey Report and the Survey Report issued by GWF Franklin S.A. submitted by AIG to support its allegation of total loss of the goods in question accorded with the Survey Report on Fire Incident on MV “Heng Shan” furnished by Ocean Shipping in respect of contents regarding, inter alia, cargo condition during transportation, information on the fire and that the goods were fumigated. In addition, the Survey Report issued by GWF Franklin S.A. pointed out that the consignees claimed that smoky flavor became the major problem for the cargo’s intended use, which is, as basic ingredient for producing detergent. It was estimated that the costs for re-processing the fumigated goods, counting out all additional costs/expenses incurred by the goods during transportation, would be a very large amount, and by taking the matters regarding this claim into consideration, the goods under B/L No.S202 and B/L No.S203 already constituted a total loss. In the circumstances that Ocean Shipping failed to submit evidence to overturn the Survey Report issued by GWF Franklin S.A., the court of first instance relied upon the said Survey Report and ascertained that the goods in question became a total loss owing to fumigation consequent on the fire.  (2) The causes of loss of the goods under B/L No.S202 and B/L No.S203 Among all the reports provided by AIG and Ocean Shipping, only the Survey Report on Fire Incident on MV “Heng Shan” issued by Burgoyne Incorporated and submitted by Ocean Shipping gave analysis on the causes of the loss. In such circumstances that AIG failed to provide evidence to the contrary, the court of first instance ascertained that the loss was most likely due to the spillage and combustion of sodium sulfite in reliance upon the survey report issued by Burgoyne Incorporated. (3) As to whether Ocean Shipping, as the carrier, had provided a seaworthy vessel, and had properly and carefully stowed and discharged the goods and whether Ocean Shipping was entitled to invoke the fire defence to exonerate it f rom liability The ship’s certificates and other relevant documents submitted by Ocean Shipping demonstrated that before and at the beginning of the voyage in question, MV “Heng Shan” it provided to carry the goods was seaworthy, cargo-worthy and sufficiently and efficiently manned. The vessel was also equipped with a carbon dioxide extinguisher system satisfactory to the requirements of her classification society. In pursuance of the provisions of the IMDG Code (2000), sodium sulfite is categorized as Class 4.2 and neotocite as Class 4.3. The two kinds of products should be kept in a cool and dry condition during transportation and stowed in a place “away f rom” all heat sources. They can be stored in one hold, but they must maintain a horizontal distance of 3 meters between the perpendiculars of two closest points. On the voyage in question, the sodium sulfite and neotocite were stowed separately in the tweendeck and bottom compartment of hold No.2, thus not violating the requirements in respect of stowing dangerous goods under the IMDG Code (2000). In light of the ship’s deck logbook and the Survey Report on Fire Incident on MV “Heng Shan” issued by Burgoyne Incorporated, at the time when the fire broke out and thereafter, Ocean Shipping took reasonable actions to extinguish the fire, and properly and carefully cared for the goods by ventilation, air renewal, cleaning, smell removal and so on. AIG’s allegation that Ocean Shipping misrepresented the goods to Port of Manzanillo, Mexico, as a result of which, the port authority and the stevedores company failed to exercise due supervision and caution over the discharge operations was groundless and thus was not supported by the court. In view of the above, the loss of the goods in question was not attributed to fault or negligence on the part of Ocean Shipping, but to the fumigation ensuing f rom the fire. In pursuance of the provisions of Article 51.1.2 of the Maritime Code of the People’s Republic of China, Ocean Shipping is not liable for such loss resulting f rom fumigation consequent on the fire not attributed to Ocean Shipping.  F rom the foregoing, the court of first instance rejected AIG’s claims in accordance with the provisions of Article 51.1.2, Article 257.1 and Article 263, and ordered AIG to bear the court fee RMB44,712.00. By virtue of dissatisfaction with the judgment of the court of first instance, AIG brought an appeal before this court, requesting this court: (1) to set aside the judgment of the court of first instance; (2) to order Ocean Shipping to pay AIG a sum of RMB3,433,643.08 for loss of goods and interest thereon counting f rom 5th April 2002 to the date of actual payment; (3) to order Ocean Shipping to pay AIG a sum of RMB104,595.51 for general average contribution and interest thereon courting f rom 13th July 2004 to the date of actual payment; (4) to order Ocean Shipping to bear the court fees and other legal fees of both first instance and second instance, on the following grounds:  (i) The court of first instance erred in ascertaining that Ocean Shipping was entitled to invoke the fire defence. Subject to the dangerous nature of goods, it is a customary practice for ports worldwide to enforce a strict customs declaration system. In the present case, the Ship Declaration Form tendered by Ocean Shipping to the port authority after the carrying vessel arrived at Port of Manzanillo, Mexico stated that the dangerous goods were merely 32 tons, while the Dangerous Cargo List made by China Ocean Shipping Agency, agent of Ocean Shipping specified that the goods intended for discharge at Port of Manzanillo was 269.226 tons. In fact, the said Dangerous Cargo List was made exclusively for goods for discharge at Port of Manzanillo and not for all the cargo carried onboard. It is plainly apparent that the neotocite, class 4.3 under the IMDG Code, stowed in hold No.2 repeatedly mentioned and confirmed by Ocean Shipping was not recorded on the said Dangerous Cargo List; the vessel's name, call sign, date and time of arrival and other particulars specified on the Ship Declaration Form tallied with those of MV “Heng Shan”. Besides, the Ship Declaration Form was signed and stamped by Master Xu Dewen, the ship's agent and the port authority, and therefore its authenticity, validity and relevancy should be confirmed. In light of ship's operation practices, Ocean Shipping must keep the original copy of the Ship Declaration Form on file. If Ocean Shipping has objection to this submission, it should furnish the original copy to support its contention, otherwise, it should be ascertained that Ocean Shipping misrepresented the quantity of the dangerous cargo carried with an attempt to escape port supervision and control. Owing to Ocean Shipping's failure to truthfully declare the dangerous cargo carried, the port authority and the stevedores company failed to exercise due supervision and caution over the discharge operations. Given the above, Ocean Shipping was obviously at fault in this case and thus shall have no title to the fire exception which enables the carrier to escape liability for cargo damage/loss. (ii) Ocean Shipping failed to provide a seaworthy vessel and failed to properly and carefully stow and discharge the cargo in question and thus was not entitled to invoke the fire defence. First of all, Ocean Shipping failed to provide a ship equipped with a fire fighting apparatus, emergency installation and fire protection devices, there was existence of potential safety hazard on the vessel provided which actually resulted in the cargo loss. In this sense, MV "Heng Shan" was neither seaworthy nor cargo-worthy. Under the relevant regulations of the Ministry of Communications, a vessel applied to carry dangerous cargo shall be equipped with fire fighting apparatus and emergency installation, and emergency facility and protection devices shall be provided at the place where cargo discharge operations are carried out subject to the nature of the dangerous cargo. According to the Survey Report on Fire Incident on MV “Heng Shan” issued by Burgoyne, evidence 7 of Ocean Shipping, hold No.2 where the discharge operations took place was not equipped with any fire-fighting apparatus or fire protection device, while after the fire broke out, the crew only used a 6-kilogram dry-chemical fire extinguisher fetched f rom boatswain's storage room located in the accommodation area to fight the fire, as a result of which, the fire was not put under control in time, causing serous damage to the goods and posing a grave threat to the safety of the port. In light of relevant evidence provided by Ocean Shipping, at the time when the fire was discovered in hold No.2, a stevedore was sitting on the deck of hold No.2, quite near the fire spot and was not aware of the fire, which means that the fire at that time was still quite small. If there were the required fire-fighting equipment, the fire would have been put out or put under control timely. Secondly, Ocean Shipping failed to exercise reasonable supervision over the discharge operations in hold No.2 stowed with the dangerous cargo and failed to properly and carefully care for the goods carried, which resulted in the losses in this case. In view of the above, Ocean Shipping has no right to run the fire defence. It is provided for in clause 28 of the Charter Party entered into between Ocean Shipping and the charterer (the Charter Party was incorporated into the bills of lading in question) that "Master is responsible for making stowage plans, supervising the loading, stowing and discharge operations", hence supervising the discharge operations was one of the duties on the part of Ocean Shipping. According to the Survey Report on Fire Incident on MV “Heng Shan” issued by Burgoyne, evidence 7 of Ocean Shipping, Ocean Shipping did not arrange for supervision over the discharge operations in hold No.2 but merely performed routine patrols, and what's more, there was an interval of more than one hour between every two patrols. By the time the fire broke out, the discharge of paraffin wax in the upper compartment of hold No.2 had been in progress for nearly 40 hours, and half of the paraffin wax had been unloaded while in the meantime, some sodium sulfite was exposed. In the circumstances, any strike or collision by the unloading tools or articles would result in a leakage/ spillage of the sodium sulfite. Ocean Shipping should have strengthened supervision over the discharge operations to prevent any damage to the dangerous goods and to ensure that the fire could be discovered instantly after occurrence and put out timely by adoption of effective measures.  (iii) The court of first instance erred in ascertaining that the action lodged by AIG was already time-barred. The cargo in question was delivered on 29th November 2001. And the court of first instance inconsiderately held that the limitation period respecting claims for loss of the cargo in question expired on 29th November 2002. However, the fact is AIG instituted a recourse claim before the Second Maritime Court of Panama against Ocean Shipping in September 2002 who in response provided a security through its P&I club to the Second Maritime Court of Panama on 17th October 2002. The Panama court issued a decision to suspend the proceedings on 22nd May 2003 on the grounds that the case should be handed over to the jurisdiction of the court of first instance. Pursuant to the provisions of Article 267 of the Maritime Code of the People’s Republic of China, the limitation period shall be discontinued as a result of bringing an action by the claimant. Therefore, the time limit of this case was discontinued consequent on AIG's institution of claims before the Second Court of Panama against Ocean Shipping in September 2002, and stays discontinued till to date as a result of the Panama Court's decision to suspend the proceedings. Hence, the action brought by AIG before the court of first instance was not time-barred. In view of the above, AIG requested the court of second instance to reserve the judgment of the court of first instance.  Ocean Shipping contended in its written statement of defence that:  1. Ocean Shipping provided a seaworthy and cargo-worthy vessel for the voyage in question, and properly and carefully stowed, cared for, discharged the goods in question; the alleged cargo loss was attributable to the fire incident on MV "Heng Shan" and the court of first instance was correct in ascertaining that Ocean Shipping was entitled to run the fire defence. First of all, AIG's allegation that Ocean Shipping misrepresented the quantity of the dangerous goods to Port of Manzanillo was not supported by effective and valid evidence. The only evidence AIG provided to support its allegation was the Ship Declaration Form. However, AIG failed to have such declaration form duly notarized and legalized and even failed to provide the original copy for verification. Consequently, the said evidence’s authenticity should not be recognized. Secondly, AIG claimed that the port authority and the stevedores company failed to exercise due supervision and caution over the discharge operations. However, AIG failed to furnish any evidence to demonstrate the standard of “due supervision and caution”. Nor did AIG presented evidence to prove that the discharge operations failed to satisfy such standard. Therefore, AIG’s such allegation was merely a groundless and irresponsible oral statement. MV "Heng Shan" was seaworthy, cargo-worthy and sufficiently and efficiently manned on the voyage in question, and fire-fighting equipment and devices onboard perfectly met the requirements of the International Convention for the Safety of Life at Sea (SOLAS), 1974 and the requirements of China Classification Society. What’s more, even after that incident, China Classification Society still recognized the class of hold No. 2 where the fire broke out, which shall suffice to prove that the vessel satisfied the requirements of China Classification Society before the fire incident. The only reason AIG gave for its allegation of unseaworthiness was that “the discharging was not equipped with any fire-fighting apparatus or fire protection device”. The fact is however, according to the Survey Report issued by the China Classification Society submitted by Ocean Shipping to the court of first instance, MV “Heng Shan” was at least equipped with 115 bottles of carbon dioxide, 45 kilograms for each bottle, and these bottles was particularly and collectively stored in the carbon dioxide cylinder onboard the vessel, instead of scattered over each cargo holds. In the meantime, the Cargo Ship Safety Equipment Certificate provided by Ocean Shipping to the court of first instance certified that the fire-fighting system and devices as well as fire control plans onboard MV “Heng Shan” fully satisfied the requirements under the International Convention for the Safety of Life at Sea (SOLAS), 1974. In such instance, the locations of all these equipment, apparatus and devices met the requirements in this regard. AIG submitted that Ocean Shipping failed to exercise due supervision over the discharge operations in the cargo hold where the dangerous cargo was contained and failed to properly and carefully cared for the goods carried was not only groundless but also completely contradictory to the facts. The sodium sulfite and neotocite stowed in hold No.2 were labeled as Class 4.2 and Class 4.3 respectively by the IMDG Code, which means they were merely conventional dangerous goods, and yet AIG failed to submit any effective international rules or domestic regulations to prove that crew are obliged to exercise supervision over the discharge operations of these “conventional dangerous goods”. In fact, crew members are only obliged to supervise the loading and unloading operations of extra large units or Class 1 dangerous cargo, whereas in other circumstances, they are merely required to perform regular watch and patrols. Paragraph on page 6 and paragraph 3 on page 7 of evidence 7 provided by Ocean Shipping to the court of first instance proved that the crew members of MV “Heng Shan” exercised due supervision and control over the discharge operations and carefully and strictly carry out regular patrols around the ship. The fire incident was discovered by the crew on duty when performing the regular patrol. Besides, at the time when the fire was discovered, there was a stevedore sitting on the port deck of hold No.2, without discovery of the fire, which indicates that the fire broke out all of a sudden and therefore it was entirely groundless for AIG to allege that the crew member on duty failed to perform patrols and took notice of the fire only when it was too late. In addition, after discovery of the fire, Ocean Shipping promptly took reasonable and effective actions to fight the fire and protect the goods f rom incurring any further loss, and thus was not at fault or negligent.  2. Similarly, since the incident giving rise to general average was caused by the fire in question which shall relieve Ocean Shipping f rom any liability, AIG has no title to lodge any claim against Ocean Shipping for the alleged general average contribution.  3. AIG’s claims against Ocean Shipping were already time-barred under the provisions of the Maritime Code of the People’s Republic of China regarding limitation period and consequently AIG has lost the right to win. During the hearing held by court of first instance, AIG confirmed the following items: (1) the disputes in this case should be governed by Chinese laws and (2) the carrier delivered all the goods in question to the consignees on 29th October 2001. Therefore, the time limit for any claim lodged by AIG against Ocean Shipping arising f rom the disputes in this case expired on 28th October 2002 according to the provision of Article 257 of the Maritime Code. Thus the action instituted by AIG against Ocean Shipping before the court of first instance on 22nd February 2008 was time-barred. To say the least, even if it is true that AIG commenced legal proceedings against Ocean Shipping before the Second Maritime Court of Panama in respect of the disputes under this case in September 2002 and that foreign lawsuit sufficed to result in a discontinuance of limitation period regarding actions before Chinese courts, the limitation period of this case shall become discontinued in September when AIG lodged the alleged lawsuit in Panama and recount f rom that day and accordingly became expired in September 2003. Given the above, Ocean Shipping requested the court of second instance to uphold the judgment of first instance. AIG provided the Professional Survey Certificate issued by port of authority of Manzanillo on 15th October 2001 to the court of second instance to evidence that the fire incident was attributed to improper stowage of the goods in question and hence Ocean Shipping shall be held liable therefore. Ocean Shipping contended that the said certificate was not new evidence and should not be admitted by the court of second instance. Ocean Shipping further contended that the port stevedores were performing the discharge operations when the fire incident occurred, which means that the port authority was an interested party to this case and the certificate issued by it was insufficient to reflect the objective facts. This court held that according to the provisions of Article 41.1.2 of Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures regarding new evidence submitted to the court of second instance, the foregoing certificate submitted by AIG to the court of second instance was not new evidence and thus shall not be admitted by this court.  Upon examination, this court ascertained that the facts found by the court of first instance were true and correct and thus confirmed by this court. This court held the present case arose f rom disputes over a contract of carriage of goods involving foreign elements. Both parties concerned had no issue with the jurisdiction and application of Chinese laws in the trial of first instance and this court hereby confirmed this fact. In light of the grounds of appeal by AIG, the issues in the trial of second instance should be summarized as follows: (1) whether Ocean Shipping was entitled to invoke the fire defence and (2) whether the claim lodged by AIG for loss of goods was time-barred.  As for issue (1), neither party has issue with the fact that the fire incident led to an actual loss of the goods under B/L No.S202 and B/L No.S203. Pursuant to the provisions of Article 51.1.2 of the Maritime Code of the People’s Republic of China regarding the carrier’s right to run the fire defence, AIG was under the obligation to discharge the burden of proving that Ocean Shipping was at fault or negligent in the fire incident if it submitted that the carrier Ocean Shipping was liable for the loss arising f rom the fire.  AIG submitted that Ocean Shipping failed to truthfully present the quantity of the dangerous goods carried to the port authority, causing the port authority and stevedores company to fail to exercise due supervision and caution over the discharge operations onboard the vessel. Nevertheless, the Ship Declaration Form, which was the only evidence submitted by AIG with a hope to support its submission was made in duplicated copies which were not recognized by Ocean Shipping. Besides, there was not any other effective evidence with originals available to corroborate the said evidence. Therefore, the court of first instance did not erred in rejecting the said evidence. What’s more, AIG failed to present any evidence to demonstrate the standard of “due supervision and caution”. Nor did AIG provide any evidence to prove that the discharge operations failed to meet the foregoing standard. Hence, AIG’s such submission was not supported by this court. AIG further submitted that the vessel provided by Ocean Shipping was not equipped with required fire fighting apparatus, emergency system or fire protection devices, posing potential safety hazards and therefore was not seaworthy or cargo-worthy. Upon examination, the ship certificates and other relevant documents provided by Ocean Shipping explicitly indicated that the Minimum Safe Manning Certificate and Cargo Ship Safety Equipment Certificate among others of MV “Heng Shan” remained valid at time of the incident and the voyage in question satisfied the requirements regarding minimum safe manning. Besides, China Classification Society issued a survey report, stating that the carbon dioxide system onboard the vessel was in satisfactory condition. Moreover, in light of the Survey Report on Fire Accident on MV “Heng Shan” issued by Burgoyne and provided by Ocean Shipping, apart f rom keeping on watch at the ladder way, the crew member on duty performed patrol around the ship when he discovered the fire. He called out loud and started the fire alarm device immediately upon such discovery, while the chief engineer, upon receipt of such warning, immediately brought out a 6-kilogram dry-chemical fire extinguisher f rom boatswain’s storeroom to fight the fire. After finding that the fire was too fierce to be put out by the extinguisher, chief engineer ordered to shut up the hatch of hold No.2 where the fire broke out. Meanwhile, four fire hoses were used to cool the edge of the hatch. Ten minutes after the fire alarm, master ordered to flood the cargo hold with carbon dioxide and finally the fire was put under control. These facts further indicated that MV “Heng Shan” was sufficiently equipped with fire-fighting apparatus and fire protection devices, and master and other crew members had exercised due diligence to apply these apparatus and devices and adopt reasonable actions to put out the fire, and succeeded in the end and accordingly protected the goods f rom incurring further loss/damage. Therefore, Ocean Shipping was not at fault or negligent in this respect. On the contrary, AIG failed to discharge the burden of proving that there was any fault or negligence on the part of Ocean Shipping in respect of seaworthiness and cargo-worthiness of the vessel and therefore AIG’s such submission was not supported by this court.  In addition, AIG also submitted Ocean Shipping failed to exercise due supervision over the discharge operations in the cargo hold where dangerous goods were stowed, and failed to properly and carefully care for the goods carried. Upon investigation, the sodium sulfite and neotocite in hold No.2 were respectively categorized as Class 4.2 and Class 4.3 by the IMDG Code (2000) and were separately stowed in the tweendeck and bottom compartment of hold No.2, thus not violating the requirements in respect of stowing dangerous goods under the IMDG Code (2000). As to clause 28 of the Charter Party incorporated into the bills of lading regarding master’s responsibility for supervision over the loading, stowing and discharge operations, it was ascertained that the crew member on duty performed regular patrols around the ship when such operations were in progress and the fire was discovered by the said crew member in the process of patrol; whereupon effective and prompt actions were adopted to put out the fire instantly upon discovery of the fire. Therefore, there was no evidence indicating that master and other crew members failed to supervise the discharge operations. Thus AIG’s submission that Ocean Shipping failed to exercise due supervision over the discharge operations in the cargo hold where dangerous goods were stowed and failed to properly and carefully care for the goods carried was groundless and was not supported by this court. To sum up, AIG’s failed to discharge the burden of proving that Ocean Shipping was at fault or negligent in the fire incident, and therefore Ocean Shipping shall be entitled to invoke the fire defence under Article 51.1.2 of the Maritime Code and be exonerated f rom liability. As for issue (2), Article 257.1 provides that “The limitation period for claims against the carrier with regard to the carriage of goods by sea is one year, counting f rom the day on which the goods were delivered or should have been delivered by the carrier”. In the instant case, both parties concerned confirmed that the date when the goods under B/L No.S202 and B/L No.S203 should have been delivered was 29th November 2001, as a result, the limitation period for any claim by AIG against the carrier regarding carriage of the goods should run f rom that day and expired on 29th November 2002. Therefore, the lawsuit lodged by AIG against Ocean Shipping for loss of goods before the court of first instance on 22nd February 2008 was time-barred. AIG argued in the trial of second instance that it commenced legal proceedings against Ocean Shipping before the Second Maritime Court of Panama in September 2002 which rendered a decision on 22nd May 2003 to suspend the proceedings, as a result of which, the two limitation periods involving this case were discontinued accordingly, and therefore its claims were not time-barred. However, AIG failed to discharge the burden of proving that the Second Maritime Court of Panama actually entertained the alleged proceedings and rendered a decision to suspend such proceedings. Consequently, AIG’s defence regarding the limitation period was not established and thus was not supported by this court. In addition, AIG did not have issue with the limitation period for the claim regarding the adjusted general average contribution under this case and therefore the court upheld the ascertainment of the court of first instance in this regard. To sum up, the facts were clearly ascertained and the law was correctly applied in the judgment of the court of instance and therefore should be upheld by this court. AIG’s appeal was groundless and was dismissed by this court. In pursuance of the provisions of Article 153.1.1 of the Civil Procedural Law of the People's Republic of China, this court hereby orders: AIG’s appeal is dismissed and the judgment of the court of first instance sustained; The court fee of second instance RMB8,258 is for AIG’s account. This judgment shall be final.  Presiding judge: Hou Xianglei Judge: Mo Fei Judge: Ye Dan The Higher People’s Court of Guangdong Province (stamp) 17th June 2011 “This copy is certified to be in conformity with the original.” Clerk: Ye Liya Relevant provisions: The Civil Procedural Law of the People's Republic of China Article 153 After trying a case on appeal, the peoples court of second instance shall, in the light of the following situations, dispose of it accordingly: " (1) if the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal shall be rejected in the form of a judgment and the original judgment shall be affirmed; (2) if the application of the law was incorrect in the original judgment, the said judgment shall be amended according to the law; (3) if in the original judgment the facts were incorrectly or not clearly ascertained and the evidence was insufficient, the peoples court of second instance shall make a written order to set aside the judgment and remand to case to the original peoples court for retrial, or the peoples court of second instance may amend the judgment after investigating and clarifying the facts;  or (4) if there was violation of legal procedure in making the original judgment, which may have affected correct adjudication, the judgment shall be set aside by a written order and the case remanded to the original peoples court for retrial. The parties concerned may appeal against the judgment or written order rendered in a retrial of their case.
  • Case of dispute over compensation for vessel-involved pollution damage between Shinhan Capital Co., Ltd. and Jiangmen Maritime Safety Administration of PRC

    2016-09-29

    The Guangdong Higher People’s Court of the People’s Republic of China Civil Judgment (2010) YGFMSZZ No.241 Appellant (the defendant in the first instance): Shinhan Capital Co., Ltd. Address: 530-1,Gojan-Dong,Danwon-Gu,Ansan, Gyunggi-Do, South Korea. Legal Representative: Han Daoxi Agent ad litem: Zhou Qi, lawyer of Sloma & Co. Agent ad litem: Zhu Chengkang, lawyer of Sloma & Co. The respondent (the plaintiff in the first instance): Jiangmen Maritime Safety Administration of the People’s Republic of China. Address: No.72, Jiang Hai Er Road, Jiangmen City, Guangdong Province, China. Legal representative: Xie Zhuoting, managing director of the Administration. Agent ad litem: Xu Guangyu, lawyer of Guangyu & Co. Agent ad litem: Lin Xiaomei, intern lawyer of Guangyu & Co. With regard to the case of disputes over compensation for vessel- involved pollution damage between the appellant Shinhan Capital Co., Ltd. (hereinafter referred to as Shinhan Company) and the respondent Jiangmen Maritime Safety Administration of the People’s Republic of China (hereinafter referred to as Jiangmen MSA), the appellant appeal to this court against the civil ruling of (2010) Guang Hai Fa Chu Zi No.201 rendered by Guangzhou Maritime Court. This court has formed collegiate bench in accordance with law and tried this case. Now the trial has been closed. Jiangmen MSA alleged in the first instance that: On 24 September 2008, suffered from typhoon Hagupit, MV “ZEUS” owned by Shinhan Company stroke the reefs on waters to the east of Shangchuang Island in Taishan City, Guangdong Province, P. R. China, leading to the break of the hull and massive leakage of fuel oil and causing ocean pollution. In order to reduce the pollution damage to fishery resources, marine ecology, fishing and breeding industry in near waters, Jiangmen MSA organized vessels and personnel to clean the oil pollution, cost of labor, materials, vessels and pollution disposal occurred therefrom was RMB 13406484. The abovementioned clean-up cost is incurred by the oil leakage of MV “ZEUS”. The owner of MV “ZEUS” Shinhan Company should bear the compensation liability for the clean-up cost. Therefore, Jiangmen MSA appeal to the court claiming against Shinhan Company for the clean-up cost RMB 13406484 plus interests in accordance with the loan interest rate stipulated by the People's Bank of China for the corresponding period from 15 October 2008 to the actual payment date, and bear all the litigation costs. Shinhan Company replied in the first instance that: 1. The clean-up cost in this case has no particularity, its nature of claim is different from which stipulated as “making it harmless” in Article 9 of Several Provisions of the Supreme People’s Court Concerning Trial over Ships Collision Disputes (hereinafter referred to as Collision Regulations). Besides, the disposal of making the shipwreck of MV “ZEUS” harmless includes wreck removal and oil pumping, which Shinhan Company has already settled with Jiangmen MSA by agreement. The clean-up cost appealed by Jiangmen MSA belongs to claims subject to limitation stipulated in the Maritime Code of the P.R. China (hereinafter referred to as Maritime Code), such loss should be compensated according to due proportion of the limitation fund for maritime claims established by Shinhan Company. 2. Though MV “ZEUS” was bareboat chartered without registration, its management complies with the International Management Code for the Safe Operation of Ships and for Pollution Prevention (the ISM Code). Shinhan Company and the master of MV “ZEUS” have no fault for the accident, Shinhan Company does not lose the right to enjoy the limitation of liability for maritime claim. 3. Daily rent of the cleaning vessels appealed by Jiangmen MSA is obviously unreasonable, and claim of labor cost for the cleaning personnel has no legal basis. Fact proven by the first instance is as follow: On 24 September 2008, suffered from typhoon Hagupit, MV “ZEUS” stroke the reefs on waters to the east of Shangchuang Island in Taishan City, Guangdong Province, P. R. China, leading to the break of the hull and massive leakage of fuel oil and causing ocean pollution. In order to reduce the pollution damage to near waters, Jiangmen MSA organized 14 vessels and personnel to clean the oil pollution. Cost of labor, materials, vessels and pollution disposal appealed by Jiangmen MSA was RMB 13406484 in total, including: 1. Cost of cleaning vessels: From 24 to 25 September, 2008, Jiangmen MSA signed the leasing contract of cleaning vessels with Lin Jilian, Zhang Weiguo, Cai Huoji, Lin Tongsheng, Lin Guilan, Zhang Xiaodong and Chen Long respectively, leasing their own vessels for the clean-up operation, and promising the daily rent (includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). Rent occurred till the end of clean-up operation was RMB 106116, RMB 212002, RMB 112630, RMB 92840, RMB 116452, RMB 292400 and RMB 292400 respectively. On 24 and 27 September, 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Jiangmen Jianghai Ship Technology Service Company and Guangdong Guohua Yuedian Taishan Power Plant respectively, asking two companies to dispatch their own vessels to participate the clean-up operation, and informed in written of the daily cost of each vessel (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). Rent occurred till the end of clean-up operation was RMB 474450 and RMB 2485440 respectively. On 24 September 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Guangdong MSA, asking the said MSA to dispatch MV “HAIXUN 31” to participate the clean-up operation, and informed in written that the daily cost of the vessel should be calculated as RMB 464000 (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). The vessel participated in the operation for 9 days and cost occurred was RMB 4176000 in total. On 24 September 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Xinhui MSA, asking the said MSA to dispatch MV “HAIXUN 1522” to participate the clean-up operation, and informed in written that the daily cost of the vessel should be calculated as RMB 16000 (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). The vessel participated in the operation for 8 days and cost occurred was RMB 128000 in total. On 24 September 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Taishan MSA, asking the said MSA to dispatch MV “HAIXUN 15072” to participate the clean-up operation, and informed in written that the daily cost of the vessel should be calculated as RMB 16000 (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). The vessel participated in the operation for 15 days and cost occurred was RMB 240000 in total. On 3 October 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Zhuhai MSA, asking the said MSA to dispatch MV “HAIXUN 151” to participate the clean-up operation, and informed in written that the daily cost of the vessel should be calculated as RMB 109920 (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). The vessel participated in the operation for 2 days and cost occurred was RMB 219840 in total. The Abovementioned cost for cleaning vessels alleged by Jiangmen MSA was RMB 8948570 in total. 2. Labor cost: Jiangmen MSA alleged that all of its 68 staffs had participated the clean-up operation, labor cost was RMB 1188000 in total. 3. Material cost: Jiangmen MSA purchased 10 tons of oil absorption felt and 3.25 tons of oil dispersant from Jiangmen Xinhui Jinye Pier Pollution Prevention Engineering Co., Ltd, the total cost was RMB 662500 in total. 4. Cost of pollutant transport and disposal: according to the delivery receipt of disposing oily water and oily felt signed by Jiangmen MSA and Jiangmen Xinhui Jinye Pier Pollution Prevention Engineering Co., Ltd, cost arising therefrom was RMB 550000 in total. 5. Vehicle cost: Jiangmen MSA signed the vehicle leasing contract with the owner of agricultural vehicle JK2583 Wen Beiqun, promising the daily rent in RMB 3000; Jiangmen MSA dispatched four vehicles of its own unit Yue J04841, Yue JK2583, Yue JL3101, Yue J22563 to participate the operation and cost arising therefrom was RMB171000. In addition, Jiangmen MSA alleged for management cost in RMB 1117207, tax in RMB 1117207 without submitting any relevant evidence. The abovementioned cost added up to RMB 13406484. Jiangmen MSA informed Shinhan Company when organizing the clean-up operation, Shinhan Company did visit the cleaning site but did not stayed through the whole process. Jiangmen MSA had sent evidences of abovementioned cost to Shinhan Company two months before the court session of claim-confirming proceeding. Shinhan Company communicated with Jiangmen MSA after receiving the evidences, saying the calculation of cost was unreasonable and asked for investigation, but Shinhan Company haven’t submitted any relevant evidence of investigation so far. According to the Certificate of Ship Nationality, owner of MV “ZEUS” is Shinhan Company, port of registry is Jeju, Korea. The Cargo Ship Safety Construction Certificate shows that type of ship is other cargo ship. Korean Register of Shipping issued the International Load Line Certificate and Cargo Ship Safety Equipment Certificate to the said vessel, both valid till 20 September 2009. On 21 July 2006, Shinhan Company signed the vessel leasing contract with Changhe Shipping Co., Ltd (hereinafter referred to as Changhe Company), promising: Shinhan Company chartered MV “ZEUS” to Changhe Company; Changhe Company was responsible for the crew’s appointment, command and supervision; and Shinhan Company was not responsible for any accident caused by the crew and such attached loss of life and property as well as relevant debt. On 1 January 2008, Changhe Company singed the vessel management contract with First Marine Co., Ltd, promising: First Marine Co., Ltd performed the management obligation to MV “ZEUS” according to Korean administrative law and international convention; business handled by First Marine Co., Ltd includes the selection, arrangement, command and supervision of the master, senior officers and the seamen. Certificate of Compliance No. KOR-0171-C issued by Korean Register of Shipping shows that the license holder is Changhe Company; applicable type of ship is other cargo ship; date of issue is 25 August 2004, valid till 26 July 2012. Certificate of Compliance No. KOR-0218-C issued by Korean Register of Shipping shows that the license holder is First Marine Co., Ltd; applicable type of ship is other cargo ship; date of issue is 11 June 2007, valid from 16 May 2007 till 11 August 2009. Safety Management Certificate No. KOR-1298-S issued by Korean Register of Shipping shows that name of the vessel is “ZEUS”, license holder is First Marine Co., Ltd; completion date of inspection is 27 July 2007, valid till 26 July, 2012. Certificate of Competency No. BS-D2-06-0267 issued by Busan Regional Maritime Affairs and Fisheries Office in 26 June 2006 shows that license holder Jeong A Jang is qualified as a master, valid till 25 June 2011. In the crew list of MV “ZEUS” submitted by Shinhan Company and approved by notarization, the master’s name is Jeong A Jang. Telegram sent to the shipowner one day before the accident, which was 23 September 2008, reading: Due to No.0814 typhoon Hagupit, the ship anchored to take shelter from the wind. Ship’s position 21°42.190′N, 112°50.50.763′E. MV “ZEUS” loaded with heavy oil 221.80 tons, light oil 18.35 tons, fresh water 60 tons, cylinder lubricating oil 2.830 tons, system lubricating oil 5.08 tons. Estimated time of leaving the shelter is the afternoon of 24. After the accident, Jiangmen MSA signed the Operation Agreement of Underwater Oil Pumping and Shipwreck Removal and the Settlement Agreement of Claims over Cost of Rescue Missing Crew Member and Salvage, Transport and Disposal of Bodies, Cost of Setting, Maintain and Withdraw the Buoy, and Cost of Onsite Safeguard with Shinhan Company respectively on 7 November 2008 and 11 December 2009. Two parties settled the costs of the underwater oil pumping, shipwreck removal, buoy setting, maintain and withdraw, and onsite safeguard. Court of the first instance made a ruling of Guang Hai Fa Chu Zi No.509, permitting the responsible person of MV “ZEUS” to set up a limitation fund for maritime claims with special drawing right of USD796256, equivalent to RMB 8537377.20. In this limitation fund, besides the registration of claims in RMB 13406484 applied by Jiangmen MSA, there was also a registration of claims in RMB 14466145 as fishery loss applied by 40 fishermen. As for the clean-up cost, the China Reinsurance (Group) Corporation provided a credit guarantee in RMB 9 million to Jiangmen MSA for Shinhan Company. The judicial committee of the first instance thought that the case was a dispute over compensation of vessel-involved pollution damage. According to Article 4 of Several Provisions of the Supreme People’s Court on the Scope of Cases to be Heard by Maritime Court, the case was under the specific jurisdiction of maritime court. The accident and damages occurred in waters of Shangchuang Island in Taishan City Guangdong Province, a place under jurisdiction of the said court. According to Paragraph 2, Article 7 of the Special Maritime Procedure Law of the P. R. China, the court of first instance had the right of jurisdiction. Since the accident vessel “ZEUS” is owned by Shinhan Company, a Korean company, this case involves foreign elements. In addition, the accident and the damages occurred in the China Sea. As per Article 146 of General Principles of the Civil Law of the People's Republic, “The law of the place where an infringing act is committed shall apply in handling compensation claims for any damage caused by the act. If both parties are citizens of the same country or have established domicile in another country, the law of their own country or the country of domicile may be applied”, the law of the P. R. China should be the applicable law to settle the dispute entity. With respect to the nature of the claim, the clean-up cost alleged by Jiangmen MSA in this case is the claim not subject to limitation. Reasons are as follow: first, the claim raised by Jiangmen MSA belongs to “Claims of a person other than the person liable in respect of measures taken to avert or minimize loss for which the person liable may limit his liability in accordance with the provisions of this Chapter” provided in Paragraph 4 of Article 207 of the Maritime Code. The party held responsible for the accident is Shinhan Company. Since Shinhan Company did not fulfill its duty of pollution clearance, Jiangmen MSA organizing pollution clearance by means of official authority is actually a vicarious performance of signing contract with clean-up units for the responsible party to entrust the said units of clean-up operation, thus the clean-up cost claimed by Jiangmen MSA belongs to “the payment as agreed upon in the contract”. As per Paragraph 2 of Article 207 of the Maritime Code, “However, with respect to the remuneration set out in sub-paragraph (4) for which the person liable pays as agreed upon in the contract, in relation to the obligation for payment, the person liable may not invoke the provisions on limitation of liability of this Article”, the claim in this case belongs to claims not subject to limitations. Secondly, stipulation of Article 207 of the Maritime Code regarding the limitation of liability for maritime claims partially took in the stipulations in Convention on Limitation of Liability for Maritime Claims, 1976 but retains the Article of “Claims in respect of raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship” The party held liable shall not enjoy limitation of liability for maritime claims concerning the aforesaid retained stipulation. By comparison, it can be perceived that clean-up cost does not belong to claims subject to limitation. Thirdly, Article 9 of the Collision Regulations stipulates that “In case compensation is required for expense of refloating, clearing and demolishing the sunken, wrecked, grounded and abandoned ship and cargo on board or making it harmless, the responsible party shall not be entitled to the benefit of limitation of liability for maritime claims provided for in Chapter XI of Maritime Law”, which is for solving the unsettled problems in the provisions of the retained part of the Convention as well as Article 207 of Maritime Code by means of judicial interpretation. The nature and consequence of oil pollution in captioned case are the same as that of oil pollution caused by ship collision; therefore, the nature of claim for clean-up cost in this case is the same as that of claim for cost of making it harmless. Thus, it should be determined that the clean-up cost in this case belongs to claims not subject to limitation. Moreover, in marine pollution accident by ship, the responsible party is obliged to clean up pollution. In the case that the responsible party did not fulfill its obligation, national competent departments in respect of maritime affair shall perform duties in place of the said party by means of official authority, and claim against the responsible party for clean-up cost, i.e. cost of vicarious performance are based on the actual cost incurred. In this case, Shinhan Company did not fulfill its duty of pollution cleaning. As a national maritime competent department, Jiangmen MSA organized clean-up units to clean pollution and required Shinhan Company to pay the cost of vicarious performance. As a maritime competent department, ,Jiangmen MSA organized the clean-up and made actual payment out of public interests and marine environment protection. Should the responsible party enjoy limitation of liability, Jiangmen MSA will not receive due compensation for its clean-up expense, which may severely discourage the initiative of pollution cleaning by maritime administrative departments and is not conducive to marine environmental protection. Therefore, the clean-up cost shall be paid in full by the responsible party Shinhan Company to the administrative substituted executor Jiangmen MSA, and Shinhan Company shall not enjoy limitation of liability for maritime claims. With respect to the calculation of the clean-up cost, as a national maritime competent department, Jiangmen MSA organized the pollution clearance out of public interests rather than seeking for undue interests. Though the clean-up cost has not yet been paid, Jiangmen MSA had signed the contract with owners of the vessels and vehicles participating in the cleaning operation and sent letters with agreed expenses to the relevant departments. Since the said units actually participated in the pollution cleaning operation, Jiangmen MSA is obliged to pay for the clean-up cost incurred by virtue of law. In the meantime, when carrying out the pollution cleaning operation, Jiangmen MSA had noticed Shinhan Company, and the latter also arrived at the operation site. After completing pollution cleaning, and two months before the court session date, Jiangmen MSA had submitted the settlement of the clean-up cost and related evidence to Shinhan Company. Shinhan Company indicated that it would investigate the irrational parts of the cost, but so far it has not provided any rebuttal evidence. Taking into consideration the actual situation of the case, RMB 8948570 for clean-up vessels, RMB 662500 for clean-up materials, RMB 550000 for transportation and disposal of pollutant, RMB 171000 for vehicles, altogether in RMB 10332070 claimed by Jiangmen MSA are confirmed and approved. As a maritime competent department, staff of Jiangmen MSA participating in pollution cleaning operation belongs to its scope of official duty, thus the compensation claim of labor cost for its own staff alleged by Jiangmen MSA has no legal basis and shall not be supported. With respect to claims alleged by Jiangmen MSA for RMB 1117207 of administrative fee and RMB 1117207 of tax roll, since the said MSA has not submitted any relevant evidence to support, the claim shall not be supported, either. Jiangmen MSA alleged that interest should calculate since 15 October 2008, which lacks evidence to prove its validness and shall not be supported. The interest should be calculated from 18 December 2008, the date Jiangmen MSA filed the lawsuit till the actual payment date at the rate of loan interest rate for circulating fund of the People’s Bank of China of the corresponding period. In conclusion, as per Paragraph 2 of Article 207 of Maritime Code and Article 90 of Marine Environmental Protection Law of the P. R. China, court of first instance adjudged as follows: 1. Shinhan Company compensates Jiangmen MSA for clean-up cost in total amount of RMB 10332070 plus interest (interest calculated from 18 December 2008 to the actual payment date at the rate of loan interest rate for circulating fund of the People’s Bank of China of the corresponding period), such compensation shall be paid separately from limitation fund for maritime claims established by Shinhan Company; 2. Reject other claims of Jiangmen MSA. The processing fee of the case is RMB 102239, in which Jiangmen MSA shall bear RMB 23446 and Shinhan Company shall bear RMB 78793. Shinhan Company appealed to this court for revocation of the original civil ruling, rejecting the claims of Jiangmen MSA, ruling the claims of Jiangmen MSA belong to claims subject to limitation, determining Shinhan Company shall enjoy limitation of liability and the processing fees of first instance and second instance shall be borne by Jiangmen MSA. Facts and the reasons are as follows: 1.The clean-up cost in this case belongs to expense incurred from preventing or minimizing pollution damage. In accordance with Summary of the Second National Foreign-related Commercial and Maritime Trial Work, since the clean-up cost incurred in this case is not governed by the International Convention on Civil Liability for Oil Pollution Damage, 1992, it shall applies to provision of limitation of liability for maritime claims stipulated in the Maritime Code. The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 taken effect in China clearly stipulates that claim for clean-up cost belongs to claims subject to limitation under the Maritime Code. 2. Claim for clean-up cost does not equal to claim for cost of wreck removal. Claims subject to limitation stipulated in Article 207 of the Maritime Code is different in nature from “claim for cost of wreck salvaging and removal” stipulated in Convention on Limitation of Liability for Maritime Claims, 1976 that retained by the Maritime Code. The former concerns cost of cleaning up pollution caused by leaked oil, while the latter concerns cost of making harmless of the vessel or cargo on board, while cleaning leaked oil and pumping oil from shipwreck are totally different in nature. Article 9 of the Collision Regulations roots in the retained stipulation of Convention on Limitation of Liability for Maritime Claims, 1976, and the claim stipulated has an inconsistent nature with that of claim for clean-up cost in this case. Therefore, Article 9 cannot apply to this case. 3. During pollution cleaning operation, Shinhan Company did not entrust Jiangmen MSA to sign cleaning contract with clean-up units, nor was Jiangmen MSA an employee of Shinhan Company. The contract signed by Jiangmen MSA cannot directly bind Shinhan Company, so there is no “payment as agreed upon in the contract” between the two parties. Therefore, the opinions of the original ruling deeming the clean-up cost claimed by Jiangmen MSA belongs to “the payment as agreed upon in the contract by the person liable” lacks legal basis. 4. Jiangmen MSA did not make actual payments for any clean-up cost. Therefore, Jiangmen MSA suffered no loss from the accident. Moreover, Jiangmen MSA did not submit any evidence to prove the causal relationship between the clean-up cost and the accident; nor did it prove the reasonability of vessels, staff, materials and vehicles participating in pollution cleaning operation; Jiangmen MSA should bear the legal consequences of inability to provide evidence. In conclusion, the fact determined in the original ruling is unclear and applied the law wrongly. Jiangmen MSA alleged in the second instance that : 1.After the accident happened, Shinhan Company neither took pollution cleaning actions nor entrusted any third party to clean pollution, which seriously damaged marine environment. According to Article 71 of Marine Environmental Protection Law of the P. R. China (hereafter referred to as Marine Environmental Protection Law), Jiangmen MSA is entitled to take compulsive pollution cleaning. By signing contract with a third party and entrusting clean-up units to clean pollution, Jiangmen MSA fulfilled the duty in place of Shinhan Company to remove risk and impact of pollution. As per paragraph 2 of Article 207 of the Maritime Code, the expense paid by Jiangmen MSA as agreed upon in the contract belongs to compensation paid by the liable person as agreed upon in the contract, thus Shinhan Company cannot enjoy limitation of liability. If Shinhan Company shall enjoy limitation of liability in this case, it would seriously hinder Jiangmen MSA’s duty of administrative law enforcement and disturb the order of marine safety and environment protection; which is against the purpose of legislation of the Marine Environmental Protection Law and the Maritime Code aiming at protecting marine ecology environment and requiring the person liable to strictly perform its obligation of pollution clearance and prevention. According to the Article 71 of Marine Environment Protection Law, taking compulsive clean-up measures was executing the rights rather than performing obligation of Jiangmen MSA. 2. The nature and consequence of oil pollution in captioned case are the same as that of oil pollution caused by ship collision. Jiangmen MSA’s cleaning operation is a behavior of making the oil harmless. There is no fundamental different between the clean-up cost involved in the case and the cost of “clearing and demolishing the sunken, wrecked, grounded and abandoned ship or making it harmless” stipulated in Article 9 of the Collision Regulations. Such regulation should be applied to identify the clean-up cost as claims not subject to limitations. 3. After the accident happened, Shinhan Company had sent experts for site investigation, and confirmed that there was no other shipwreck or oil leakage happened around. Jiangmen MSA also provided evidences to prove the vessel’s sinking time, spot, damage area, amount and types of leaked oil, which sufficiently demonstrated the causal relationship between the oil leakage of MV “ZEUS” and the pollution accident of the subject water. Shinhan Company didn’t provide any rebuttal evidence to counter the arguments. Jiangmen MSA also submitted evidence to prove that the clean-up operation was completed and there was actual cost occurred therefrom. And two months after the Shinhan Company received the evidence from Jiangmen MSA it didn’t provide any rebuttal evidence. Therefore, the clean-up cost occurred in accident waters by Jiangmen MSA is reasonable. 4. According to the evidence provided by Jiangmen MSA in the first instance, it was the grate fault of Shinhan Company that resulted in this accident. As per Article 209 of the Maritime Code, Shinhan Company was not entitled to enjoy the limitation of liability. In view of the above, the judgment of the first instance determined the facts clearly and applied laws properly, and should be upheld. The appeal of Shinhan Company should be rejected. This court hereby confirmed that the fact determined by the first instance was verified. This court holds that the captioned case is a dispute over compensation for pollution damage caused by ships. And this court confirmed that both parties involved have no objection towards the court of first trial to execute the right of jurisdiction and the dispute in this case shall apply the law of the P. R. China. The focus of disputes in this case are: 1. Whether Shinhan Company should bear the responsibility of compensating the clean-up cost; 2. If Shinhan Company should bear such responsibility, what’s the specific amount of clean-up cost they should undertake; 3. Whether Shinhan Company is entitled to limitation of liability for the clean-up cost. As for the first dispute, Jiangmen MSA filed a lawsuit against Shinhan Company for the clean-up cost arising from the oil leakage of the vessel owned by the latter due an accident caused by typhoon, and they have provided evidence to prove the facts that the damage had happened. According to Sub-paragraph 3 of Paragraph 1 of Article 4 of Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures, if Shinhan Company appeal to exempt from the compensation liability of environmental pollution, they shall provide evidence to prove that the exemptions and pollution accident stipulating in existing law have no causal relationship with the clean-up cost. But Shinhan Company did not provide any above evidence. According to Article 2 of Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures, Shinhan Company should bear the legal consequences of inability to provide evidence. Shinhan Company should bear the compensation responsibility of the clean-up cost in this case. Therefore, Shinhan Company’s appeal of the clean-up cost claimed by Jiangmen MSA did not have causal relationship with the pollution accident lacks factual and legal basis. This court does not support it. As for the second dispute, accident happened to the vessel owned by Shinhan Company and caused ocean pollution, Shinhan Company ought to perform its obligations of clean-up and restoring the marine environment by virtue of law. Under the circumstance that Shinhan Company failed to fulfill the above obligations, Jiangmen MSA organized compulsive clean-up operation, signed contract with relevant cleaning units and individuals, rent vessels and vehicles, and purchased materials. The clean-up operation was completed and such cost also been proved by relevant contracts. Even if Jiangmen MSA hasn’t effected actual payment of the clean-up cost for the moment, it still has to pay the cost according to the contracts later. Therefore, Shinhan Company’s appeal of Jiangmen MSA suffered no actual loss in the accident lacks basis of facts and this court does not support it. Shinhan Company considered the clean-up cost claimed by Jiangmen MSA is unreasonable and over-price. In the first instance they have submitted the list of clean-up cost of other vessels in the same period. The clean-up cost claimed by Jiangmen MSA was clearly prescribed in the vessel leasing contracts, vehicle leasing contracts and materials purchase contracts. According to the content of these contracts, Jiangmen MSA did not obtain commercial profits during the clean-up operation in this case. The list of clean-up cost of other vessels in the same period submitted by Shinhan Company cannot prove the clean-up cost arising from this accident. There is no comparability. Therefore, Shinhan Company’s assertion that the clean-up cost claimed by Jiangmen MSA unreasonable is inconsistent with the facts. This court does not support it. As for the third dispute, the vessel owned by Shinhan Company leaked fuel oil and caused ocean pollution due to the typhoon in her voyage, the claimed clean-up cost arising from this situation belongs to “claims in respect of other loss resulting from infringement of rights other than contractual rights occurring in direct connection with the operation of the ship or salvage operations” stipulated in Paragraph 3 of Article 207 of Maritime Code. But Shinhan Company was negligent in eliminating the damage after the accident happened. According to Article 71 of Marine Environment Protection Law, “For vessels involved in maritime incidents causing or possibly resulting in major pollution damages to the marine environment, the competent State administrative department in charge of maritime affairs shall have the right to adopt forcible measures to avoid or reduce pollution damage.” In order to minimize the pollution damage caused by Shinhan Company, Jiangmen MSA signed contracts with entrusted cleaning units to perform clean-up operation, which was actually a vicarious performance of Shinhan Company’s obligation for clean-up. The clean-up cost arising from abovementioned contracts belongs to claims not subject to limitation stipulated in Article 207 of Maritime Code: “However, with respect to the remuneration set out in sub-paragraph (4) for which the person liable pays as agreed upon in the contract, in relation to the obligation for payment, the person liable may not invoke the provisions on limitation of liability of this Article.” Paragraph 1 of Article 17 of Several Provisions of the Supreme People’s Court Concerning Trial over Disputes on Limitation of Liability for Maritime Claims ( hereinafter referred to as Limitation of Liability for Maritime Claims )stipulates that “The maritime claims subject to limitation of liability provided in Article 207 of the Maritime Code excludes the claims in respect of the refloating, removal, destruction or rendering harmless of a ship which is sunk, wrecked, stranded or abandoned or claims in respect of the removal, destruction or rendering harmless of the cargo onboard the ship.” The cost of “rendering harmless” stipulated in Limitation of Liability for Maritime Claims is consistent with that stipulated in Collision Regulations. Although the object for expense in two abovementioned regulations and the clean-up cost are different, they are all for reducing damage caused by ship-involved accident, their ultimate purpose are to maintain public interest. Now that the previous two expenses belong to claims not subject to limitation, the clean-up cost in this accident should belong to claims not subject to limitation as well. Besides, it is not fair if the person responsible for the accident didn’t take effective action to minimize or eliminate the damage, but take less responsibility than the one taken positive action to minimize or eliminate the damage caused by himself, which will not contribute to the protection of marine environment, either. Therefore, The opinions of the courts of the first instances deeming the clean-up cost as claims not subject to limitation was right. The dispose is beneficial to supervise the person responsible for the marine pollution accident to take his responsibility actively, protect the marine environment, and realize the harmonious development between shipping business and marine protection. This court rule for sustain. In view of the above, the judgment of the first instance determined the facts clearly and applied laws properly, the original judgment should be affirmed. The ground of appeal is insufficient and the appeal of Shinhan Company should be rejected. In accordance with Sub-paragraphs 1 of Paragraph 1 of Article 153 of the Civil Procedure Law of the P. R. China, it is judged as follows: Reject the appeal, affirm the original judgment. The litigation fee of the second instance is RMB 78793, assumed by the Appellant Shinhan Company. This judgment should be final. Presiding Judge:Hou Xianglei Acting Judge:Wang Jing Acting Judge:Li Mingtao Guangdong Higher People’s Court (stamped) 30 October 2011 Certified as true to the original Court Clerk: Wang Qian The translation is provided by Huang & Huang CO.
  • Case of dispute over ship mortgage filed by Cornèr Banca S.A. against Jiangmen Yinhu Shipbreaking Co., Ltd and others

    2016-07-19

    Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2010)GHFCZ No.737 Claimant: Cornèr Banca S.A. Address: Via Canova 16, 6901 Lugano, Switzerland. Legal Representative: T. Arsuffi, Assistant Vice President Agent ad litem: CAO Yanghui, atttorney from Wang Jing & Co. Agent ad litem: WANG Weisheng , attorney from Wang Jing & Co. Defendant: Jiangmen Yinhu Shipbreaking Co., Ltd. Address: Shadui County, Xinhui District, Jiangmen City, Guangdong, China Legal Representative: LIAO Zhaowen, Chairman Agent ad litem: YANG Yunfu, atttorney from Yang & Lin Co. Agent ad litem: REN Yanbin , attorney from Yang & Lin Co. Defendant: Minmetals Australia Pty Ltd Address: Level 8 564 ST Kilda Road Melbourne Australia Legal Representative: LIU Zhilong, General Manager Agent ad litem: ZHANG Shuzhen, attorney from Beijing Dacheng Law Office Agent ad litem: WANG Yan, attorney from Beijing Dacheng Law Office Defendant: Guangdong Metal Recycling Corporation Address: 21F, 12#, Bei Jiao Chang Road, Guangzhou City, Guangdong of China Legal Representative: ZHANG Xiongwen, General Manager Agent ad litem: LIU Mei, Manager of Import & Export Branch of Guangdong Metal Recycling Corporation Agent ad litem: WANG Xinchun, Assistant Manager of Import & Export Branch of Guangdong Metal Recycling Corporation The Claimant Cornèr Banca S.A. sues Defendants Jiangmen Yinhu Shipbreaking Co., Ltd (“Yinhu”), Minmetals Australia Pty Ltd (“Minmetals”), Guangdong Metal Recycling Corporation (“Recycling Corporation”) pertaining to the dispute of ship mortgage. The claimant submitted a case to the Court against Yinhu on 2 November 2010 and the Court, after accepting it, established collegiate panel in accordance with law. On 19 April 2011, Claimant applied to the Court to place Minmetals and Recycling Corporation as addition defendants to the case, which was granted by the Court. The Court notified Minmetals and Recycling Corporation as Defendants to the case on 31 May 2011 and heard the case in open court on 8 September 2011. CAO Yanghui, WANG Weisheng, the agent ad litem on behalf of Claimant, YANG Yunfu, REN Yanbin, the agent ad litem on behalf of Defendant Yinhu, ZHANG Shuzhen, WANG Yan, the agent ad litem on behalf of Defendant Minmetals, LIU Mei, WANG Xinchun, the agent ad litem on behalf of Defendant Recycling Corporation appeared in court and participated in the litigation. Now the case has been closed. Claimant claimed that on 24 May 2006, the Claimant signed a Loan Agreement with Marbel Trading Corp. (“Marbel”), wherein the Claimant provided Marbel Trading Corp. a loan of two million five hundred thousand Dollars in the currency of the United States of America. On the same day, they signed a first preferred Panamian ship mortgage, wherein Marbel mortgaged M/T “Black Pearl” to the Claimant in the amount of three million one hundred and ninety thousand Dollars in the currency of the United States of America (USD 3,190,000), as security for Marbe’s due and punctual repayment of the Loan and interest thereon in accordance with the terms of the Loan Agreement. The above mortgage of M/T “Black Pearl” has been (and was at all material times) registered with the Registry Public of Panama. Owing to the fact that Marbel failed to perform such repayment obligation as agreed in the Loan Agreement, Claimant, on 17 July 2007, issued a written notice, demanding Marbel to remedy the above Events of Default. Till 31 December 2009, the principal and accrued interest owed by Marbel to the Claimant are USD2,176,807.96. In September 2009, without notifying Claimant and obtaining permission from Claimant, Marbel sold M/T “Black Pearl” to Minmetals who sold the vessel to Recycling Corporation and Recycling Corporation subsequently resold it to Yinhu. At the beginning of 2010, Yinhu imported M/T “Black Pearl” to Jiangmen for scrapping. The Claimant notified Yinhu repeatedly that M/T “Black Pearl” is subject to the lawful registered mortgage in favor of the Claimant and requested Yinhu not to infringe upon the Claimant’s lawful right and stop scrapping. However, Yinhu finally scrapped M/T “Black Pearl” irrespective of objection from Claimant. The above acts of Defendants infringe upon the lawful rights and interests of the Claimant, as a result, the Claimant could not implement its mortgage over M/T “Black Pearl”. Therefore the Defendants shall be severally and jointly liable to compensate the loss of the Claimant. Claimant requests the Defendants to severally and jointly compensate the Claimant for the loss of loan USD 2,083,334 plus interest (the interest shall be calculated to the actual payment day according to the rate provided in the contract) and bear the court fee for this case as well as all other costs the Claimant has paid or will pay for this case. Claimant submitted such evidential materials to the Court within evidence submission period as follows: 1. Loan Agreement; 2. Naval Mortgage Agreement; 3. Registry information of the vessel; 4. Three contract of ship purchase; 5. Ship Import Application and Ship Entry Notice; 6. Two default notices; 7. Three notices and delivery record; 8. Lending and repayment record; 9. Photos. Defendant Yinhu defended that: 1. Claimant does not produce any evidence proving it has provided the loan to Marbel subject to Loan Agreement, Marbel has actually received the loan, and that Marbel fails to repay the loan; 2. The ship mortgage claimed by Claimant has not been recorded on the certificate of ship registry. The Claimant fails to submit the original mortgage registration certificate and it cannot be evidenced that the mortgage has been publicized. Therefore, the mortgage cannot be used against the third party; 3. In the chain of contract of ship purchase, there is no contractual relationship between Yinhu and Marbel. Yinhu knew nothing about mortgage on M/T “Black Pearl” and has paid in full to Recycling Corporation. Yinhu is therefore a bona fide third party; 4. Yinhu has fulfilled obligation of declaration and obtained permission of competent authorities in order to purchase and scrap M/T “Black Pearl” as scrap steel ship and no illegal acts exist therein. In sum, Defendant requests the Court to reject the claims of Claimant and the court fee shall be borne by Claimant. Defendant Yinhu submitted such evidential materials to the Court within evidence submission period as follows: 1. Contract of ship purchase and annex thereof, commercial invoice; 2. Sales contract; 3. Three guarantees; 4. Certificate of ship registry; 5. Payment instruction and payment voucher; 6. Contract of scrap steel ship; 7. Representation; 8. Ship files; 9. Customs declaration and annex thereof; 10. Import Goods Declaration Form; 11. Quarantinable treatment certificate for conveyance; 12. Import Application; 13. Scrap steel ship into the waters declaration form; 14. Scrap steel ship into port notices; 15. Scrap steel ship berthing scheme; 16. Residual oil /oil water receiving and hold cleaning declaration form; 17. ship-scrapping application. Defendant Minmetals defended that: 1. Minmetals, Recycling Corporation and Yinhu do not jointly commit tort and cannot cause the same damage and shall not bear the several and joint liability; 2. Without the signature and chop by Marbel on Loan Agreement and Naval Mortgage Agreement, the two documents are not in effect and cannot prove the loan and mortgage exist legally; 3. Claimant fails to produce legal and effective ship mortgage registry certificate. The witness statement made by Johel Antonio Coccio, officer in Panama Public Registry, cannot be admitted as convincing evidence due to the fact that the witness did not appear in court to be questioned; 4. The mortgage claimed by Claimant did not go through public process and cannot be used against the third party. Minmetals, when purchasing M/T “Black Pearl”, has performed duty of care as a buyer and paid in full. Thus, Minmetals is a bona fide third party without any fault, and does not infringe upon the mortgage of Claimant. In sum, Defendant Minmetals requests the Court to reject the claims of Claimant and the court fee shall be borne by Claimant. Defendant Minmetals submitted such evidential materials to the Court within evidence submission period as follows: 1. Contract of ship purchase; 2. Commercial invoices; 3. Sales contract; 4. Certificate of ship registry; 5. Payment instruction and payment voucher; 6. Commission agreement and commission disbursement voucher; 7. E-mails. Defendant Recycling Corporation defended that: 1. Only signatures of Claimant and INTERSEA MANAGENT SA and no signature and chop of Marbel appear on Loan Agreement and Naval Mortgage Contract. Besides, Claimant fails to produce evidences to prove INTERSEA MANAGEMENT SA is the authorized representative of Marbel. Therefore, it cannot be proved that Marbel is a party to the contract and involved into the Loan Agreement and Naval Mortgage Contract with Claimant; 2. The ship mortgage claimed by Claimant is based on the loan to Marbel and since Claimant fails to submit any effective arbitral award or judgment to prove Marbel does not pay back all the loan, there is no factual and legal basis for Claimant to claim ship mortgage; 3. The ship registry certificate submitted by Marbel indicates Marbel is the owner of M/T “Black Pearl” without any endorsement of valid mortgage. Thus, it is not possible for Minmetals, Recycling Corporation and Yinhu to be aware of mortgage on M/T “Black Pearl” and they are bona fide buyers without subjective fault and shall not bear the liability of tort; 4. Pursuant to the notice of default of Claimant, Marbel has failed to return the loan since 17 July 2007, but Claimant did not enforce mortgage nor apply to seize the ship till M/T “Black Pearl” was finally purchased and scrapped by Yinhu. The fact that Claimant delayed in enforcing mortgage indicates the hesitation and uncertainty of Claimant towards the legal existence of mortgage; 5. The scrapping of M/T “Black Pearl” results in the destruction of mortgaged property as well as the mortgage attached to it. In accordance with the essence of Reply of Supreme Court on Whether Bona Fide Transferee of Registered Mortgage Property shall indemnify mortgagee after the destruction of Mortgaged Property, Recycling Corporation, as a bona fide transferee, shall not bear the indemnification liability. In sum, Defendant requests the Court to reject the claims of Claimant and the court fee shall be borne by Claimant. Defendant Recycling Corporation submitted such evidential materials to the Court within evidence submission period as follows: 1. Contract of ship purchase; 2. Payment voucher; 3. Ship certificate; 4. Ship sales certificate; 5. Sales Contract for scrap steel ship. After cross-examination of evidences submitted by both parties in court trial and in consideration of cross-examination submission of Claimant and Defendants, the collegiate panel ascertains the facts as follows: On 24 May 2006, Claimant and Marbel signed a Loan Agreement in Lugano, Switzerland, wherein: Claimant provides Marbel a loan of USD 2,500,000. Marbel, three months after withdrawing the loan, repays to Claimant by installment of USD 208,333 every quarter and the interest shall be calculated at the three-month interbank rate in London plus two percentage interest margin. The interest rate shall be adjusted every three month; Marbel, before or on the day when withdrawing the loan, signed a contract where Claimant enjoys a first preferred mortgage on the ship registered pursuant to Panamanian law and passed it to Claimant for registration; The Loan Agreement is governed by Swiss law whilst the mortgage property is applied by Panama law. On the same day, both parties signed a first preferred Panamanian ship mortgage, wherein: To guarantee return of the loan, Marbel acknowledges Claimant enjoys a first preferred mortgage on M/T “Black Pearl” and the secured amount in the mortgage contract is USD 3,190,000; Within three days after conclusion of the contract, Marbel submits to Claimant an original document of ship mortgage officially endorsed by Panama Ship Registry, to evidence the mortgage of M/T “Black Pearl” has been registered; One week after the temporary registration of document of ship mortgage in Panama Ship Registry, Marbel shall submit a new certificate from Panama Ship Registry to evidence the temporary registration has been changed to official registration. In the Loan Agreement and Ship Mortgage Contract, the columns indicating borrower and mortgagor have been chopped “INTERSEA MANAGEMENT SA” without signature and chop of Marbel. Pursuant to the registry certificate of M/T “Black Pearl” issued on 8 January 2009 by Panama Merchant Ship Registry, the owner of M/T “Black Pearl” is Marbel, the construction location is Aichi, Japan and the construction date is in 1981 (keel laid), steel tanker. The length is 170 m, the width is 32.2 m, the depth is 19.2 m, the gross tonnage is 29,864 and the net tonnage is 12,528. The validity of certificate is till 7 January 2010. On 19 March 2009, Johel Antonio Coccio certified that: M/T “Black Pearl” was registered on 22 June 2006 and the owner is Marbel. Claimant is the first preferred ship mortgagee and the secured amount is USD 3,190,000. The registration number is 1001224 and registration date is 24 August 2006. The mortgage is still on registry till the issue of the certification. The certification is stamped by Panama Public Registry. During the trial, the agent ad litem on behalf of Claimant asserted the existence of original ship mortgage documents and was requested by the collegiate panel to submit them before deadline. However, so far Claimant has not submitted documents of ship mortgage. The lending record and repayment record presented by Claimant demonstrated that: Claimant provided Marbel a loan of USD 2,500,000 on 30 June 2006. By 31 December 2006, Marbel was still in a debt of USD 2,125,561.97 to Claimant. There are no signature and chop of Marbel in the lending record and repayment record. On 15 September 2009, Minmetals and Marbel signed a memorandum of agreement, wherein: Minmetals purchases M/T “Black Pearl” from Marbel at a price of USD 2,553,337.41, calculated at 9,086.61 long ton (equal to 9,232 MT) with USD 281 per long ton CIF Xinhui, China. The payment shall be remitted to the account of SEA DARN BROKERS SA as beneficiary designated by Marbel. The date of ship delivery is 10/15 November 2009. Minmetals respectively pays USD 619,184.33, USD 19,150.02, USD 1,838,402.93, adding up to USD 2,476,737.28 to SEA DARN BROKERS SA on 18 September 2009, 22 September 2009 and 24 December 2009. Marbel issues a USD 2,553,337.41commercial invoice and a sales contract to Minmetals, guaranteeing that M/T “Black Pearl” is free and clear of any registered mortgage, maritime lien, property encumbrance, claims and any other debt constraint. On 18 September 2009, Recycling Corporation and Minmetals signed a contract of ship purchase, wherein: Recycling Corporation purchases M/T “Black Pearl” from Minmetals at a price of USD 2,544,250.80; The date of ship delivery is 10/15 November 2009 and the delivery location is Xinhui, China. Recycling Corporation pays USD 2,544,250.80 to Minmetals on 28 December 2009 for ship purchase and Minmetals issues a USD 2,544,250.80 commercial invoice to Recycling Corporation. On 22 September 2009, Yinhu and Recycling Corporation signed a contract of scrap steel ship purchase, wherein: Yinhu purchases M/T “Black Pearl” from Recycling Corporation at a price of RMB 21,093,491.08; The location of ship delivery is subject to foreign contract. The date of ship delivery is subject to foreign contract at the option of ship owner. Yinhu pays RMB 21,103,032.24 to Minmetals on 25 December 2009 for ship purchase. Recycling Corporation issues an RMB 21,103,032.24 commercial invoice to Yinhu. M/T “Black Pearl” arrived at shipyard of Yinhu on 26 December 2009. Upon the application of Recycling Corporation, Guangzhou Huangpu Exit and Entry Inspection and Quarantine Bureau issued quarantinable treatment certificate for conveyance on 30 December, permitting the scrapping; Guangzhou Huangpu Old Port Customs approved and verified import on 19 January 2010. Upon the application of Yinhu, Jiangmen MSA, after examination and verification, approved scrapping. M/T “Black Pearl” now has been finished scrapping. All members of collegiate panel unanimously opine that: the case is pertaining to a dispute of ship mortgage. In accordance with article 38 of Some Provisions of the Supreme People's Court on the Scope of Cases to be Entertained by Maritime Courts, the case is within the scope of cases entertained specially by maritime court. The place of tort in the case is the waters of Jiangmen City of People’s Republic of China and the addresses of Defendant Recycling Corporation and Yinhu are within jurisdiction of the Court. In accordance with Article 6 of Special Maritime Procedure Law of the People's Republic of China and Article 29 of Civil Procedure Law of the People's Republic of China related to the provision of “A lawsuit filed for tort act shall be under the jurisdiction of the people s court in the place where the tort act took place or where the defendant has his domicile”, the Court has jurisdiction over the case. As the nationality of the involved M/T “Black Pearl” is Panama and the domiciles of Claimant and Defendant Minmetals are not in People’s Republic of China, the case is foreign factor-related. In accordance with Article 146 of General Principles of Civil Law of People’s Republic of China, which provides that “The law of place where the tort took place shall apply to damages arising from tort”, in the case the law of People’s Republic of China shall be applicable to deal with substance of the dispute. The dispute is centered on: 1. Whether the claim of mortgage loss by Claimant can be established; 2. Whether Defendants infringe upon ship mortgage of Claimant by the act of purchasing M/T “Black Pearl”. 1. Whether the claim of mortgage loss by Claimant can be established. Ship mortgage is a secure method to guarantee creditor’s interests by ship. The ship mortgage placed is to guarantee a certain creditor’s right to be realized. Ship mortgage is an accessory right and exists when the secured primary creditor’s right exists and extinguishes when the secured primary creditor’s right extinguishes. Therefore, enforcement of ship mortgage by mortgagee is premised on whether the primary creditor’s right exists. The mortgage could only exist when the primary creditor’s right exists and mortgagee is consequently entitled to enforce the mortgage on the mortgaged ship transferred by debtor. Claimant maintains that Defendants infringe upon its mortgage and requests Defendants to compensate the loss, but Claimant fails to provide effective evidence to prove Marbel has not repaid the loan pursuant to Loan Agreement and the loan of Marbel still exists. Therefore, Claimant shall bear the disadvantageous litigation result for failure to discharge burden of proof. As the Claimant cannot prove the existence of primary creditor’s right, the claim of accessory creditor’s right, i.e. mortgage loss is lack of factual and legal basis and cannot be supported. 2. Whether Defendants infringe upon ship mortgage of Claimant by the act of purchasing M/T “Black Pearl” Claimant maintains that the mortgage of M/T “Black Pearl” has been registered in Panama registry and submits the certification issued by Johel Antonio Coccio. The certification from Johel Antonio Coccio is merely witness statement and is not as effective as Ship Mortgage Certificate and thus cannot be used to prove M/T “Black Pearl” has been registered in registry of flag state. Besides, Johel Antonio Coccio did not appear in court as witness. Without other evidences to confirm it, the certification of Johel Antonio Coccio is not adopted. In the trial, Claimant maintains that except the certification from Johel Antonio Coccio, there are documents of ship mortgage registry but fails to submit to the court. Because Claimant fails to prove the mortgage of M/T “Black Pearl” has been registered, the mortgage provided in the contract of ship mortgage with Marbel does not have public effect. Defendants, when purchasing M/T “Black Pearl”, has examined the certificate of ship registry and sales contract provided by Marbel and thus has performed the duty of care and paid the price. Owing to the fact that there is no record of ship mortgage in both certificate of ship registry and sales contract, Defendants cannot be aware of mortgage placed on M/T “Black Pearl” and they are bona fide buyers without subjective fault and cannot infringe upon mortgage of Claimant. In accordance with Article 13(1) of Maritime Law of People’s Republic of China, which provides that the mortgage of a ship shall be established by registering the mortgage of the ship with the ship registration authorities jointly by the mortgagee and the mortgagor. No mortgage may act against a third party unless registered, Defendants shall not be liable for the tort. In sum, in accordance with Article 64(1) of the Civil Procedure Law of People’s Republic of China and Article 13(1) of Maritime Law of People’s Republic of China, the civil judgment is hereby rendered as follows: Reject the claims of Claimant Cornèr Banca S.A. The court fee RMB 109,075 shall be borne by Claimant. If not satisfied with this Civil Judgment, Claimant Cornèr Banca S.A.and Defendant Minmetals Australia Pty Ltd. may, within thirty days upon receipt of the Judgment, Defendant Jiangmen Yinhu Shipbreaking Co., Ltd and Guangdong Metal Recycling Corporation may, within fifteen days upon receipt of the Judgment, submit petition for appeal to the Court with copies in the number of the opponent/concerned parties for filing an appeal with Guangdong Provincial Higher Court. Presiding Judge: CHEN Bin Acting Judge: XIONG Shaohui Acting Judge: YANG Yousheng Date: 22 December 2011 Certified as true to the original Court Clerk: ZHUANG Zhifa The translation is provided by Wang Jing & CO.
  • Case of dispute over contract of carriage of goods by sea between COSCO Logistics (Guangzhou) Company Limited and CMA CGM (China) Shipping Co., Ltd. Shunde Branch

    2016-05-17

    Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2010)GHFCZ No.10 Plaintiff : COSCO Logistics (Guangzhou) Company Limited Address : 30th -32nd Floor, East Tower, Fortune Plaza, 116 East Tiyu Road, Tianhe District, Guangzhou, China Legal Rep. : Ma Jianhua, Employee of Company Agent ad litem : Shen Hongwei, Lawyer from Geenen Foreign Legal Service Center Agent ad litem : Ren Lina, Paralegal from Geenen Foreign Legal Service Center Defendant : CMA CGM (China) Shipping Co., Ltd. Shunde Branch Address : Room 501-504, Hongjian Building, Ronggui Ave, No.2 South Fengxiang Road, Shunde District, Foshan, China Person in Charge : Zhu Liqing, General Manager of Shunde Branch Agent ad litem : Zhao Shuzhou, Lawyer from Wang Jing & Co. Law Firm Agent ad litem : Yang Bo, Lawyer from Wang Jing & Co. Law Firm With respect to the case of dispute over contract of carriage of goods by sea lodged by the Plaintiff, COSCO Logistics (Guangzhou) Company Limited (hereinafter referred to as “COSCO”) against the Defendant CMA CGM (China) Shipping Co., Ltd. Shunde Branch (hereinafter referred to as “CMA Shunde”) on 7 December 2009, this Court accepted the case and then formed a collegiate bench accordingly to hear it. On 25 January 2010, the Plaintiff submitted an application to this Court requesting to join CMA CGM S.A (hereinafter referred to as “CMA CGM”) to this lawsuit as a co-defendant. This Court ruled to dismiss the Plaintiff’s application on 17 June. This Court convened both parties to exchange evidences on 28 July and 8 September and held a public court hearing. Shen Hongwei, the agent ad litem of the Plaintiff, Yang Bo, the agent ad litem of the Defendant attended the court hearings. Now the trial of this case has been concluded. It was alleged by the Plaintiff, COSCO that on 5 December 2008, the Plaintiff accepted the entrustment of Shanwei Good Harvest Aquatic Products Co., Ltd (hereinafter referred to as “SGHAP”) to carry the cargo laden in a 40’ container from Yantian of Shenzhen to Miami of America. On the same day, the Plaintiff, in its own name, booked the cargo space from the Defendant who issued the booking confirmation to the Plaintiff after accepting the entrustment. On 12 December, both parties confirmed via email the information on the bill of lading: B/L No. was UH2130925, Container No. was TRLU1810852, cargo name was frozen tilapias, the shipper stated on the B/L was SGHAP, and the consignee was COSCO LOGISTICS (AMERICAS). INC (hereinafter referred to as “COSCO (Americas)”). Both parties agreed that the cargo shall be released in accordance with their telex release instruction; thus, no original B/L was issued after the cargo was loaded. On 18 December, the Plaintiff paid the freight in amount of RMB 27,844.05 to Shunde Branch of Sinotrans Guangdong Co., Ltd. (hereinafter referred to as “Sinotrans Shunde”) as per the Defendant’s requirements. On 19 December, the Plaintiff and SGHAP executed the Telex Release Application (Letter of Guarantee) pursuant to the form provided by the Defendant and sent it to the Defendant by email, informing the Defendant to deliver the subject cargo to COSCO (Americas) at the destination port. On 25 December, the Defendant confirmed the content of the telex release application via email. In accordance with the information provided by the Defendant, the subject cargo arrived at the destination port on 9 January 2009, but the consignee COSCO (Americas) didn’t receive the cargo arrival notice. Afterwards, it was understood that the subject cargo has been delivered to another party at the destination port. Therefore, SGHAP lodged a lawsuit against the Plaintiff and China Ocean Shipping Agency in June 2009, for requesting the aforesaid two parties to compensate the loss of subject cargo in amount of RMB601,360. On 23 December, the Plaintiff in this case compensated RMB481.000 (80% of the cargo value) to SGHAP through the mediation held by this Court. Subsequently, SGHAP issued a Letter of Subrogation to assign the right of claim for the subject cargo to the Plaintiff to facilitate Plaintiff to seek recourse from the party who is ultimately response for the loss. In summary, the Plaintiff requested the Court to order the Defendant to compensate the cargo loss in amount of RMB 601,360, freight payment RMB 27,844.05 and the interest thereon (the interest should be calculated from the date the Plaintiff actually paid the compensation to SGHAP to the date of payment of compensation to the Plaintiff at the overdue repayment interest rate as published by the People’s Bank of China) and to order the Defendant to bear the court fee for this case. The Plaintiff submitted the following evidences within the time limit for adducing evidence: 1. the booking note issued by the Plaintiff to the Defendant which proves the Plaintiff issued the booking note to the Defendant in December 2008 and the Plaintiff booked cargo space from the actual carrier, CMA CGM via the Defendant; 2. the booking confirmation issued by the Defendant to the Plaintiff which proves the Defendant issued the booking confirmation to the Plaintiff on the same day after receiving the Plaintiff’s entrustment; 3. the B/L confirmation issued by the Defendant to the Plaintiff which proves the relationship of carriage and the details of carriage of the subject cargo; 4. the Telex Release Application issued by the Defendant to the Plaintiff which proves the Defendant forwarded to the telex release confirmation to the Plaintiff on 25 December, it was stated in the email that the consignee was COSCO (Americas); 6.the notarial document which proves Notary Public Office of Guangzhou has notarized the Evidence No. 4 and Evidence No. 5; 7. the customs declaration form for export which proves the value of subject cargo; 8. ICBC’s advice of rejection which proves SGHAP failed to collect the cargo price via bank and the value of subject cargo; 9. the freight invoice which proves the Plaintiff has paid the freight of the subject cargo in amount of RMB 27,844.05; 10. the Letter of Subrogation issued by SGHAP which proves SGHAP assigned all the rights in the subject cargo to the Plaintiff; 11. the sales contract and the notarial certificate, the packing list and the notarial certificate, the commercial invoice and the notarial certificate with respect to the subject cargo provided by SGHAP which prove the value of subject cargo. After the hearing, the Plaintiff supplemented the following evidences: 12. statement on failing to receive the cargo which proves COSCO (Americas) failed to receive the subject cargo; 13. container tracking record and the notarial certificate showing the empty container numbered as TRLU1810852 arrived at Rotterdam container yard on 2 September 2009 which prove the cargo has been picked up; 14. the Civil Mediation Award which proves with regard to the lawsuit lodged by SGHAP against the Plaintiff, both parties have reached a settlement through the mediation held by the Court; 16. the Plaintiff’s illustration about the payment of freight which proves Sinotrans Shunde received the freight payment on behalf of the Defendant; 17. the invoice numbered as 01724153 provided by Sinotrans Shunde and the relevant remittance advices which prove the Plaintiff has paid the freight and Sinotrans Shunde received the freight on behalf of the Defendant. It was defended by the Defendant, CMA Shunde that 1.The Plaintiff is not the shipper or consignee of the subject cargo and the right of subrogation claimed by the Plaintiff is lacking in legal basis. Therefore, the Plaintiff does not enjoy the right to sue or the right to claim damages based on the B/L; 2. The Defendant is not the carrier of the cargo under the subject cargo, but is merely the agent of the carrier. Thus there is no contract of carriage of goods by sea between the Defendant and the Plaintiff or the shipper. The claim raised by the Plaintiff against the Defendant based on the subject B/L has no factual or legal basis; 3. The Defendant has reasonably fulfilled its obligations as an agent with no negligence. The scope of agency does not cover delivery of cargo at the port of destination, thus the Defendant is not obliged to bear any liability for the wrongful delivery claimed by the Plaintiff; 4. The Plaintiff has not provided any evidence to prove that the Defendant or the carrier has committed any act of wrongful delivery of the cargo. The evidence provided by the Defendant proves that CMA CGM has already finished the cargo delivery with COSCO (Americas) at the destination port in accordance with the telex release instruction, and has never committed any act of wrongful delivery of cargo. The Plaintiff instructed the terminal to deliver goods without presentation of B/L due to its own fault, which has nothing to do with the Defendant and the carrier; 5. The Mediation Award and Receipts provided by the Plaintiff can only show that it has indemnified the shipper for 80% of the invoice value of the cargo. Under such circumstance, the Plaintiff can only claim compensation within the scope of the compensation it has actually made. Therefore, the lawsuit lodged by the Plaintiff for claiming the invoice value and the freight has no factual or legal basis. The Defendant submitted the following evidences within the time limit for adducing evidence: 1. the agency agreement which proves the defendant was the agent of CMA CGM and responsible for accepting booking and arranging the carriage of the cargo while the scope of the agency does not cover cargo delivery; 2. the arrival notice issued by CMA CGM to COSCO (Americas) which proves CMA CGM notified the consignee who was stated on the B/L in time after the subject cargo arrived at the destination port; 3. the payment notice issued by CMA CGM to COSCO (Americas) which proves after the cargo arrived at the destination port, the consignee shall pay the customs exam fee for the cargo, and CMA CGM notified COSCO (Americas) to pay the customs exam fee; 4. the invoices for the expenses arising at the destination port issued by CMA CGM to COSCO (Americas) which proves CMA CGM has received the customs exam fee paid by COSCO (Americas); 5.the cargo release record of the subject container conducted by the cargo release electronic system-LARA at the destination port, the record proves the cargo has been delivered to COSCO (Americas) after receiving the notice of telex release and the customs exam fee; 6.the arrival notice sent by COSCO (Americas) which proves COSCO (Americas) received the arrival notice from CMA CGM and informed the consignee stated on the B/L. After the cross-examination on evidence, the Defendant had no objection to the authenticity of Evidence No.1-8, Evidence No.11 and Evidence No.13-15, but did not admit other evidences. The Plaintiff did not admit all the evidences submitted by the Defendant. With regard to the evidences which are without dispute, the collegiate panel admits the probative force. Evidence No.10 submitted by the Plaintiff was the original copy and it corroborated the aforesaid evidences which with the probative force, thus the collegiate panel also admits its probative force. Evidence No.1 submitted by the Defendant was the original copy, the Plaintiff only raised objection to it but failed to submit evidence to rebut it, thus, the collegiate panel also admits its probative force. Through the review and ascertainment of the aforesaid evidences, and combining with the hearing and investigation, the fact findings of this case are as below: In November 2008, SGHAP and O CEAN BREEZE SEAFOOD concluded the sales contract numbered as GHXS0812; the agreed cargo was 44,000 pounds of frozen tilapias (laden in a container), 3/5 ounce of frozen tilapias were laden in 1,760 cartons while 5/7 ounce of frozen tilapias were laden in 2,640 cartons; the price terms was CFR Miami of America and the cargo was in total amount of USD88,167. The port of loading was a port in China while the destination port was Miami of America. The payment term was Documents against Payment at sight. On 4 December, SGHAP issued the commercial invoice numbered as 08050 to OCEAN BREEZE SEAFOOD and explicitly indicated the total price of the cargo was in amount of USD 88,167. The packing list issued on the same day stated that the B/L No. was PENA4201296; the cargo was 1,760 cartons of 3/5 ounce of frozen tilapias and 2,640 cartons of 5/7 ounce of frozen tilapias. The container No. recorded on the aforesaid invoice and packing list was TRLU1810852. On 5 December, COSCO Logistics (Guangzhou) Company Limited Foshan Branch (hereinafter referred to as “COSCO Foshan”) issued the booking note to the Defendant. This booking note was the standard form provided by CMA Shunde, the heading was “The booking note of CMA Shunde”. The recorded booking party was COSCO Foshan, the shipper was SGHAP, the consignee was “To Order”; the place of receipt and the port of loading was Yantian, the port of discharge and the place of delivery was Miami of America; the cargo was frozen tilapias in gross weight of 18,800 kilograms; the shipper was responsible for trucking fees and wharfage, the ocean freight was prepaid; one 40’ freezer; telex release was stipulated by the B/L; it was stated that “in case SWB is issued, then the off-site payment is not allowed, and money shall be paid to CMA Shunde”. COSCO Foshan affixed its special seal for business on the booking note. On the same day, the Defendant issued the booking confirmation and the heading was the Defendant’s name (CMA Shunde); the shipper/freight forwarder was COSCO Foshan, the booking note No. was USH130925, the carrying vessel was CMA CGM NEW JERSEY and the voyage No. was PX509E. On 12 December, the Defendant issued the draft B/L in Shunde, and the draft B/L was on the B/L form of CMA CGM, the B/L No. was UH2130925, the shipper was SGHAP, the consignee and the notify party was COSCO (Americas); the cargo was one 40’ freezer, the container No. was TRLU1810852 in which 4,400 cartons of frozen tilapias were laden; the freight was prepaid at Shunde; the cargo was delivered FCL/FCL; the column of “Issue on behalf of CMA CGM” was in blank. On 18 December, SGHAP issued the bill of exchange to OCEAN BREEZE SEAFOOD for requesting it to pay USD 88,176 (the amount under the commercial invoice numbered as 08050) at sight to CIBC. COSCO Foshan sent an email to the Defendant, to which the Telex Release Application was enclosed, which recorded: To CMA CGM, the date was 19 December, COSCO Foshan applied to deliver the cargo (under the B/L numbered as UH2130925 which under the voyage numbered as PX509E) to COSCO (Americas) by means of telex release at the destination port; and it stated “the original B/L has been submitted by the Defendant…the total value of the aforesaid cargo is in amount of USD 91,056 which has been paid to us; thus, we apply to directly deliver the aforesaid cargo to COSCO (Americas)”, SGHAP affixed its seal on the Telex Release Application. On 25 December, the Defendant sent email to CMA CGM USA/IMPORT and instructed: whereas the full set B/L has been received, with regard to the cargo laden in the container numbered as TRLU1810852 under the B/L numbered as UH2130925, please urgently release the cargo to the consignee-COSCO (Americas) without production of B/L. The Defendant forwarded this email to the Plaintiff. On 4 January 2009, Shanwei Customs issued the customs declaration form for export numbered as 603120080318502092 which stated the shipper was SGHAP; the port of discharge was Miami of America; the payment term was Documents against Payment; the terms of delivery was C&F; the contract number was GHXS08050; the cargo was in gross weight of 22,220 kilograms while in net weight of 19,976 kilograms; the container number was TRLU1810852; the cargo was laden in 4,400 cartons, the value of 3/5 ounce of frozen tilapias was in amount of USD 34,320 while the value of 5/7 ounce of frozen tilapias was in amount of USD 53,856, the total value of the cargo was in amount of USD 88,176. The customs declaration form was affixed with SGHAP’s special seal for customs declaration and Shanwei Customs’ verification seal. Both parties confirmed that the subject cargo was shipped to the port of discharge-Miami on 9 January. On 11 March, ICBC Shanwei Branch issued the advice of rejection which shows OCEAN BREEZE SEAFOOD rejected to pay USD 81,576 under the commercial invoice numbered as 08050. On 14 October, the Plaintiff tracked the movement of the container numbered as TRLU1810852 on the official website of CMA CGM, and the result showed this container was released at Rotterdam container yard on 2 September 2009. In addition, in accordance with the agency agreement submitted by the Defendant, on 27 June 2001, CMA CGM and CMA CGM (China) Shipping Co., Ltd. concluded the agency agreement. Both parties agreed that CMA CGM (China) Shipping Co., Ltd. is the agent of CMA CGM in Shanghai, Ningbo Port, Zhejiang Province, Xiamen, Shenzhen, Qingdao, Dalian and Tianjin/Xingang, as well as being responsible for paying (without any deduction) all the due freight and other fees for each voyage (for instance, the prepaid freight, terminal operation charges, demurrage charges and any other fees applicable to export transportation as well as import fees, demurrage charges and any other applicable fees which are to be charged ) to CMA CGM. The agency agreement came into effect on 1 July 2001 and shall remain effective; however, either party can terminate the agreement at any time upon issuing to the other party a notice 90 days in advance. Furthermore, in accordance with the investigation, SGHAP filed a lawsuit with this Court in June 2009 and alleged that it concluded the cooperative agreement with COSCO Foshan in September 2008, and they agreed that the Plaintiff in this case shall accept to carry SGHAP’s cargo or the cargo agented by SGHAP and issue B/L. On 12 December of the same year, China Ocean Shipping Agency issued B/L numbered as PENA4201296 with respect to the shipping of subject cargo. However, the subject cargo was released at the destination port by the carrier without SGHAP’s instruction which caused SGHAP suffered a direct economic loss in amount of RMB 601,360. The court was requested to order the Plaintiff and China Ocean Shipping Agency to compensate the subject cargo loss in amount of RMB 601,360. Subsequently, the parties reached a settlement through the mediation held by the Court, namely, the Plaintiff compensated 80% of the cargo value to SGHAP, and SGHAP issued Letter of Subrogation to assign the right of claim for the subject cargo to the Plaintiff, and the Plaintiff can claim against the actual person who is liable for the damages. On 11 December 2009, SGHAP issued a Letter of Subrogation to assign all the rights with respect to the cargo under B/L numbered as UH2130925 to the Plaintiff, and the legal representative-Zhong Yongqiang signed and affixed SGHAP’s official seal on the Letter of Subrogation. On 23 December, the Capital Planning Department of the Plaintiff issued the payment order numbered as APP091247036 for entrusting the Business Department of Guangzhou Branch of China Merchants Bank to remit RMB 481,000 to SGHAP, and attached the Civil Mediation Award numbered as (2009) GHFCZ No. 355. On the same day, China Merchants Bank affixed the verification seal on the payment slip numbered as E69005004667130, and SGHAP issued the voucher to prove the aforesaid payment has been received. With regard to the facts in dispute, the collegiate panel ascertained as below: 1. The value of the subject cargo and the ocean freight The Plaintiff alleged the value of the subject cargo was in amount of RMB 601,360 and the loss of freight was in amount of RMB 27,844.05. The Defendant had no objection to the value of the subject cargo, but asserted the Civil Mediation Award numbered as GHFCZ No. 355 proves that the Plaintiff had reached a settlement with SGHAP by compensating the latter the amount of RMB 481,000; thus, the Defendant asserted that the Plaintiff’s current claim lacks legal basis. The collegiate panel holds that the aforesaid adopted evidences (customs declaration form for export, sales contract, commercial invoice, etc.) are sufficient to prove the total value of subject cargo was in amount of USD 88,176, the price terms was CFR, the aforesaid total value of subject cargo has contained the freight (with respect to transporting the subject cargo) paid by the Plaintiff. The value of the subject cargo was recorded in USD. The Plaintiff alleged the value of subject cargo was in amount of RMB 601,360 and the Defendant had no objection, the collegiate panel confirms the value of the subject cargo was in amount of RMB 601,360. The Plaintiff has reached settlement (namely, by compensating RMB 481,000) with SGHAP in the aforesaid case and resolved all the disputes between it and SGHAP. The collegial panel ascertains the actual loss suffered by the Plaintiff shall be in amount of RMB 481,000. The Plaintiff held that it has paid the freight in amount of RMB 27,844.05 to Sinotrans Shunde as per the Defendant’s requirements, and Evidence No. 9 and Evidence No.17 have been submitted. The two evidences stated that on 16 December 2008, Sinotrans Shunde issued forwarder’s freight invoice numbered as 01724153 to COSCO Foshan, the invoice amount was RMB 27,844.05, B/L No. was USH130925, the sailing date was 18 December 2008, the port of loading was Yantian, the destination port was Miami of America, the container No. was TRLU1810852. On 18 December, COSCO Foshan effected the payment stated in the invoices (No.01724153, 01724155, 01724088) to Sinotrans Shunde via Foshan Branch of Bank of China. The Defendant raised no objection to the authenticity of the invoice, but it rebutted that although the container No. recorded on the aforesaid invoice was consistent with the container No. in this case, the B/L No.USH130925 recorded on the aforesaid invoice was different from the B/L No.UH2130925 in this case. Moreover, the invoice was issued by Sinotrans Shunde and shall be irrelevant to this case. The collegiate panel holds that the B/L No. recorded on the aforesaid invoice was consistent with the booking note No. for the subject shipment. Furthermore, the sailing date, the port of loading, the destination port and the container No. were consistent with the subject cargo. Therefore, the Defendant’s allegation that the invoice was irrelevant to this case is not correct. Moreover, the Defendant, as the party for accepting booking and arranging shipping of cargo, should has known the relevant facts with respect to freight collection, but the Defendant failed to provide the facts to the Court; thus, the collegiate panel admits the Plaintiff’s representation that they had paid the freight in amount of RMB 27,844.05 to Sinotrans Shunde. 2. Whether the Defendant has delivered the cargo to COSCO (Americas) The Plaintiff asserted that the consignee on the B/L failed to receive the cargo at the destination port, and presented as proof a statement issued by COSCO (Americas) on August 5, 2010, which reads“In respect of the cargo (its shipper is SGHAP, the carrier is CMA, the container number is TRLU1810852, and the number of B/L is UH2130925), we as the consignee received a notice of arrival from CMA in January 2009, but were told the cargo had been taken when we were preparing to go through the procedures of taking delivery. Up to now, we haven’t received the cargo from CMA and haven’t paid any port fees to CMA.” The Defendant asserted the Plaintiff’s evidence is not valid, stating the Plaintiff failed to evidence that the Defendant or the actual carrier mis-delivered the cargo, and provided Evidence NO. 205 to prove the carrier had performed its duties. Evidence NO. 2-4 provided by the Defendant says CMA CGM sent a notice of arrival to COSCO (Americas) on December 30, 2008, notifying “CMA CGM NEW JERSEY PX510W is estimated to arrive on January 9, 2009” and requiring the consignee to go through the procedures of customs declaration for the cargo under the B/L UH2130925. On January 8, 2009, CMA CGM sent a debit note requiring the consignee to pay customs inspection fee of USD 160.00. On the same day, CMA US issued an invoice numbered NAIM1263913 on which the payer is COSCO (Americas) and the amount is USD 160.00, a B/L numbered UH2130925 and an application for shipment numbered USH130925. All the three documents haven’t been stamped or confirmed by the consignee. The cargo release record in Evidence NO. 5 shows CMA CGM released the cargo on January 12, 2009, but didn’t include the consignee’s stamp or confirmation. The Plaintiff did not confirm the above evidence produced by the Defendant. The collegiate panel holds that the above evidential documents are not admitted because the Plaintiff and the Defendant failed to produce the originals and they refused to confirm the opposing party’s evidence. In this case, the Plaintiff asserts that the consignee didn’t receive the cargo involved in the case and has provided the container tracking record to this Court to evidence the subject container has been circulated as an empty container. Since the subject cargo was intended to be delivered in a full container, this tracking history could prove the cargo has been released. As the party responsible for arranging the transport, the Defendant should know more about the cargo status in the destination port than the Plaintiff. Therefore, the Defendant shall bear the burden of proof in respect of the delivery to the consignee at the destination port. Since the Defendant alleged the cargo had been delivered to COSCO (Americas), yet failed to produce proof, the Defendant shall be responsible for the failure of producing proof. Therefore, the Defendant’s allegation lacks factual basis and is not admitted. Both parties expressly choose to apply the law of People’s Republic of China during the trial. The members of the collegiate panel unanimously hold that: this is a case of dispute over contract of carriage of goods by sea, and according to Article 1 of the Maritime Procedure Law of the People's Republic of China and Article 11 of the Provisions of The Supreme People’s Court for the Scope of Cases Handled by Maritime Courts, this case shall be under the jurisdiction of Maritime Court. According to Article 28 of Civil Procedure Law of the People’s Republic of China, a lawsuit arising from a dispute over a transport contract shall be under the jurisdiction of the people's court of the place of dispatch or the place where the Defendant has its domicile, and in this case, the place of dispatch and the place where the Defendant has its domicile are both under the jurisdiction of this Court. Therefore, this Court shall have jurisdiction to hear this case. Since both parties expressly choose to apply the law of People’s Republic of China during the trial, and according to Paragraph 1, Article 4 of the Provisions of The Supreme People’s Court for Trial of a Case of Dispute over Civil or Commercial Contracts involving Foreign Interests, this case shall be governed by laws of P.R.C. The Plaintiff claims that since SGHAP and the Defendant are parties to the contract of carriage of goods by sea, and SGHAP transferred the right of claims to the Plaintiff subsequent to the compensation made by the Plaintiff to SGHAP, the Plaintiff shall thus enjoy the right to claim against the Defendant. The Defendant argued that the Plaintiff’s claim in respect of the transfer of the right of claims is not tenable, because the Plaintiff is not the shipper, the Defendant is not the carrier, and no contract of carriage of cargo by sea between the Plaintiff and the Defendant existed. According to Article 71 of Maritime Code of the People's Republic of China, A bill of lading is a document which serves as an evidence of the contract of carriage of goods by sea and the taking over or loading of the goods by the carrier, and based on which the carrier undertakes to deliver the goods against surrendering the same. A provision in the document stating that the goods are to be delivered to the order of a named person, or to order, or to bearer, constitutes such an undertaking. In this case, the Plaintiff as the booking party sent a booking note to the Defendant, and the Defendant in its own name sent a booking confirmation to the Plaintiff confirming the contract of carriage of cargo by sea. Therefore, both parties completed a valid offer and an undertaking, and the following draft B/L further specified both parties’ rights and obligations. During the performance of the contract, the Defendant required the Plaintiff to send an application for telex release, and this application showed that the addressee is CMA CGM, so the actual carrier is CMA CGM. During proceedings, the Agency Agreement presented by the Defendant expressly showed that it is the agent of the actual carrier CMA CGM. According to Paragraph 2 of Article 403 of Contract Law of the People’s Republic of China, Where the agent failed to perform its obligation toward the third person due to any reason attributable to the principal, the agent shall disclose the principal to the third person, allowing the third person to select in alternative either the principal or the agent as the other contract party against whom to make a claim, provided that the third person may not subsequently change its selection of the contract party. The Plaintiff in this case may choose the Defendant as the other contract party against whom the Plaintiff claims its rights under the contract of carriage of cargo by sea. In conclusion, the Plaintiff entrusted the Defendant with the carriage of the cargo and has paid the relevant fees, and the Defendant accepted the Plaintiff’s entrusting, so a contract of carriage of cargo by sea between the Plaintiff and the Defendant is established. The contract which is based on both parties’ true will is legitimate and valid and shall have binding force on both parties. According to Paragraph 1 of Article 46, the responsibilities of the carrier with regard to the goods carried in containers covers the entire period during which the carrier is in charge of the goods, starting from the time the carrier has taken over the goods at the port of loading, until the goods have been delivered at the port of discharge. Unless as otherwise agreed, it’s the carrier’s obligation to deliver the cargo to the consignee under the contract of carriage of cargo by sea. The Defendant failed to prove that it delivered the cargo to the consignee as agreed, and the Plaintiff compensated for the loss of the cargo. According to Article 107 of the Contract Law of People’s Republic of China, Types of Liabilities for Breach, if a party fails to perform its obligations under a contract, or rendered non-compliant performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc. Based on the ascertained facts, the Plaintiff’s actual loss amounts to RMB 481,000.00, and the Plaintiff’s claim that the loss of cargo shall be compensated shall be supported. The Plaintiff’s claim that the loss of cargo shall be subject to the interest counting from December 23, 2009 when the Plaintiff actually made compensation to SGHAP shall be supported. But the Plaintiff’s claim that the interest rate shall be subject to the interest rate for late payment prescribed by People’s Bank of China lacks sufficient facts and thus can’t be supported. The interest rate shall be subject to the current benchmark interest rate of RMB loan published by People’s Bank of China. The settlement amount of RMB481,000 effected by the Plaintiff represents a package deal for the claim for the full value of the cargo amounting to RMB 601,360.00 and the freight the Plaintiff paid. Therefore, the Plaintiff’s claim that the Defendant shall reimburse additionally the freight payment of RMB 27,844.05 and the relevant interest lack basis and thus is not supported. In conclusion, according to Article 107 and Paragraph 2 of Article 403 of the Contract Law of the People’s Republic of China as well as Paragraph 1 of Article 46 of the Maritime Code of the People’s Republic of China, this Judgment is hereby rendered as follows: 1. the Defendant CMA Shunde shall compensate Cosco Logistics (Guangzhou) Company Limited the amount of RMB 481,000.00 plus interest (subject to the current benchmark interest rate of RMB loan published by People’s Bank of China and counted on the basis of a period from December 23, 2009 to the date of payment ascertain in this judgment); 2. other claims by Cosco Logistics (Guangzhou) Company Limited are dismissed. The payment obligation shall be fulfilled within ten (10) days from the date when this judgment becomes effective, failing which the interest on the debt for late fulfillment shall be paid twice as much as the original amount according to Article 229 of the Civil Procedure Law of People’s Republic of China. The court cost of this case is RMB 10,535.00, of which the Plaintiff shall pay RMB 2,109.00 and the Defendant shall pay RMB 8,426. Any party who is dissatisfied with this judgment has the right to submit to this court the statement of appeal, and the copies of thereof in accordance with the number of the other parties, within 15 days of the service of this judgment, for appealing before the Guangdong Higher People’s Court. Presiding judge : Deng Yufeng Judge : Song Ruiqiu Acting judge : Chang Weiping Clerk : Zhu Mingfang August 20, 2012 (Guangzhou Maritime Court) Certified as true to the original The translation is provided by Wang Jing & CO.
  • Case of dispute over contract of carriage of goods by sea between Zuoyou Furniture (Shenzhen) Co, Ltd and Schenker International (H.K.) Ltd and Schenker (H.K.) Ltd. and another

    2016-03-14

    Higher People’s Court of Guangdong Province Civil Judgment (2009) Yue Gao Fa Min Si Zhong Zi No.347 Appellant (plaintiff of first instance): Zuoyou Furniture (Shenzhen) Co., Ltd Domicile: No.5 Luogang Road, Luogang Industrial District, Buji, Shenzhen Legal representative: Huang Jinlan, board director Agent ad litem: Liu Ning, lawyer of Guangdong Pin Ran Law Firm Agent ad litem: Wu Ming, lawyer of Guangdong New Orient Law Firm 1st Appellee (defendant of first instance): Schenker International (H.K.) Ltd. Domicile: 38/F, China Resources Building, No.26 Harbor Road, Wanchai, Hongkong Legal representative: Andrew Blaise Jilling, board director 2nd Appellee (defendant of first instance): Schenker (H.K.) Ltd. Domicile: 35/F, Skyline Tower, 39 Wang Kwong Road, Kowloon Bay, Hongkong Legal representative: Andrew Blaise Jiling, board director 3rd Appellee: Schenkerocean Limited Domicile: 35/F, Skyline Tower, 39 Wang Kwong Road, Kowloon Bay, Hongkong Legal representative: Peter Rahan Sprogis, board director Agents ad litem of the three appellees: Huang Hui, Zhang Jing, lawyers of Huang & Huang Co. Law Firm Defendant of first instance: Schenker China Ltd. Domicile: No.266, Yiwei Road, Pudong New Area, Shanghai City Legal representative: Karl-Heinz Emberger, board director Agents ad litem: Huang Hui, Zhang Jing, lawyers of Huang & Huang Co. Law Firm With respect to the case arising from dispute over contract of carriage of goods by sea between the appellant Zuoyou Furniture (Shenzhen) Co, Ltd (hereinafter referred to as “Zuoyou”) and the appellees Schenker International (H.K.) Ltd (hereinafter referred to as “Schenker International”) and Schenker (H.K.) Ltd. (hereinafter referred to as “Schenker (H.K.)”) and Schenkerocean Limited (hereinafter referred to as “Schenkerocean”), and the defendant of first instance Schenker China Ltd (hereinafter referred to as “Schenker China”), by virtue of dissatisfaction with the Civil Decision under ref: (2008) Guang Hai Fa Chu Zi No.414 rendered by Guangzhou Maritime Court, the appellant lodged an appeal of this case before this court. After accepting entertaining thereof, this court legitimately constituted the collegial panel to try the case, which has now been concluded. Zuoyou alleged before the court of first instance that: Since April 2007, Zuoyou has concluded a serial of furniture purchase contracts with Reid Furniture Ltd. (hereinafter referred to as “Reid”) from Britain by email, agreeing that Zuoyou would supply Reid with furniture such as sofas through different batches. After conclusion of the contract, Reid appointed Schenkerocean as the carrier for the goods under the foregoing contract. Ever since June 2007, Schenker China has advised Zuoyou to make booking with Schenker (H.K.) Dongguan Office who would make booking with the actual carrier Evergreen Line thereafter. After obtaining shipping space from Evergreen Line, Schenker (H.K.) Dongguan Office issued Zuoyou an S/O and advised him to arrange shipment. After the shipment was completed, Zuoyou paid Guangzhou Branch of Schenker China for relevant local operating fees and B/L fees. As the agent of Schenkerocean, Schenker International issued to Zuoyou three sets of original Bs/L No.CNCAN1050704825, No.CNCAN1050705063, and No.CNCAN1050705064. As the agent of Schenkerocean, Schenker (H.K.) issued Zuoyou three sets of original Bs/L No.CNCAN1050704473, No.CNCAN1050704475, and No.CNCAN10507044608. After the goods arrived at the port of destination, the buyer Reid did not effect payment against documents as agreed. On 11th March 2008, Schenker International advised Zuoyou by email that the goods had been delivered to the buyer Reid. Schenkerocean illegitimately released the goods to Reid without collecting the original Bs/L, causing Zuoyou to lose ownership of property over the goods therein while the Bs/L were still under his possession and resulting in cargos payment loss of USD243, 522, an export tax refund loss of USD26,809.42, an interest loss of CNY115,961.8 and an exchange rate loss of CNY183,961.37, all sustained by Zuoyou. Zuoyou held that Schenkerocean released the goods at the port of destination without presentation of original Bs/L, as a result of which, Zuoyou was unable to obtain the payment of the goods and suffered from loss of export tax refund, interest loss and exchange rate loss. Thereby Schenkerocean shall be held liable for the above losses and the other three defendants are at fault and shall be severally and jointly liable therefor. Zuoyou requested the court to adjudge the four defendants to indemnify Zuoyou for cargos payment loss of USD243,522, an export tax refund loss of USD26,809.42, an interest loss of CNY115,961.8 and an exchange rate loss of CNY183,961.37 and to bear the litigation fee of this case. Schenker International defended in the first instance that: 1. Schenker International merely accepted the entrustment of the carrier Schenkerocean and acted as the agent of Schenkerocean to sign and issue the three sets of original Bs/L No. CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064 for and on behalf of Schenkerocean, and is thereby faultless in the carrier Schenkerocean’s release of goods without presentation of original Bs/L and shall not bear any liability for the disputes over release of goods without presentation of original Bs/L in the subject case in accordance with law. 2. Zuoyou has already received part of the payments from Reid, which actually approved the carrier Schenkerocean’s delivering of the subject goods to the consignee. The uncollected payments were due to the quality defects of the goods, which has no direct causal relation with the alleged release of goods without presentation of original Bs/L. 3. The claim amount alleged by the plaintiff is unreasonable. Firstly, Zuoyou has already received payment for the goods in the amount of USD128,526.29 from Reid, which should be deducted from the cargos value loss claimed by Zuoyou. Secondly, the relevant evidence submitted by Zuoyou to prove the local freight as well as the operating and handling fee, could not demonstrate that such fees were actually incurred from the subject goods or that Zuoyou has actually effected payment of such fees. Even if it was so that such fees were incurred from the subject goods and has been actually paid, such fees have been included in the actual value of the goods loaded on board. Thus it would be a repeated claim for cargos payment. Thirdly, the law in our country stipulates that the amount of indemnity to be paid by the carrier to the holder of original B/L for release of goods without presentation of original B/L shall be calculated according to the value of goods loaded on board plus freight and insurance, and the loss for export tax refund and exchange rate claimed by Zuoyou goes beyond the statutory indemnity scope. As a result, Schenker International required the court to reject the litigation requests filed by Zuoyou against Schenker International. Schenker China defended in the first instance that: 1.Zuoyou did not provide any evidence to prove that Schenker China was the actual forwarder of Schenker International in Mainland China; 2. Schenker China has no relationship with Zuoyou under contract of carriage, nor has he ever participated in the carriage and delivery of the subject goods. Therefore, Zuoyou shall not be entitled to request Schenker China to bear liability for the alleged release of goods without presentation of original Bs/L in the subject case. Schenker (H.K.) defended in the first instance that: 1. Schenker (H.K.) merely accepted the entrustment of the carrier Schenkerocean and acted as the agent of Schenkerocean to sign and issue three sets of original Bs/L No. CNCAN1050704473, CNCAN1050704475 and CNCAN1050704608 for and on the behalf of Schenkerocean, is thereby faultless in the carrier Schenkerocean’s release of goods without presentation of original B/L and shall not bear liability for the disputes over release of goods without presentation of original Bs/L in the subject case in accordance with law. 2. The goods under the three sets of original Bs/L signed and issued by Schenker (H.K.) were delivered to the consignee Reid during July 2007 and August 2007 respectively, and Zuoyou confirmed that he was aware of the delivery of the goods on 11th March 2008. Zuoyou did not lodge any litigation against Schenker (H.K.) until 30th March 2009, which exceeded the statutory time limit for lodging litigation. Schenkerocean rebutted in the first instance that: the goods under the six sets of Bs/L carried by Schenkerocean were delivered to the consignee Reid during the period from July 2007 to December 2007, and Zuoyou confirmed that he was aware of the delivery of the goods on 11th March 2008. Zuoyou did not lodge any litigation against Schenkerocean until 19th May 2009, which exceeded the statutory time limit for lodging litigation. Schenkerocean required the court to reject the litigation requests filed by Zuoyou. Upon hearing, the court of first instance ascertained that: Since September 2006, Zuoyou has developed long-term furniture export trade cooperation with Reid. The subject goods are furniture under Bs/L No.CNCAN1050704473, CNCAN1050704475, CNCAN10507044608, CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064, whose total value amounts to USD243,522 as recorded therein. For carriage of the above goods under the 6 sets of Bs/L, Zuoyou made booking with Schenker (H.K.) Dongguan Office during the period from June 2007 to October 2007. After obtaining shipping space from Evergreen Line, Schenker (H.K.) Dongguan Office issued to Zuoyou an S/O, notifying him to arrange shipment. After the shipment was completed by Zuoyou, Schenker (H.K.) immediately issued to Zuoyou an expense list covering such charges as THC, document charges and commission charges, which totaled CNY48,853. Zuoyou effected payment of the above amount to Sinotrans Guangdong International Forwarding Co., Ltd, Guangzhou Branch (hereinafter referred to as “Sinotrans Guangzhou”). Sinotrans Guangzhou issued Zuoyou special invoice of international freight forwarding agency for the expenses incurred under the 6 sets of Bs/L. During the court hearing, all parties involved confirmed that the cargos under the 6 sets of Bs/L had been shipped to the port of destination from July to December 2007, and the carrier, Schenkerocean, actually released the cargos to the purchaser, Reid, without presentation of original Bs/L. Zuoyou received the email on 11th March, 2008 from Schenker International and was informed that the cargos had been delivered to Reid at the port of destination. The three original bills of lading with B/L No. CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064 were stamped by the seal of Schenker International and the personal seal of Zhou Guoqiang. The other three original bills of lading with B/L No. CNCAN1050704473, CNCAN1050704475 and CNCAN10507044608 were stamped by the seal of Schenker (H.K.) and the personal seal of Zhou Guoqiang. The top left corners of the said six bills of lading were printed with “SCHENKERocean” in large letters, with Zuoyou stipulated as the shipper, Reid as the consignee and the Notify Party, Shenzhen Yantian as the port of loading and Scotland GRANGEMOUTH as the port of destination therein. On the lower right corner, it was recorded in red letters (other information was all recorded in black letters) that “Signed and issued as agents for Schenkerocean as Carrier by”, and on the back side thereof, the “definition” terms identify that the “carrier” of the B/L refers to “the party under whose name the B/L is issued, which is Schenkerocean”. The top left corner of all 6 S/Os under the 6 subject Bs/L, were recorded with “Schenker (H.K.) -Dong Guan Office”, the top right corner with “Acknowledgement of Booking only for Schenker (H.K.)”, and the “document required” column with “Schenker Ocean B/L”. The full name of Schenker Ltd -Dongguan Office is Schenker (H.K.) Ltd -Dongguan Representative Office,and with Zhou Guoqiang as its chief representative and its registered number as “No. Qi Wai Yue Wai Zhu Zi Di 000393”. During the hearing, all parties involved said they were unable to confirm the relationship between Zhou Guoqiang and the fourth defendants. With respect to the loss claimed by Zuoyou, all parties involved raised no objection to the cargo value of USD 243.522 under the six bills of lading, which was also affirmed by the court of first instance. Schenker International alleged that the purchaser, Reid, had effected payment of USD128.526.29 as part of the payment for goods and submitted the payment vouchers thereof as evidence. Despite that such payment vouchers as the Scottish Bank remittance slip submitted by Schenker International could prove that the purchaser, Reid, had indeed paid USD128,526,29 in different sums to Zuoyou as payment for the goods, there was a series of sales and purchases of goods and cargo payment between Zuoyou and Reid due to their long-term business relationship. Given that, such payment vouchers rendered by Schenker International could not be used to refer to the goods under the 6 subject bills of lading, and therefore could not prove the amount of USD 128,526,29 was effected as payment for goods under the 6 subject bills of lading. Thus they were not confirmed by the court of first instance. The RMB48, 853 loss of local freight and relevant handling charges claimed by Zuoyou is charges that happened before loading. It was the necessary cost for Zuoyou to export goods. The cost should have been included in the actual value at the time of loading. Zuoyou has no right to double claim the charges. Zuoyou rendered no evidence to prove the USD26.809.42 loss of export rebate it claimed, and therefore was not affirmed by the court of first instance. Zuoyou claimed a RMB183. 961. 37 loss of foreign exchange rate. Owing to the contract breach of the defendant, Zuoyou didn’t receive the payment in time, causing Zuoyou unable to exchange the payment in time and to avoid the risk of depreciated US Dollars against RMB. Therefore, the foreign exchange rate loss of Zuoyou should be indemnified by the defendant as per the exchange rate on the agreed day of payment. Zuoyou filed a litigation before this court on 19th August 2008, with Schenker International and Schenker China as the defendants. During the trial process, Zuoyou applied to add Schenker (H.K.) and Schenkerocean as the co-defendants on 2nd April 2009 and 19th May 2009 respectively. The court of first instance holds that this case is arising from dispute over the contract of carriage of goods by sea. During the trial, all the parties involved agreed that laws of the P. R. China are applicable. According to Article 269 of Maritime Code of the People’s Republic of China, laws of the P. R. China are applicable to settle substantive disputes in this case. After concluding the export trade contract with the purchaser, Reid,Zuoyou contacted Schenker (H.K.) -Dongguan Office and conducted such services as booking, shipment, payment as required by the office. It was clearly stipulated in the six subject shipping orders given by Schenker (H.K.) -Dongguan Office to Zuoyou that Schenker (H.K.) -Dongguan Office accepted the booking on behalf of Schenker (H.K.). Among the six bills of lading held by Zuoyou, the three original bills of lading with B/L No. as CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064 were stamped by the seal of Schenker International and the personal seal of Zhou Guoqiang. The other three original bills of lading with B/L No. as CNCAN1050704473, CNCAN1050704475 and CNCAN10507044608 were stamped by the seal of Schenker (H.K.) and the personal seal of Zhou Guoqiang. However, from the contents of the Bs/L, on the lower right corner of the bills, it was written in red letters (other information was all written in black letter) that “Signed and issued as agents of Schenkerocean as Carrier by”, and on the top left corner “Schenkerocean” in large printed letters, which could be considered that through what was recorded on the bills of lading Schenkerocean Ltd is shown as the carrier, authorizing Schenker International and Schenker (H.K.) to issue the bills of lading, and Schenker International and Schenker (H.K.) are the agents of Schenkerocean. Zuoyou raised no objection while accepting the bills of lading, thus it could be regarded that Zuoyou recognized the proxy relation between Schenkerocean and Schenker (H.K.) and Schenker International, and was aware that Schenker International and Schenker (H.K.) undertook civil legal acts under the name of Schenkerocean. Zuoyou also confirmed the establishment of relationship under contract of carriage of goods with Schenkerocean. To say the least, even though Zuoyou deemed that Schenker International and Schenker (H.K.) established the contract relation under their own names, according to Article 402 of Contract Law of the People's Republic of China, “Where the agent enters into a contract with a third party under the agent’s name within the scope of authorization by the principal, and if the third party is aware of the proxy relationship between the agent and the principal, the said contract shall directly bind the principal and the third party, unless truthful evidence proves that the said contract binds only the agent and the third party”, it shall be considered that parties concerned stated on the six bills of lading are Zuoyou and Schenkerocean, under the circumstances where Zuoyou hasn’t rendered any evidence to prove the subject contract of carriage of goods binds only Zuoyou, Schenker International and Schenker (H.K.). Zuoyou believed that Schenker International has neither registered with the Administration for Industry and Commerce in China, nor paid taxes in accordance with laws; Schenker (H.K.) has neither registered with the Administration for Industry and Commerce in China, nor paid taxes in accordance with law and hasn’t yet acquired the NVOCC qualification from the Ministry of Communications; Schenkerocean obtained the NVOCCC qualification, yet it failed to establish the corporate legal person in China according to law. The three defendants violated relevant regulations in the Regulations of the PRC on International Maritime Transportation put forward by the State Council and “the Promulgation on the Implementation of the Regulations of the PRC on International Maritime Transportation” put forward by the Ministry of Communications, which constitutes the act of illegal proxy, and the three defendants should bear several and joint liabilities therefor. Nevertheless, Zuoyou has not rendered any valid evidence to prove the above facts. Pursuant to the provisions of Article 14 of Interpretation (2) of the Supreme People’s Court on Several Issues concerning the Application of the Contract Law of the People’s Republic of China, “mandatory provisions in Paragraph 5 of Article 52 of Contract Law means mandatory provision of competence”, even though the three defendants failed to establish corporate legal person in China or obtain NVOCC qualification, it was the administrative mandatory provision that they violated, which would not necessarily invalidate the proxy act or the contract of carriage of goods. Zuoyou filed the lawsuit over the loss caused by the carrier of cargos involved releasing the cargos to the consignee without presentation of original B/L. Pursuant to the provisions of Article 71 of the Maritime Code of the People’s Republic of China, a bill of lading is a document based on which the carrier undertakes to deliver the goods against surrendering the same, and the carrier has the obligation to release goods based on the original B/L. In this case, Schenkerocean is the party liable for the act of releasing goods without presentation of original B/L. As per the provisions of Paragraph 2 of Article 63 of General Principles of the Civil Law of the People's Republic of China, “An agent shall perform civil juristic acts in the principal’s name within the scope of the power of agency. The principal shall bear civil liability for the agent’s acts of agency”, the liability for releasing goods without presentation of original B/L shall be borne by the carrier itself rather than its agent. Since Schenker International and Schenker (H.K.) are only agents of the carrier Schenkerocean, rather than concerned parties in the relationship of contract of carriage, they shall not be liable for Schenkerocean’s act of releasing goods without presentation of original B/L. Given the current evidences, Schenker China had no connection with the carriage of the goods involved and didn’t participate in any part of the carriage of the goods, and therefore shall not be liable for Schenkerocean’s act of releasing goods without presentation of the original B/L, either. Cargos under the six subject bills of lading arrived at the port of destination during July to December in 2007, and was actually delivered to Reid by the carrier, Schenkerocean. Getting to know on 11 March 2008 the carrier’s release of goods without presentation of the original B/L, Zuoyou applied to add Schenkerocean as co-defendant of this case on 19 May, 2009. Pursuant to Article 14 of Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law during the Trial of Cases about Delivery of Goods Without an Original Bill of Lading, where the holder of the original B/L files a lawsuit against the carrier by reason of the carrier’s delivery of goods without presentation of original B/L, provisions in Article 257 of Maritime Code of the P. R. China Shall be applicable. The limitation of action is one year, counting from the day the goods should have been delivered by the carrier”, Zuoyou failed to render any valid evidence to prove that the limitation period shall be suspended or discontinued, and its lawsuit against Schenkerocean has surpassed the one-year limitation of time. Therefore, it shall not be entitled the right to win the lawsuit. In conclusion, pursuant to the provisions of paragraph 2 of Article 63 of the General Principles of the Civil Law of P. R. China and the provisions of Article 257 of the Maritime Code of the P. R. China, the judgment is hereby rendered as follows: The litigation requests filed by Zuoyou Furniture (Shenzhen) Co, Ltd are hereby rejected. The court fee of this case is RMB 24,456, all of which shall be borne by Zuoyou Furniture (Shenzhen) Co, Ltd. By virtue of dissatisfaction with the Civil Judgment rendered by the court of first instance, Zuoyou lodged an appeal to this court, requesting: 1. to set aside the judgment of first instance; 2. to adjudge that Schenker International, Schenker (H.K.), and Schenkerocean jointly indemnify Zuoyou for loss of payment of the goods in the amount of USD243,522, interest loss of RMB115,961.80, export tax rebate loss of USD26,809.42 and foreign exchange loss of USD183,961.37; 3. to adjudge that the litigation cost of the first and second instances shall be borne by Schenker International, Schenker (H.K.), and Schenkerocean, with reasons as follows: 1. The court of first instance rendered that “SCHENKERocean” recorded on the top left corner of and on the subject bills of lading represents SCHENKEROCEAN LIMITED and rejected the litigation requests of Zuoyou on grounds that “The plaintiff raised no objection while accepting the bills of lading. Thus it could be regarded that the plaintiff recognized the proxy relationship between Schenkerocean and Schenker (H.K.) and Schenker International, and was aware that Schenker International and Schenker (H.K.) undertook civil legal acts in the name of Schenkerocean. The plaintiff also confirmed the establishment of relationship under contract of carriage of goods with Schenkerocean” and “On 11th March, 2008 the plaintiff acknowledged that the carrier had already released the goods without first obtaining the original Bs/L, and on 19th May, 2009 applied to add Schenkerocean as co-defendant of this case. But its lawsuit against Schenkerocean has surpassed the limitation of action of one year. Therefore, it shall not be entitled to win the lawsuit”. The aforesaid judgment made by the court of first instance went against the facts and law. First of all, “SCHENKERocean” did not necessarily represent SCHENKEROCEAN LIMITED and none of the 6 sets of bills of lading was recorded with a full name of SCHENKEROCEAN LIMITED as the carrier; while carrying the aforesaid goods for Zuoyou, Schenkerocean hadn’t yet obtained the NVOCC qualification from the Ministry of Communication of the P. R. China, and there was no evidence to prove that Schenkerocean had filed the bills of lading with letters of “SCHENKERocean” on record for reference of exclusiveness. Therefore, when Schenker International and Schenker (H.K.) issued the bills with letters of “SCHENKERocean”, such bills of lading could not be deemed as the exclusive ones of Schenkerocean and thus be used to confirm the identity of Schenkerocean as the carrier. Zuoyou couldn’t confirm or acknowledge in light of such bills of lading, that Schenkerocean was the carrier, nor its proxy relationship with Schenker International and Schenker (H.K.) Secondly, Schenker International and Schenker (H.K.) had neither presented to Zuoyou any document or power of attorney indicating their proxy relationship with Schenkerocean, nor made sufficient implication or statement on the content of the bills of lading to show their identity as the agents and Schenkerocean as the actual carrier, not when Zuoyou made the booking or when Schenker International and Schenker (H.K.) signed and issued the 6 sets of bills of lading in their own names and had Dongguan Office present them to Zuoyou. The aforesaid 6 sets of bills of lading were all made in English format. Both Schenker International and Schenker (H.K.) have the letters “SCHENKER” in their English name. And “SCHENKER” in “SCHENKERocean” recorded on the top left corner of the bills was deliberately made in capital and “ocean” in lowercase. Even professional translation companies would believe that “SHENKERocean” represented Schenker International, which justified Zuoyou’s understandings that the carrier in the bills of lading was Schenker International and Schenker (H.K.). Pursuant to the provisions of Article 40, Article 41 and Article 42 of the Contact Law and the provisions of Article 10 of Interpretation (2) of the Supreme People’s Court on Several Issues concerning the Application of the Contract Law of the People’s Republic of China, the standard terms used by Schenker International and Schenker (H.K.) with a view to exempting their liability is invalid and their claim to be the agents of Schenkerocean is groundless. Schenker International and Schenker (H.K.) shall be identified as the carrier and held liable for indemnity and breach of contract, as understood by Zuoyou. To say the least, although Schenker International and Schenker (H.K.) signed and issued the Bs/L to Zuoyou in their own names within the scope of authority granted by Schenkerocean, they failed to present to Zuoyou any legal documents or power of attorney revealing their status as agents, nor did they make sufficient implication or statement on the contents of the Bs/L, but intentionally concealed such material facts as their status as agents and the identity of the actual carrier, which violated the principle of good faith and caused Zuoyou to suffer from actual loss. Pursuant to stipulations in Paragraph 2 and Paragraph 3 of Article 42 in the Contract Law, Schenker International and Schenker (H.K.) shall indemnify Zuoyou for the loss suffered therefrom. Thirdly, before Schenkerocean obtained the NOVCC qualification and registered its B/L for record in China, and prior to Schenkerocean’s retroactive recognition to Zuoyou for the subject Bs/L signed and issued by Schenker International and Schenker (H.K.), the ascertainment that the carrier under the subject Bs/L was Schenkerocean lacks legal basis and shall not be confirmed or recognized by Zuoyou. After the format of the subject Bs/L was registered for record in China, Schenker International and Schenker (H.K.) were not registered for record as the designated agents simultaneously. Therefore, prior to Schenkerocean’s retroactive recognition to Zuoyou for the subject Bs/L signed and issued by Schenker International and Schenker (H.K.), the agency act of Schenker International and Schenker (H.K.) could not be deemed as valid. Furthermore, in the email sent by Schenker International to Zuoyou on 11th March 2008, he notified Zuoyou of the delivery of the goods, but did not mention that the carrier who delivered the goods was Schenkerocean. Consequently, from the time of booking shipping space till 19th May 2009, Zuoyou was never told and did not affirm either that Schenker International and Schenker (H.K.) were merely the agents; with respect to the fact that current Schenkerocean was the actual carrier, Schenker International and Schenker (H.K.) did not advise or imply it to Zuoyou on 19th May 2009, either. 2. As regards the time limit for litigation of this case, Zuoyou learnt by email on 11th March 2008 that the subject goods had been delivered without presentation of the original Bs/L and lodged the litigation before the court on 19th August 2008, listing Schenker International and Schenker (H.K.) as the defendants. Therefore the time limit for litigation against Schenker International and Schenker (H.K.) that was discontinued from the date the lawsuit was lodged hasn’t yet exceeded the statuary time limit of one year. Since Schenkerocean confirmed the agency act of Schenker International and Schenker (H.K.) in signing and issuing the Bs/L, Zuoyou opined that Schenkerocean retroactively recognized the agency act of Schenker International and Schenker (H.K.). Pursuant to the provisions of Article 11 of Interpretation (2) of the Supreme People’s Court on Several Issues concerning the Application of the Contract Law of the People’s Republic of China, such retroactive recognition shall take effect as of the date Schenkerocean’s recognition reached Zuoyou. After Schenkerocean confirmed the agency act of Schenker International and Schenker (H.K.) on 19th May 2009, Zuoyou added Schenkerocean as the co-defendant on the very date; the time limit for litigation was discontinued thereupon and has never exceeded the statutory time limit of one year, thus Zuoyou shall have the right to win the lawsuit in accordance with law. Thereby, the ascertainment by the court of first instance that the time limit for the Zuoyou to lodge the lawsuit against Schenkerocean exceeds one year is erroneous and shall be corrected in accordance with law. 3. Since the six subject original Bs/L were all signed and issued by Schenker International and Schenker (H.K.), even though Schenkerocean retroactively recognized the act as agency relationship afterwards, prior to the registration of the subject B/L format for record and the confirmation by Zuoyou on the Schenkerocean’s retroactivity, such retroactive recognization shall not have any legal force against Zuoyou, and Schenker International and Schenker (H.K.) shall indemnify Zuoyou for the loss suffered therefrom; meanwhile, by right of the voluntary retroactive recognition of Schenkerocean, Schenkerocean shall be jointly liable for such loss sustained by Zuoyou; after the format of the subject Bs/L was registered for record, as the exclusive user of the Bs/L, Schenkerocean confirmed the agency act of Schenker International and Schenker (H.K.) and thereby shall be liable for the loss thus suffered by Zuoyou; besides, since Schenker International and Schenker (H.K.) intentionally concealed material facts when signing and issuing the Bs/L, which violated the principle of good faith, they shall indemnify Zuoyou for the loss thus sustained. Therefore, the loss arising from the carrier’s delivery of goods under the six subject Bs/L without presentation of the original Bs/L shall be jointly borne by Schenker International, Schenker (H.K.) and Schenkerocean. Schenker International, Schenker (H.K.) and Schenkerocean defended in the second instance that: 1. the subject S/O and Bs/L all served to demonstrate that the carrier was Schenkerocean. The Bs/L indicated in red letters that it was signed and issued by Schenker International, Schenker (H.K.) on behalf of Schenkerocean. It was Zuoyou’s own fault for failing to ascertain the relationship thereunder and the carriage relationship stipulated by the Bs/L shall not be denied. 2. Although the word “schenker” are found in the names of all the defendants, they completely vary from each other, and represent independent legal persons. It was Zuoyou’s own fault to mix up each subject in light of one English word in common. 3. The agency relationship between Schenkerocea and Schenker International and Schenker (H.K.) exists from the very beginning instead of being recognized retroactively in the first instance. 4. Schenkerocea acquired the NVOCC qualification from the Ministry of Communications in November 2006. Therefore, the act of agency in this case is valid. To say the least, even if Schenkerocea hasn’t obtained the NVOCC qualification, the civil juristic act of signing and issuing Bs/L on behalf of the carrier remains valid. The litigation filed by Zuoyou went beyond the limitation of actions. The defendants request the court to reject the appeal and uphold the original judgment. Schenker China agreed with Schenker International, Schenker (H.K.) and Schenkerocean. After hearing, the court of second instance finds the fact ascertained by the original judgment to be true and is hereby confirmed by this court. This court holds that: this case is arising from dispute over the contract of carriage of goods by sea. After Zuoyou concluded the booking of shipping space with Schenker (H.K.) -Dongguan Office, Schenker (H.K.) and Schenker International issued the 6 sets of the subject Bs/L. Schenker (H.K.) and Schenker International claimed that they signed and issued the Bs/L on behalf of Schenkerocean but failed to assume the obligation of express by notifying Zuoyou of their principal-agent relationship with Schenkerocean. Besides, their English names are similar to that of Schenkerocean. Meanwhile, the 6 sets of Bs/L were stamped by the personal seal of Zhou Guoqiang, chief representative of Schenker (H.K.) -Dongguan Office. Given the above, Schenker (H.K.) and Schenker International shall be ascertained as the carrier. Schenker (H.K.) and Schenker International claimed themselves to be agents of Schenkerocean but failed to provide clear power of attorney, which was not clear power of attorney as to the authority conferred. Pursuant to the provisions of Paragraph 3 of Article 65 of General Principles of the Civil Law of the People's Republic of China, “If the power of attorney is not clear as to the authority conferred, the principal shall bear civil liability towards the third party, and the agent shall be held jointly liable”, Schenker (H.K.), Schenker International, and Schenkerocean shall be held jointly liable. Schenkerocean claimed that he had acquired the NVOCC qualification from China by the time of the subject carriage but failed to provide evidence to prove it. Therefore, it shall be ascertained that Schenkerocean had not obtained qualification to operate non-vessel shipping business within the territory of China by the time of the subject carriage and that it was illegal for Schenker (H.K.) and Schenker International to operate non-vessel shipping business within the territory of China as agents for Schenkerocean and thereby they shall be held jointly liable as well. With respect to the limitation of actions, Schenkerocean, Schenker (H.K.) and Schenker International shall be held jointly liable for the subject carriage of the goods. The limitation actions shall be discontinued as Zuoyou filed a lawsuit against any of them. The lawsuit filed by Zuoyou against Schenker International hasn’t yet surpassed the limitation of action as prescribed by Maritime Code of the People's Republic of China, and thereby Zuoyou shall not lose the right to win the case. Zuoyou is entitled to claim that Schenker (H.K.), Schenker International and Schenkerocean shall be jointly liable for loss of payment of the goods and the interest thereof, but his request for export tax refund loss and exchange rate loss lacks grounds and thereby shall not be supported. To sum up, the erroneous facts ascertained by and improper handling of the first instance, are hereby corrected by this court. Parts of the reasons for Zuoyou’s appeal are well-grounded and hereby supported by this court, while the rest are not and hereby rejected in according with law. Pursuant to Provision 3 of Paragraph 1 of Article 153 of Civil Procedure Law of the People's Republic 0f China, the judgment is rendered as follows: 1. The original judgment is hereby set aside. 2. Schenker (H.K.), Schenker International and Schenkerocean shall jointly indemnify Zuoyou in the amount of USD243,522 and the interest thereof, which shall be based on the principal in RMB converted from the above amount in USD and calculated as per the interest of liquidity loans over corresponding period promulgated by People's Bank of China, counting from 11th March 2008 till the date of actual payment. The above obligation of payment shall be fulfilled within 10 days as of the date this judgment enters into effect. In case of failing to make the payment within the period designated by the judgment, interest on the debt for the delayed period shall be doubled. The entertaining fee of the first instance is RMB24,456, of which, Zuoyou shall pay RMB4,377, and Schenker (H.K.), Schenker International and Schenkerocean shall be jointly liable for RMB20,079. The entertaining fee of the second instance is RMB24,456, of which, Zuoyou shall pay RMB4,377, and Schenker (H.K.), Schenker International and Schenkerocean shall be jointly liable for RMB20,079. This judgment is final. Presiding judge: Ouyang Zhenyuan Acting judge: Mo Fei Acting judge: Li Yunchao 25th December 2009 Higher People’s Court of Guangdong Province (stamp) This copy is proved to be identical with the original after checking. Clerk: Jiao Xiaoding The translation is provided by Huang & Huang CO.
  • Case of dispute over contract of carriage of cargo by sea filed by Shenzhen Huapu Digital Co. Ltd against CMA CGM (China) Shipping Co., Ltd. Shenzhen Branch, CMA CGM (China) Shipping Co., Ltd etc.

    2016-01-26

    Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2009)GHFCZ No.590 Plaintiff : Shenzhen Huapu Digital Co. Ltd. Address : Building No.6 District No.1, Huai De Cui Hai Industrial Zone, Fuyong Street, Baoan District, Shenzhen, Guangdong, China Legal Rep. : Wu Kaiting, Chairman Agent ad litem : Li Daofeng, attorney-at-law from Grandall Law Firm Agent ad litem : Yan Yi, attorney-at-law from Grandall Law Firm Defendant : CMA CGM (China) Shipping Co., Ltd. Shenzhen Branch Address : 60/F, Shunhing Square, Di Wang Commercial Center, Shennan Road East, Luohu District, Shenzhen Legal Rep. : Aubrey Chang, General Manager of South China Agent ad litem : Zhao Shuzhou, Attorney-at-law of Wang Jing & Co. Law Firm Agent ad litem : Yang Bo, Attorney-at-law of Wang Jing & Co. Law Firm Defendant : CMA CGM (China) Shipping Co., Ltd. Address : No. 39, Golden Bund Finance Centre, No.222 Yan’an Dong Road, Shanghai. Legal Rep. : Farid T.Salem Agent ad litem : Zhao Shuzhou, Attorney-at-law of Wang Jing & Co. Law Firm Agent ad litem : Yang Bo, Attorney-at-law of Wang Jing & Co. Law Firm Defendant : CMA CGM S.A. Address : 4, quai d’Arenc-13235 MARSEILLE cedex 02-France Legal Rep. : Philippe Blanchet, General Counsel Agent ad litem : Zhao Shuzhou, Attorney-at-law of Wang Jing & Co. Law Firm Agent ad litem : Yang Bo, Attorney-at-law of Wang Jing & Co. Law Firm With respect to the case of dispute over contract of carriage of cargo by sea filed by the Plaintiff Shenzhen Huapu Digital Co. Ltd. on 23 Sep, 2009 against the Defendant CMA CGM (China) Shipping Co., Ltd. Shenzhen Branch (hereinafter referred to as “CMA Shenzhen”), the Defendant CMA CGM (China) Shipping Co., Ltd. (hereinafter referred to as “CMA China”), and the Defendant CMA CGM S.A. (hereinafter referred to as “CMA France”), after accepting this case, this court formed a collegial panel in accordance with law. The Defendant CMA France raised an objection against the jurisdiction of this court within the time limit for filing the statement of defense. This court ruled to dismiss the objection on jurisdiction on 4 Dec., 2009. CMA France who was not satisfied with the ruling lodged an appeal. Guangdong Higher People’s Court ruled to dismiss the appeal and maintain the original ruling on 12 June 2010. This court summoned the parties hereto to carry out pre-trial evidence exchange on 4 November 2010 and conducted an open trial on the present case respectively on 4 November 2010 and 12 April 2011. The following persons have appeared before this court to participate in the court hearings: Li Daofeng and Yan Yi, agents ad litem of the Plaintiff; Zhao Shuzhou and Yang Bo, agents ad litem jointly entrusted by the three Defendants. The trial of this case has closed. The Plaintiff Shenzhen Huapu Digital Co. Ltd. alleged that: to perform the contract for export goods signed on 23 December 2008 between the Plaintiff and its Brazilian customer Proview Electronica Do Brasil Ltda (hereinafter referred to as “Proview”), the Plaintiff entrusted the Defendant CMA Shenzhen to transport the electronic products worth US$940,000 to Manaus, Brazil. On 25 December 2008, CMA Shenzhen received the goods, which were stuffed separately in two containers numbered CMAU8077425 and TRLU7273391. Without the consent of the Plaintiff, CMA Shenzhen issued the full set of original bills of lading No.SZ1477171 in the name of the agent of CMA France. While the full set of original bills of lading are still in the Plaintiff’s hand, the cargoes stuffed in the two containers were released respectively on 27 April 2009 and 10 June 2009, as a result of which the Plaintiff was unable to collect the cargo payment as stipulated in the sale contract. CMA Shenzhen, as the party to the contract of carriage, and CMA France, as the carrier under the bill of lading, shall be obliged to deliver the cargo against the production of the original bill of lading, and thus they should compensate the Plaintiff for the loss of the Plaintiff caused by the delivery of cargo without original bill of lading. CMA Shenzhen is the branch company of the CMA China, so CMA China shall be liable for assuming the liability of CMA Shenzhen. The Plaintiff requested this court to order the three Defendants to compensate for the losses to the Plaintiff caused by the delivery of cargo without the bill of lading in the amount of RMB6,426,404, plus interests accrued thereon (calculated at the loan interest rates published by the People’s Bank of China prevailing at the corresponding periods, counting 1 March 2009 to the date of payment determined by court judgment), and lawyer’s fee in amount of RMB200,000 incurred by the Plaintiff for this lawsuit and to bear the court fee. The Plaintiff provided the following evidence within the period for adducing evidence: 1. purchase order, pro forma invoice and export commodity invoice of Shenzhen; 2. packing list; 3. original bill of lading in triplicate; 4 invoice for container demurrage; 5. website data print; 6. correspondences between the two parties; 7. central parity rates; 8. Export Goods Invoice, the Form and Detailed Sheets of Tax Exemption, Tax Deduction and Drawback of Export Goods, and the Verification and Writing-off Form for Foreign Exchange Collected in Export. Defendants CMA Shenzhen, CMA China and CMA France jointly defended that: 1. CMA Shenzhen only acted as the agent for the carrier CMA France for accepting booking, arranging the carriage and issuing the bill of lading, and had no any relation of carriage contract with the Plaintiff, thus the Plaintiff has no right to sue CMA Shenzhen and CMA China; 2. The delivery of the cargo without presentation of the original bill of lading as alleged by the Plaintiff does not conform to the fact, because the cargo has not been delivered to any party, but has been stored at the inland depot “AURORA EADI” under customs control, waiting to be collected; 3. The cargo involved in this case has been compulsively transferred to the inland depot of the discharge port by the customs, and been compulsively un-stuffed and stored at the inland depot. The transit and de-stuffing have nothing to do with the carrier. In the light of the regulations of the port of destination, the consignee specified in the bill of lading has the right to apply to the customs for the transfer of the cargo to the inland depot under the supervision of the customs by presentation of a copy of the bill of lading; the carrier has no way to interfere with or prevent such transfer; the bill of lading holder will not thereby lose the ownership in the cargo, because the cargo remains under the customs supervision and only the holder of the original bill of lading has the right to take delivery of the cargo; 4. The Defendants have already notified the Plaintiff of the current storage status of the cargo and taken initiative to assist them in dealing with issues such as taking delivery of and returning the cargo. However, the Plaintiff has consistently delayed to take delivery of the cargo. Thus any loss or risk arising therefrom should be borne by the Plaintiff and has no relevance with the Defendants. To sum up, the Defendants requested to dismiss all the litigation requests of the Plaintiff according to law. The three Defendants provided the following evidence within the period for adducing evidence: 1. agency agreement signed by CMA France and CMA China; 2. approval documents issued by the Brazilian Finance Ministry and the Ministry of Agriculture; 3.legal opinion issued by Brazilian lawyers on the delivery of cargo at the port of the destination and local laws and regulations on cargo inland transfer; 4. written certifying documents and correspondences of the customs inland warehouse. Upon cross-examination and hearing, the following evidential documents and facts were confirmed by the Plaintiff and the three Defendants, which are accordingly by the Collegial Panel: The Plaintiff entrusted CMA Shenzhen to transport its cargo from Shenzhen, China to Manaus, Brazil in December 2008. CMA Shenzhen accepted the entrustment of the Plaintiff and arranged the cargo transportation. On 25 December 2008, CMA Shenzhen issued a set of original bill of lading numbered SZ477171 in triplicate to the Plaintiff. The shipper specified on the bill of lading is the Plaintiff, the consignee and notify party is PROVIEW, the carrier is CMA France, shipper’s load, stow and count, cargo is said to be 20,200 sets of XPS-300 black set-top box, stowed separately into two containers of 40 feet, numbered as CMAU8077425 and TRLU7273391 in full container load; the carrying vessel is M/V “Northern Faith”, voyage number PP501E; loading port is Chiwan, Shenzhen, China, and unloading port is Manaus, Brazil, date of loading on board is 25 December 2008, and the bill of lading was signed by CMA Shenzhen, the agent of the carrier CMA France on that day in Shenzhen. The cargo specified on the bill of lading hereinabove arrived at the port of destination, Manaus. The customs clearance certification issued by the Brazilian Finance Ministry specified that the two containers numbered as CMAU807742 and TRLU72339 and stacked at the wharf Chibatao were thereafter transferred to the customs inland depot “AURORA EADI” by road. The containers departed at 17hr13min30sec 20 February 2009 and arrived at 05hr13min30sec 21 February 2009. After the arrival at the inland depot “AURORA EADI”, the subject containers were de-stuffed. Based on the letter dated 17 July 2009 issued by Kleber, the staff member of the inland depot “AURORA EADI”, the three Defendants asserted that the de-stuffing date should be 23 April 2009. While in the light of the commencing date and ending dates of container demurrage, the Plaintiff asserted that the de-stuffing date for the container No.CMAU8077425 should be 27 April 2009 and 10 June 2009 for the container TRLU723391. On 8 July 2009, the Plaintiff sent an e-mail to CMA Shenzhen to check out whether the cargo specified on the bill of lading No.SZ147717 were released without B/L at the discharging port. CMA Shenzhen immediately informed the branch company of CMA France in Manaus, Brazil (hereinafter referred to as CMA Brazil) of the situation and made investigation, and informed the legal department of CMA France of the claim of the Plaintiff. On 14 July 2009, CMA Brazil responded that the cargo was transferred from Chibatao to AURORA EADI without B/L, but there was the authorization from the customs authorities to release the cargo without presentation of original bill of lading. On 18 August 2009, CMA France sent an e-mail to the Plaintiff to inform it the container demurrage fee of the cargo specified on the B/L in Brazil amounted to US$8,480, of which, the beginning and ending dates for the demurrage of the container No.CMAU8077425 are respectively 16 February 2009 and 27 April 2009, during which the period from 16 February 2009 to 8 March 2009 is for free, and the period from 9 March 2009 to 16 April 2009 is calculated as the rate of US$40 per day, i.e. US$1,560 in total, and the period from 17 April 2009 to 27 April 2009 is calculated as US$80 per day, i.e. $880 in total. The beginning and ending dates for the demurrage of the container No.TRLU7273391 are respectively 16 February 2009 and 10 June 2009, during which the period from 16 February 2009 to 7 March 2009 is for free, and the period from 8 March 2009 to 15 April 2009 is calculated at US$40 per day, i.e. $1,560 in total, and the period from 16 April 2009 to 10 June 2009 is calculated at US$80 per day, i.e. $4,480 in total. CMA France also informed the Plaintiff in its e-mail that the re-stuffing cargo would cost an additional amount of US$270, and remind the plaintiff to take immediate action to avoid the forfeiture of the cargo by the customs. On 22 September 2009, the Plaintiff signed an retainer contract with Grandall Legal Group Shenzhen Law Firm (hereinafter referred to as “Grandall Law Firm”), in accordance with which, the Plaintiff entrusted Grandall Law Firm to act as its agent ad litem in this case and the retainer fee is RMB200,000. On the same day, Grandall Law Firm provided an invoice in amount of RMB200,000 as lawyer’s fee. On 23 September 2009, the Plaintiff lodged the suit to this court and effected the payment of RMB200,000 via e-bank of Shenzhen Development Bank to Grandall Law Firm. From June to August in 2010, CMA Brazil inquired of the cargo status stuffed in the two containers numbered CMAU8077425 and TRLU7273391 by sending emails to Alcimo and Kleber, staff members of inland depot “AURORA EADI”, who responded by e-mail successively that the laden containers were still in the inland depot, but they should be delivered in time, and the huge storage fee should be paid to the depot as soon as possible. The three Defendants provided the written reply letter issued by Kleber on 10 March 2011 concerning the cargo status, in which it is stated: the cargo under the B/L No.SZ1477171 was stowed in the containers Nos.CMAU 8077425 and TRLU7273391 at first, and then de-stuffed and re-stowed in the containers Nos.XINU8226675 and TRLU7273175; it is stored at the inland depot of the customs, seal number respectively CMA CGM 2940845 and CMA CGM 2940847. The three Defendants have fulfilled the procedure of notarization and authentication for this written document. It is also found from court investigation that on 27 June 2001, CMA France and CMA China signed an agency agreement, according to which, CMA France authorized CMA China as its shipping agent in areas including Shanghai, Ningbo, Zhejiang, Xiamen, Shenzhen, Qingdao, Dalian etc; CMA China accepted the entrustment and agreed to perform its agent obligations in the area of agency in accordance with the all the clauses of the agency agreement and the addendum signed between the two parties; this agreement came into effect on 1 July 2001 and remains effective; either party can inform the other party of the termination of the agreement by telegraph, telex, fax or registered mail 90 days in advance without disclosing the reason. In order to prove the value of the cargo involved in this case, the Plaintiff provided copies of the purchase order and pro forma invoices as well as the invoice of export goods in Shenzhen. The purchase order is under the heading of Proview, order number 16915REV1, the cargo supplier is Plaintiff, the type of payment is by TT, and the transportation form is by sea, on the trade term of FOB Shenzhen, the place of delivery is Manaus; the issuing date is 23 December 2008; the specifications of the product is XPS-300(black), in total number of 20,200; the delivery date is 51 weeks, at the unit price of US$46.53, i.e. US$939,906 in total. In the column of approval persons there are the signatures of three persons, which the plaintiff asserted to be the procurement staff, procurement manager and the company senior management of Proview. The pro forma invoice No.PI-PROVIEW1222-08 issued by the Plaintiff specifies that: product type XPS-300, bulk order quantity 20,000, plus 200 spare units for free for after-sale service; unit price US$47, i.e. US$940,000 in total; on sale term of FOB Shenzhen, payment by TT, which means to be paid one week before the cargo arrived at the port of destination; after payment, the original B/L should be released via mail. The date when the invoices were issued is 22 December 2008 and the date of delivery is 24 December 2008. The invoice of export goods in Shenzhen numbered as 00575474 issued by the Plaintiff on 18 December 2008 specifies that: the purchasing party is Brazilian company Proview, and the type of trade is processing with imported materials, and the payment is settlement after export; product is XPS-300 in quantity of 20,200sets, at unit price of US$46.53, and both the sales amount and FOB price are US$939,906. The three Defendants alleged that the forgoing evidential documents do not cross-prove one another, thus denied the authenticity and relevance of these evidences. The collegial panel holds that the name and the number of the commodity specified on the invoices of the export goods in Shenzhen are consistent with the bill of lading, and the cargo name, quantity, unit price and total price are consistent with the purchase order; thus in the absence of any contrary evidence from the Defendants, the value of the subject cargo should be confirmed to be US$939,906, as specified on the invoices of export goods in Shenzhen. The number and the type of the products specified on the pro forma provided by the plaintiff are consistent with the related information in the invoices of the export goods in Shenzhen, the purchase order and the B/L, but the unit price, gross price are not the same with the export invoices and the B/L, thus, the collegial panel doesn’t accept it as the evidence of the value of the cargo. The three Defendants also relied on the documents issued by the Brazilian Finance Ministry and the Ministry of Agriculture and the Brazilian lawyers’ legal opinion on the procedures and legal requirements concerning cargo delivery and inland bonded transfer of cargo to support their argument that the containers were de-stuffed under the compulsory order of the customs authority. The Plaintiff opined that the above-mentioned evidences cannot prove the facts alleged by the three Defendants. The collegial panel holds that the forgoing documents intended to be used as evidence are formed outside the territory of China, but the three Defendants failed to have them notarized and legalized in accordance with the stipulation of paragraph 1, Article 11 of Certain Provisions on Evidence involve din Civil Actions promulgated by the Supreme Court. Besides, the documents issued by the Brazilian Finance Ministry and the Ministry of Agriculture can only prove that the cargo was transferred to inland depot “AURORA EADI” and was inspected by the Ministry of Agriculture on 21 February 2009, but cannot prove that the containers were de-stuffed compulsorily under the administrative power of the customs authority. The legal opinion on the laws and procedures concerning cargo delivery and cargo transfer at the port of destination issued by Brazilian lawyers are of personal view, and the three Defendants failed to provide any specific regulations of law to support, so the legal opinion cannot prove that there exist relevant regulations authorizing the customs at the port of destination the power to de-stuff the containers compulsorily. Considering the facts hereinabove, this court does not accept the forgoing allegation of the three Defendants. During the trial, the Plaintiff and the three Defendants agree unanimously to apply the law of China for resolving the disputes in this case. The collegial panel members all hold that: this case is one involving disputes over contract of carriage of goods by sea. According to Article 11 of Certain Provisions of the Supreme People’s Court on Scope of Cases Accepted by Maritime Courts, the case falls into the exclusive jurisdiction maritime courts. The place of departure of the cargo involved in this case is Shenzhen, Guangdong, which is under the jurisdiction of this court. In accordance with Article 28 of the Civil Procedure Law of China that a lawsuit brought on claims for damages caused by a contract over railway, road, water, air or combined transport should be under the jurisdiction of the people’s court of the place of the departure or the place of destination or the domicile of the defendant, this court shall have the jurisdiction over this case. The cargo transport in this case is from Shenzhen, China to Manaus, Brazil, involving international elements. The Plaintiff and the Defendants choose to apply Chinese law to this case according to the provisions of Article 269 of the Maritime Code of China, so this case should be governed by Chinese law. According to Article 71of the Maritime Code of China, the bill of lading is evidence of the contract of carriage of goods by sea, and against which the carrier undertakes to deliver the cargo. The Plaintiff is the shipper specified on the B/L and the holder thereof. The Defendant CMA France is the carrier specified on the B/L. Therefore between the Plaintiff and CMA France there is the contract of carriage of goods by sea as evidenced by the bill of lading. As the carrier under the contract of carriage of goods by seas, CMA France is obliged to deliver the cargo against production of the original B/L at the port of destination. The disputes of this case focus on whether or not the cargo has been delivered without production of the original bill of lading. The burden of proving this issue is on the Plaintiff, who shall provide evidence to prove that the carrier has committed the acts of delivering the cargo without collecting the original bill of lading at the discharging port, and as a result of such acts, the Plaintiff, who holds the original bill of lading, is made unable to take delivery of the cargo at the discharge port against the production of the original bill of lading. According to the facts investigated and ascertained by this court, the Plaintiff who is the seller under the sale contract, the shipper under the B/L and the holder of the original B/L, did not check with the carrier about the status of the cargo until it has been more than four months after the cargo’s arrival at the discharging port, and the Plaintiff failed to proceed to the destination port for checking the cargo status or demanding the delivery of the cargo against the original bill of lading after the carrier notified them that the cargo remains idle at the inland customs warehouse AURORA EADI. It follows that the Plaintiff has provided no evidence to prove that they are unable to take delivery of the cargo against the production of the original bill of lading at the discharging port, and inferred that the carrier has delivered the cargo without the original bill of lading on the mere fact that the two containers in which the cargo was originally stuffed were de-vanned after arrival at the discharging port. In accordance with the written certification and the related emails from the staff members of Aurora Eadi as provided by the Defendants, the cargo was put in the customs inland bonded warehouse pending delivery after being de-stuffed from the containers, and has not been delivered to the consignee or any other party. Therefore, in the absence of sufficient contrary evidence from the Plaintiff, one cannot arrive at the conclusion that the cargo has been delivered without the original bill of lading. According to the B/L terms and conditions and the shipping customs for containerized cargo, the cargo in this case should be delivered in full container load, but the holder of the B/L hasn’t required to take delivery against presentation of the original B/L after the cargo in this case arrived at the port of the destination on16 February 2009. Therefore, CMA France has the right to de-stuff the containers and store the cargo on shore 60 days after the cargo arrived at the port of destination and when no one came up to demand the delivery of the cargo, in accordance with the stipulations of Article 86 of the Maritime Code of China, which reads “if the goods were not taken delivery of at the port of discharge or if the consignee has delayed or refused taking the delivery of the goods, the master may discharge the goods into warehouse or other appropriate places, and any expenses or risks arising therefrom shall be borne by the consignee”. The fact that the cargo was de-vanned from the containers cannot prove that CMA France has committed the delivery without the B/L. In summary, the Plaintiff’s allegation that CMA France has delivered the cargo without the original B/L is groundless in fact, thus its request to hold CMA France liable for bearing the related civil liability is not supported by law. According to the fact investigated and ascertained by this court, CMA China has signed an agency agreement with CMA France. Thus CMA China is the shipping agent of CMA France in the areas including Shenzhen. As CMA Shenzhen is a branch company of CMA China, it has the right to accept entrustment from CMA France for agency business on behalf of CMA China. CMA Shenzhen made it clear on the B/L in this case that it only served as an agent of the carrier CMA France in issuing the B/L, and CMA France also confirmed that CMA Shenzhen is its agent. Under the situation that the Plaintiff has not provided adequate proof to the contrary, this court holds that CMA Shenzhen is only the agent of the carrier for transporting the cargo specified on the B/L, it is not the carrier of the cargo specified on the B/L, thus has no obligation for delivering the cargo against production of the original B/L. There exists no evidence in this case proving that CMA Shenzhen has committed the delivery of the cargo without the original B/L. Therefore the Plaintiff’s request to hold CMA Shenzhen liable for the delivery without the B/L and to hold CMA China liable for the debt payment obligation of CMA Shenzhen lacks basis in fact and in law, thus is not supported by the court. The lawyer’s fee that the Plaintiff incurred was paid out of its own initiative for handling the lawsuit, so it is of no legal ground for the Plaintiff to take it as its loss and require the opposite party to reimburse for it. This court hereby dismisses the claim of the Plaintiff against the Defendant for reimbursements of lawyer’s fee in amount of RMB200,000. To sum up, according to Article 64 (1) of the Civil Procedural Law of the People’s Republic of China, the judgment is hereby rendered as follows: All the claims of the Plaintiff Shenzhen Huapu Digital Co. Ltd against the Defendants CMA Shenzhen, CMA China and CMA France are dismissed. The case acceptance fee of this case in amount of RMB58,185 shall be born by the Plaintiff. If not satisfied with this judgment, the Plaintiff and the Defendants CMA Shenzhen and CMA China, may, within 15 days as of the service of this judgment, the Defendant CMA France, may, within 30 days as of the service of this judgment, file an appeal to the Higher People’s Court of Guangdong Province, by submitting to this court the Statement of Appeal, and the duplicates thereof in the number of the counterpart parties. Presiding Judge : Xu Yuanping Acting Judge : Li Lifei Acting Judge : Zhai Xin Guangzhou Maritime Court (Official chop affixed) 27 June 2011 Verified as identical with the original Clerk : Zeng Huifen The translation is provided by Wang Jing & CO.
  • Dispute over damages arising from ship collision filed by Shanghai Oriental Shipping & Resource Co., Ltd. against Shanghai Hailian Transportation Co. Ltd,Beihai Honghai Shipping Co., Ltd.etc

    2015-12-24

    Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2009)GHFCZ No.97 Plaintiff: Shanghai Oriental Shipping & Resource Co., Ltd. Address: F/3, 4160, Pu Dong Shangnan Road, Shanghai Legal Representative: XU Hongyi, Chairman Agent ad litem: WU Jinjun, Employee Agent ad litem: LUAN Jianping, attorney from Shanghai Gong Mao Law Firm Defendant: Beihai Honghai Shipping Co., Ltd. Address: Building C, F/9, Quanjing Tower, Beihai Avenue, Haicheng District, Beihai City, Guangxi Zhuang Autonomous Region Legal Representative: CHEN Feijing, General Manager Agent ad litem: CHEN Yusheng, attorney from Lin Yi Hua & Co. Law Office Agent ad litem: WANG Silu, attorney from Lin Yi Hua & Co. Law Office Defendant: Orient Overseas Container Line (UK) Limited Address: F/33, Harbour Center, No. 25 Harbour Road, Wanchai, Hong Kong Legal Representative: DAI Shengjian, Director Agent ad litem: CHEN Xiangyong, attorney from Wang Jing & Co. Agent ad litem: Cao Yanghui, attorney from Wang Jing & Co. With respect to the case of dispute over damages arising from ship collision filed by the Plaintiff, Shanghai Oriental Shipping & Resource Co., Ltd., against Shanghai Hailian Transportation Co. Ltd. (hereinafter referred to as “Hailian Company”), Beihai Honghai Shipping Co., Ltd. (hereinafter referred to as “Honghai Company”), Swan National Leasing (Commercials) Limited, Orient Overseas Container Line (UK) Limited (hereinafter referred to as “OOCL (UK)”) and Orient Overseas Container Line Limited, this Court, after accepting this case, formed a collegial bench in accordance with law to conduct a trial on the case. Since acceptance of this case shall be based on a decision of another case of dispute over damage compensation arising from ship collision accepted by this Court, Civil Ruling (2009) GHFCZ No.97-3 was made by this Court on 26 May, 2009 to suspend this trial. On 12 March, 2012, the cause for suspending this trial was eliminated and trial of this case was resumed. On 23 May, 2012, the Plaintiff withdrawn its claim against the Defendants, Hailian Company, Swan National Leasing (Commercials) Limited and Orient Overseas Container Line Limited, which was approved by this Court. This Court called upon the Plaintiff and the Defendants involved to carry out pre-trial evidence exchange respectively on 16 April and 11 June, 2012 and conducted an open trial on the present case. The following persons have participated in the trial of first instance and the trial of second instance respectively: WU Jinjun and LUAN Jianping, agents ad litem of the Plaintiff; CHEN Yusheng, agent ad litem of the Defendant Honghai Company; CHEN Xiangyong and CAO Yanghui, agents ad litem of the Defendant OOCL (UK). The trial of this case has been closed. The Plaintiff alleged that: on 6 August, 2008, the Plaintiff and Hailian Company entered into an agreement of carriage, under which Hailian Company is expected to, by way of partial shipment, carry steel sheets of 6,421.981MT from Zhang Jia Gang to the terminal of CSSC Guangzhou Longxue Shipbuilding Co., Ltd. (hereinafter referred to as “Longxue Company”). On 16 October, 2008, the Defendant Honghai Company issued a Waterway Bill, confirming that the total weight of 209 pieces of steel sheets carried by M/V “Xinghai 668” was 1,780.704MT. Honghai Company was the owner of M/V “Xinghai 668”. On 21 October, 2008, M/V “Xinghai 668”, on its way to Guangzhou Port, collided with M/V “OOCL EUROPE” bareboat chartered by the Defendant OOCL (UK), leading to sinking of M/V “Xinghai 668” and the cargoes consigned for shipment by the Plaintiff who therefore suffered from economic losses arising therefrom. According to the final judgment of Higher People’s Court of Guangdong Province, the Defendant Honghai Company shall bear 40% of and the Defendant OOCL (UK) shall bear 60% of the liabilities for the subject collision accident. The Plaintiff requested this Court to order these two Defendants to, based on the proportion of their respective liabilities, compensate for economic losses suffered by the Plaintiff in an amount of RMB 16,458,186.83 plus interest (the interest shall be calculated at the enterprise working-capital loan interest rate of the same period announced by the People’s Bank of China from 21 October, 2008 till the date of compensation payment as determined under this judgment). Litigation fees, cost of application for property preservation, cost of application for registration of creditor’s rights and other expenses involved in this case shall be borne by both these Defendants. In the course of trial proceedings, the Plaintiff modified the amount of economic losses incurred into RMB 16,260,865.40, which includes RMB 15,958,497.24 of purchased price of cargoes in this case, RMB 293,816.16 of freight and RMB 8,552 of insurance premium. Other litigation requests remained the same. The Plaintiff provided this Court with the following evidential materials within the period for adducing evidence: 1. Agreement of Carriage; 2. Waterway Bill; 3. Receipts; 4. Cargo Delivery Note; 5. Storage List; 6. Notice of Loss; 7. Sales Contract; 8. Purchase Contract; 9. Purchase Invoice; 10. Letter of Warranty; 11.Statement of Cargo Ownership Transfer; 12.Public Letter from Hong Kong Marine Department; 13.Correspondence between the Plaintiff and the Defendant Honghai Company; 14.Correspondence between the Plaintiff and Hong Kong Marine Department; 15. Description of Situation issued by Longxue Company; 16.Ship Registry Materials issued by Beihai Maritime Bureau; 17.Agreement on Prepayment of Insurance Indemnity; 18.Agreement on Second Prepayment of Insurance Indemnity; 19.Certificate of Insurance. The Defendant Honghai Company alleged that: 1. the Plaintiff did not provide evidences sufficient to prove that it’s entitled to claim for the subject cargo losses; 2. None of the evidences provided by the Plaintiff suffices to prove that it has suffered from the subject cargo losses; therefore the Plaintiff’s requests shall be rejected by this Court; 3.the Plaintiff has presented the VAT Invoice for purchase of the subject cargoes; if any cargo losses has actually been suffered by the Plaintiff, the amount of such losses shall be the VAT Invoice amount excluding 17% thereof; 4.withou prejudice to the preceding points of view, Honghai Company is entitled to restriction of maritime liabilities and the compensation for maritime liabilities in this case shall be limited to RMB 2,642,925.24. Reasonable expenses paid by the Defendant Honghai Company for detecting and salvaging the subject sunken ship and the cargoes carried thereon shall be proportionally deducted from such liability limitation. The Defendant Honghai Company provided this Court with the following evidential materials within the period for adducing evidence: 1. Sunken Ship Searching Agreement concluded by and between the Defendant Honghai Company and Shenzhen Xinlong Diving Engineering Co., Ltd. (hereinafter referred to as “Xin Long Company”), Report on Sunken Ship Searching and payment vouchers for conducting sunken ship searching; 2.Agreement on Salvage of Sunken Ship and Cargoes, payment vouchers for salvage works; 3.correspondence between the Defendant Honghai Company and Hong Kong Maine Department; 4. Sunken Ship Searching Agreement concluded by and between the Defendant Honghai Company and Guangzhou Salvage, Report on Sunken Ship Searching, price quotation for and payment vouchers for conducting sunken ship searching; 5.correspondence between the Defendant Honghai Company and the Plaintiff. The Defendant OOCL (UK) alleged that: 1. the Plaintiff did not provide evidences sufficient such as the voucher of payment of cargo price, to prove that it’s entitled to claim for the subject cargo losses; 2.the collision accident in this case was fundamentally and directly caused by gross fault in manning of M/V “Xinhai 668”. Even though liabilities between both ships had been apportioned under the final judgment by the Higher People’s Court of Guangdong Province, the real cause of the subject accident had not been found yet because Honghai Company did not provide true evidence; therefore, the liability ascertainment in respect of M/V “Xinhai 668” made by the Higher People’s Court of Guangdong Province was wrong, and the Defendant Honghai Company shall be fully liable for cargo losses arising from the collision; 3.the Plaintiff’s claim quanta shall not be sustained for the following two reasons: firstly, the Plaintiff didn’t provide vouchers of cargo payment made to the Seller; secondly, the Plaintiff claimed for a compensation of RMB 16,300,000; however, as indicated by evidences provided by the defendant Honghai Company, the cost of cargo refloatation was only RMB 5 million. In this case, the Plaintiff obviously failed to perform its duty to mitigate loss and thus is not entitled to claim for total loss of the sunken cargo but could claim for an amount of only RMB 5 million at most. The Defendant OOCL (UK) provided this Court with the following evidential materials within the period for adducing evidence: 1. Certificate of Registry of M/V “OOCL EUROPE”, Deck Logbook, Engine Logbook, Maritime Investigation Report issued by Hong Kong Marine Department etc.; 2. Letter from Hong Kong Marine Department; 3.Letter of the Plaintiff requesting the Defendant Honghai Company to salvage the subject cargoes; 4. Price Quotation by Guangzhou Salvage; 5.Agreement on Refloatation of Sunken Ship and Cargoes concluded by and between the Defendant Honghai Company and Xin Long Company. Based on evidences adduced by both the Plaintiff and the Defendants and through investigation and cross-examination, the collegial bench ascertains the following facts: 1. Sales of the subject cargoes The Plaintiff claimed that the subject cargoes in this case were 209 pieces of steel sheets which were purchased by the Plaintiff and China National Shipbuilding Equipment & Materials (East China) Co., Ltd. commissioned by the Plaintiff from Jiangsu Shagang Group Co., Ltd. (hereinafter referred to as “Shagang Group”). The Plaintiff had paid RMB 15,958,497.24 for purchasing such 209 pieces of steel sheets weighed 1,780.704MT in total. Afterwards, the Plaintiff sold the subject cargoes to Longxue Company at a price of RMB 16,458,186.83. Evidences such as Purchase Contract, Purchase Invoice, Sales Contract and Letter of Warranty etc. have been provided by the Plaintiff to prove such claim. As indicated in the aforesaid evidences: Products Purchase/Sales Contracts numbered D080608 and K0808I2 were concluded on 6 June and 7 July, 2008 respectively by and between the Plaintiff as the Buyer and Shagang Group as the Supplier, under which the Buyer purchased from the Supplier steel sheets in a quantity of 1,296.291MT and 1,656.225MT respectively at a price of RMB 11,295,653.15 and RMB 14,653,695.90; the Buyer should by itself take delivery of the cargoes from Shagang Company. A List of Purchased/Sold Products was enclosed respectively in each of these two Products Purchase/Sales Contracts, specifying in detail the specifications, models, quantities, weights, unit prices and total prices of the steel sheets. On 19 October, 2008, Shagang Company issued to the Plaintiff a VAT Invoice of an amount of RMB 7,146,815.38, covering 7 pieces of the subject steel sheets weighted 37.694MT at a price of RMB 342,891.25. On 28, August and 8 October, 2008, the Plaintiff as the Buyer and China National Shipbuilding Equipment & Materials (East China) Co., Ltd. as the Supplier entered into two Industrial and Mineral Products Purchase/Sales Contracts, under which the Buyer purchased from the Supplier steel sheets of 2,021.013MT and 1,448.452MT respectively at a price of RMB 18,097,982.30 and RMB 13,385,130.40; the Buyer should by itself take delivery of the cargoes from Shagang Company. A List of Purchased/Sold Products was enclosed respectively in each of these two Products Purchase/Sales Contracts, specifying in detail the specifications, models, quantities, weights, unit prices and total prices of 195 pieces and 7 pieces respectively of the subject steel sheets in this case. On 18 November, 2008 and 17 March, 2009 respectively, China National Shipbuilding Equipment & Materials (East China) Co., Ltd. issued to the Plaintiff 13 VAT invoices numbered 01615967-01615979 covering 195 pieces of steel sheets weighted 1673.779MT totally at a total price of RMB 14,973,626.93. The Invoice numbered 00199267 covers 7 pieces of the subject steel sheets weighted 69.231MT totally at a total price of RMB 641,979.06. The aforesaid 209 pieces of steel sheets were of a total weight of 1780.704MT and a total price of RMB 15,958,497.24. Four Products Purchase/Sales Contracts numbered 07GLS230-01C155, 07GLS230-01C158, 07GLS230-01C163 and 07GLS230-01C172 respectively by and between the Plaintiff as the Supplier and Longxue Company as the Buyer were concluded on 6 June, 3 July, 7 August and 18 September, 2008 respectively, under which steel sheets purchased/soled were weighted 1,296.291MT, 1,656.225MT, 2,106.578MT and 1,443.452MT respectively and priced at RMB 11,691,021.91, RMB 14,993,222.05, RMB 19,446,850.57 and RMB 13,803,142.22 respectively. A List of Purchased/Sold Products was enclosed respectively in each of these four Products Purchase/Sales Contracts, specifying in detail the specifications, models, quantities, weights, unit prices and total prices of the subject steel sheets in this case, of which 209 pieces were sold to Longxue Company at a price of RMB 16,458,186.83. On 20 April, 2012, Longxue Company issued a Description of Situation to confirm that “with respect to the provision “Place and Method of Delivery shall be a terminal designated by the Buyer” as prescribed in Article 3 of the four Products Purchase/Sales Contracts numbered 07GLS230-01C155, 07GLS230-01C158, 07GLS230-01C163 and 07GLS230-01C172 respectively concluded in 2008 by and between our company and the Plaintiff, the terminal refers to the terminal of Longxue Company; the aforesaid four Products Purchase/Sales Contracts have been fully performed by both parties thereto and the sinking of 209 pieces of steel sheets of a total weight of 1,780.704MT carried onboard M/V “Xinghai 668” has nothing to do with our company”. Agent ad litem of the Plaintiff alleged in the court trial that after occurrence of the subject collision, the Plaintiff resupplied cargoes to Longxue Company. Both Defendants raised no objection to the truthfulness of the aforesaid evidences and contents thereof corroborate with each other; besides, the collegial bench admitted the aforesaid evidences and facts. 2. Carriage of the subject cargoes On 6 August, 2008, the Plaintiff and Hailian Company entered into an agreement of carriage, under which Hailian Company is expected to, by way of partial shipment, carry steel sheets of 6,421.981MT including the subject cargoes in this case from Zhang Jia Gang to the terminal of CSSC Guangzhou Longxue Shipbuilding Co., Ltd.; the through waterway freight should be calculated at a rate of RMB 165/MT (including pilotage, insurance premium and cost of carriage); the Plaintiff should paid the freight to Hailian Company within one month of arrival of the cargoes at Longxue Company’s terminal. On 15 October, 2008, the subject cargoes in this case started to be loaded onboard M/V “Xinghai 668” at Shagang Company’s terminal. According to specifications and weights indicated in the Cargo Delivery Note issud by Shagang Company, 4 pieces of steel sheets of a total weight of 19.349MT were covered under No.6880 Delivery Note; 3 pieces of steel sheets of a total weight of 18.3MT were covered under No.6882 Delivery Note; 195 pieces of steel sheets of a total weight of 1,637.779MT were covered under No.6860 Delivery Note; 7 pieces of steel sheets of a total weight of 69.231MT were covered under No.6887 Delivery Note; these four Delivery Notes indicated a total of 209 pieces of steel sheets weighted 1,780.704MT in total. One of these Delivery Notes has a handwriting description “A total of 209 pieces of steel sheets without being scraped or bent have been actually received by GAO Huaqiang”. The Defendant Honghai Company confirmed that GAO Huaqiang was one of its employees. Shagang Company issued 30 pieces of storage lists, under which the name, specification, quantity and weight of the cargoes are consistent with those indicated in the Delivery Notes. On 16 October, 2008, the Defendant Honghai Company as the carrier issued a Waterway Bill indicating that “the Plaintiff was the Shipper; Longyue Company was the Consignee; the cargoes were 209 pieces of steel sheets weighing 1,780.704MT in total; the destination should be the terminal of Longxue Company. The Waterway Bill indicates some handwriting words that “See the Storage List for specifications of the wide thick plate”. The Defendant Honghai Company affixed the seal of V Xinghai 668” at the place of signature by the Carrier. On 21 November, 2008, the Defendant Honghai Company issued a Notice of Loss to China Pacific Property Insurance Co., Ltd. Shanghai Branch (hereinafter referred to as “Pacific Insurance Shanghai Branch”), stating that MV “Xinghai 668” carried steel sheets of 1780MT from Zhang Jia Gang to the Guangzhou Longxue Shipyard on 17 October, 2008 and sank after being collided with a foreign vessel at the water area adjacent to Hong Kong at 0600 hours of 21 October,2008, and requested the Pacific Insurance Shanghai Branch to send personnel to make inspections and entertain the loss claim. The Plaintiff intended to prove by the aforesaid evidences that: the subject cargoes were actually carried by M/V “Xinghai 668” and sank together with the same vessel on 21 October, 2008 in the collision accident. According to both Defendants, the aforesaid evidences were insufficient to prove that M/V “Xinghai 668” actually carried the subject cargoes. The collegial bench holds that: evidences such as Product Sales/Purchase Contracts, Lists of Sold/Purchased Products, Delivery Notes, Storage Lists, Waterway Bill provided by the Plaintiff constitute a complete evidence chain which proves that the 209 pieces of steel sheets of 1,780.704MT purchased by the Plaintiff were loaded onboard M/V “Xinghai 668”; the Defendant Honghai Company also confirmed in the Notice of Loss that the cargoes in question were loaded onboard “Xinghai 668”; therefore, the defense by both Defendants that the Plaintiff failed to sufficiently prove that the subject cargoes were loaded onboard M/V “Xinghai 668” could not be sustained. 3. Insurance for the subject cargoes As indicated in the Certificate of Domestic Waterway and/or Overland Cargo Transportation Insurance: on 17 October, 2008, the Plaintiff as the Insured and Hailian Company as the Applicant covered the subject cargoes against all risks under terms of domestic waterway and/or overland cargo transportation insurance (which became effective on 2 February, 1995) with Pacific Insurance Shanghai Branch by paying an insurance premium of RMB 8,552 for an insured amount of RMB 10,690.000. Pacific Insurance Shanghai Branch prepaid RMB 2,000,000 and RMB 2,500,000 on 4 May, 2009 and 26 October, 2009 respectively to the Plaintiff, and the Agreement on Prepayment of Insurance Indemnity and the Agreement on Prepayment of Insurance Indemnity for the Second Time were concluded respectively by and between them. Based on the fact that the specific amount of cargo losses in this case cannot be determined and additional costs incurred to the Plaintiff due to its purchase of substitute cargoes, the Plaintiff requested Pacific Insurance Shanghai Branch to prepay insurance indemnity. With respect to the forgoing matters, both parties reached the following agreements “1. Pacific Insurance Shanghai Branch shall respectively prepay RMB 2,000,000 and RMB 2,500,000 to the Plaintiff within 10 days after each prepayment agreements becomes effective; 2.both parties mutually confirm that the Plaintiff shall initially claim compensation for the subject cargo losses against any party who is held liable for the accident; prepayment of insurance indemnities by Pacific Insurance Shanghai Branch shall not prejudice the Plaintiff’s exercising of its rights to claim for the subject cargo losses against any liable party. The amount of losses to the Plaintiff arising from the accident shall be determined as per the terms and conditions of Insurance Policy No.ASHH101043080001015N and based on such an amount as ascertained under effective judgment made by the court or as approved by both parties through consultation; when the subject cargoes has been under insured, if the subject cargo losses incurred to the Plaintiff finally could not be fully compensated by any liable party, with respect to the part of losses failed to be compensated, Pacific Insurance Shanghai Branch shall assume insurance liabilities as agreed under the Insurance Policy and according to the proportion of the insured amount in the cargo value; for any extended part of losses or any losses which could not be recovered from any liable party through the Plaintiff’s fault, Pacific Insurance Shanghai Branch is entitled to correspondingly deduct the insurance indemnity; 3.both parties shall, within 30 days after the Plaintiff receives all compensations payable by any party liable for the accident, settle the insurance indemnity fund based on the principle of “returning the overcharge and demanding payment for the shortage”; 4.the Plaintiff confirms its promise to further negotiate with Hong Kong Marine Department to obtain a permit to salvage the sunken cargoes by itself, and, after obtaining the permit, to proactively assess and conduct cargo salvage operations with an aim to mitigate cargo losses. The Plaintiff acknowledged receipt of RMB 4,500,000 of insurance indemnity prepaid by Pacific Insurance Shanghai Branch after both Agreements on Prepayment of Insurance Indemnity were concluded by and between them. 4. Trial of the case of ship collision liabilities With respect to the dispute over damages arising from collision between M/V “Xinghai 668” and M/V “OOCL EUROPE” , the Defendant Honghai Company filed a lawsuit with this Court, requesting OOCL (UK), the bareboat charterer of M/V “OOCL EUROPE” , and other parties to assume compensation liabilities; OOCL (UK) thereafter initiated a counterclaim against the Defendant Honghai Company. The case numbers of such two claims were (2009)GHFCZ No.4 and (2009)GHFCZ No.292 respectively. This Court ruled in the Judgment of first instance that the Defendant Honghai Company shall bear 40% of and the Defendant OOCL (UK) shall bear 60% of the liabilities for the subject collision accident. The Defendant OOCL (UK) was dissatisfied with the judgment of first instance and filed an appeal. During the trial of second instance, the Defendant OOCL (UK) applied with the Higher People’s Court of Guangdong Province for obtaining evidential materials form Guangdong MSA in order to prove that some of the evidences provided by the Defendant Honghai Company were untrue and led to wrong ascertainment of accident liabilities by the court. The Higher People’s Court of Guangdong Province disapproved the application for obtaining evidence filed by the Defendant OOCL (UK) by reason that the Defendant OOCL (UK) had submitted a Confirmation of Completion of Adducing Evidences to the court of first instance. On 20 December, 2011, the Higher People’s Court of Guangdong Province made Civil Judgments (2010)YGFMSZZ No.86, 87 to overrule the appeal and sustain the original judgment. 5. The Defendant Honghai Company’s application for constituting liability limitation fund for maritime claims and the Plaintiff’s application for property preservation On 11 February, 2009, the Defendant Honghai Company applied with this Court for setting up a liability limitation fund for maritime claims. After accepting the application, this Court made a Civil Ruling (2009)GHFCZ No.116 on 19 May of the same year, permitting the Defendant Honghai Company to set up a liability limitation fund for maritime claims by exercising its 249,832 special drawing rights. Calculated at the exchange rate of special drawing rights to US dollars announced on the date of accident (i.e. 21 October, 2008), the fund can be converted into RMB 2,642,925.24. The Defendant OOCL (UK) was dissatisfied with the Civil Ruling and filed an appeal. The Higher People’s Court of Guangdong Province made the Civil Ruling (2009)YGFMSZZ No.267 to overrule the appeal and sustain the original ruling. However, the Defendant Honghai Company didn’t constitute any liability limitation fund for maritime claims with this Court according to the effective ruling. During the period when this Court was announcing the application by the Defendant Honghai Company for setting up a liability limitation fund for maritime claims, the Plaintiff completed formalities of registration of creditor’s rights with this Court and paid a registration application fee of RMB 1,000. Besides, when the Defendant Honghai Company didn’t set up any liability limitation fund for maritime claims, the Plaintiff applied for property preservation four times one after another with this Court. This Court approved the Plaintiff’s application for property preservation, prohibiting the Defendant Honghai Company to go through formalities of disposing ownership of any part of its properties, and the property preservation fee in amount of RMB20,000 was thus incurred to the Plaintiff. 6. Information about M/V “Xinghai 668” and cargo refloatation operations in this case After M/V “Xinghai 668” sank, a Sunken Ship Diving Inspection Agreement was concluded by and between the Defendant Honghai Company and Xin Long Company on 1 December, 2008, under which Xin Long Company was entrusted to conduct a diving inspection to M/V “Xinghai 668” sunken at the water area adjacent to East Lamma Channel Fairway, determine the status of the sunken ship and cargoes and issue a report on the searching. The cost of diving and searching was about RMB 85,000. On 11 December, 2008, Hong Kong Friendly Benefit Engineering Co., Ltd. issued a Diving Report for M/V “Xinghai 668”. On 8 February, 2009, an Agreement on Refloation of the Sunken Ship and Cargoes was entered into by and between the Defendant Honghai Company and Xin Long Company, under which Xin Long Company was entrusted to refloat M/V “Xinghai 668” and the subject cargoes in this case. The lump-sum fee for refloating the sunken ship was RMB 2,900,000; while the lump-sum fee for refloating the subject cargoes, cleaning them with fresh water and transporting them to the terminal of Longxue Company was RMB 5,000,000. As indicated in a number of fax correspondences between the Defendant Honghai Company and Hong Kong Marine Department which were provided by the Defendant Honghai Company, in the course of entrusting Xin Long Company to refloat the sunken ship and cargoes in this case, the Defendant Honghai Company applied with Hong Kong Marine Department for many times for postponing the refloatation. The agent ad litem of the Defendant Honghai Company alleged in the court trial that: Xin Long Company was unfamiliar with the procedures of applying for relevant permits required to conduct salvage operations in Hong Kong water areas and couldn’t fully estimate potential difficulties to be encountered. That is why salvage operations were not conducted in the end. Afterwards, the Defendant Honghai Company inquired Guangzhou Salvage about the cost of refloating the sunken ship and cargoes in this case. Guangzhou Salvage quoted that: refloatation operations conducted on site before 25 January, 2009 would cost RMB 9,180,000; it would cost RMB 8,380,000 after March, 2009. The Defendant Honghai Company didn’t conclude a salvage contract with Guangzhou Salvage because it was unable to pay for the costs of refloatation. The Plaintiff held that: it was unreasonable for the Defendant Honghai Company who was the owner of several ships to allege that it was unable to pay for the salvage costs. The Defendant Honghai Company shall be fully liable for failure in promptly conducting refloation operations which resulted in total loss of the subject cargoes and have no right to limitation of liability for maritime claims. The Defendant Honghai Company confirmed that M/V “Xinghai 668” and the subject cargoes have not been refloated yet. Members of the collegial bench unanimously hold that: this is a case of dispute over damages arising from ship collision involving Hong Kong. According to stipulations of Article 1 of Several Rules of the Supreme People’s Court on the Jurisdiction of the Maritime Courts, this case is within the jurisdiction of the maritime courts. Considering that the subject collision occurred in the border area between Guangzhou and Hong Kong water areas, pursuant to provisions of Article 241 of the Civil Procedure Law of the People’s Republic of China, this Court had competent jurisdiction. According to provisions of Paragraph 1 of Article 273 of the Maritime Code of the People’s Republic of China, laws of the People’s Republic of China shall apply. The dispute in this case mainly focuses on the following issues: the Plaintiff’s title to sue, whether the Defendant Honghai Company is entitled to limitation of liability for maritime claims, whether the insurance indemnity prepaid by the insurance company to the Plaintiff shall be deducted from the amount claimed by the Plaintiff. As to the issue on the Plaintiff’s title to sue, according to findings of fact through investigation, the Plaintiff was both the Seller and the Shipper of the subject cargoes. When the cargoes was damaged in the course of carriage, the Plaintiff is entitled to claim for damages for the cargo by law. Longxue Company as the Consignee acknowledged that Longxue Company was not the party with title to the subject cargoes. Therefore, both Defendants’ allegations that the Plaintiff was not the party with title to the subject cargoes is factually and legally groundless and shall not be sustained. As indicated in evidences available for this case, the cargo losses were caused by sinking of M/V “Xinghai 668” arising from its collision with M/V “OOCL EUROPE”. In Civil Judgments (2010)YGFMSZZ No.86, 87 made by the Higher People’s Court of Guangdong Province, it was ascertained that the subject collision were caused through faults of both M/V “Xinghai 668” and M/V “OOCL EUROPE” , which should respectively bear 40% and 60% of the liability. In accordance with provisions of Paragraph 1 of Article 169 of the Maritime Code of the People’s Republic of China, “If the colliding ships are all in fault, each ship shall be liable in proportion to the extent of its fault.” and provisions of Paragraph 2 thereof, “The ships in fault shall be liable for the damage to the ship, the goods and other property on board pursuant to the proportions prescribed in the preceding paragraph. Where damage is caused to the property of a third party, the liability for compensation of any of the colliding ships shall not exceed the proportion it shall bear”, the Defendant Honghai Company as the owner of M/V “Xinghai 668” and the Defendant OOCL (UK) as the bareboat charterer of M/V “OOCL EUROPE” shall respectively bear 40% and 60% of the liabilities for cargo losses suffered by the Plaintiff arising from the subject collision. As to the issue on whether the Defendant Honghai Company is entitled to limitation of liability for maritime claims, pursuant to provisions of Chapter 11 of the Maritime Code of the People’s Republic of China, the subject should comply with the provisions of Article 204, and the maritime claims should be among the limitable claims provided for in Article 207, and there should be no circumstances as set out in Article 209. When the subject collision accident occurred to M/V “Xinghai 668”, the subject cargoes carried onboard were on the way from Zhang Jia Gang to Guangzhou. The carriage was between inland ports of China and the Defendant Honghai Company was the owner of M/V “Xinghai 668” which is the subject in compliance with provisions of Article 204 of the Maritime Code of the People’s Republic of China. Maritime claims subject to limitation listed in Article 207 of the Maritime Code of the People’s Republic of China include: claims in respect of loss of life or personal injury or loss of or damage to property including damage to harbour works, basins and waterways and aids to navigation occurring on board or in direct connection with the operation of the ship or with salvage operations, as well as consequential damages resulting therefrom. The loss of the subject cargoes was caused by ship collision which led to sinking of the carrying ship in the course of its shipping operations, falling within the category of claims which are subject to limitation as provided above. As long as losses in this case were not resulted from any reckless act or omission of the Defendant Honghai Company with intent to cause such loss or with knowledge that such loss would probably incur, the Defendant Honghai Company shall be entitled to limitation of liability for maritime claims. Evidences available in this case indicate that the cargo losses arising from ship collision were caused through faults of both ships; no evidence could prove that the losses were resulted from any reckless act or omission of the Defendant Honghai Company with intent to cause such loss or with knowledge that such loss would probably incur. Therefore, the Defendant Honghai Company is entitled to limitation of liability for maritime claims pursuant to provisions in Article 207 of the Maritime Code of the People’s Republic of China. The Plaintiff alleged that the Defendant Honghai Company was not entitled to limitation of liability for maritime claims by reason that the Defendant Honghai Company had not performed the duty to refloate the sunken cargoes. The issue on determining whether the Defendant Honghai Company has fulfilled its duty to mitigate losses based on whether it has salvaged the subject cargoes or not is a matter of loss ascertainment in nature and has no relevance to the matter of whether the Defendant Honghai Company is entitled to limitation of liability for maritime claims and shall not prejudice the Defendant Honghai Company’s entitlement to limitation of liability for maritime claims for the cargo losses arising from ship collision. In case any sufficient evidence is available to prove that the cargo losses were extended due to fault of the Defendant Honghai Company, the extended part of such losses shall not be deemed as losses resulted from the subject ship collision, but this has no relevance to the limitation issue. Although the Agreement on Refloatation by and between the Defendant Honghai Company and the salvaging company indicates that the agreed refloatation fee is lower than the purchase price of the subject cargoes, the same cargoes failed to be refloated and the actual final cost of successfully refloating and cleaning up the cargoes could not be determined. Without sufficient evidences available, the Plaintiff’s allegation that the Defendant Honghai Company caused extension of the cargo losses was factually groundless and the losses shall be ascertained as the result from the subject ship collision. Therefore, because of lack of evidence, the Plaintiff’s defense that “the Defendant Honghai Company shall not be entitled to limitation of liability for maritime claims for not having conducted refloatation operations” shall not be sustained by this Court. As to the issue of whether the insurance indemnity prepaid by Pacific Insurance Shanghai Branch to the Plaintiff shall be deducted from the amount claimed by the Plaintiff: during the period of litigation, Pacific Insurance Shanghai Branch prepaid RMB 4,500,000 of insurance indemnity to the Plaintiff. Both Defendants held that, pursuant to provisions of Article 252 of the Maritime Code of the People’s Republic of China, the right of the insured to demand compensation from any third person shall be subrogated to the Insurer from the time the indemnity is paid; since Pacific Insurance Shanghai Branch had prepaid RMB 4,500,000 of insurance indemnity to the Plaintiff, the right of recourse within the scope of coverage was acquired by Pacific Insurance Shanghai Branch; the Plaintiff has no right to further claim for the part of losses covered by the prepaid indemnity against the Defendants. The Plaintiff however holds that, according to the Agreement on Prepayment of Insurance Indemnity concluded by and between the Plaintiff and Pacific Insurance Shanghai Branch, prepayment of insurance indemnity made by Pacific Insurance Shanghai Branch shall not preclude the Plaintiff from exercising its right to claim for the subject cargo losses against any liable party. The Plaintiff and Pacific Insurance Shanghai Branch shall, within 30 days after the Plaintiff receives all compensations payable by any liable party, settle the insurance indemnity fund based on the principle of “returning the overcharge and demanding payment for the shortage”. The amount of RMB 4,500,000 was only a prepayment rather than an actual indemnity under the insurance contract between the Plaintiff and Pacific Insurance Shanghai Branch; thus the Plaintiff is entitled to claim compensation for all losses of the subject cargoes against both Defendants. The collegial bench holds that the Plaintiff initiated this lawsuit by alleging that both Defendants were parties liable for the subject collision accident and should compensate for losses of the subject cargos arising from the collision. This lawsuit is a case of tort dispute. The Plaintiff as a party with title to the cargoes carried onboard the sunken ship is entitled to claim for the subject cargo losses against both Defendants as liable parties. In accordance with the Agreement by and between the Plaintiff and Pacific Insurance Shanghai Branch, prepayment of insurance indemnity made by Pacific Insurance Shanghai Branch shall not preclude the Plaintiff from exercising its right to claim for the subject cargo losses against any liable party; after the Plaintiff receives all compensations payable by any liable party, the Plaintiff and Pacific Insurance Shanghai Branch shall settle the insurance indemnity fund based on the principle of “returning the overcharge and demanding payment for the shortage”. Therefore, the amount of RMB 4,500,000 was only a prepayment of insurance indemnity rather than the final insurance indemnity; and liabilities to be assumed by both Defendants as parties liable for the tort will not be aggravated by the Agreement by and between the Plaintiff and the Insurer. The Plaintiff’s claiming for total loss of the subject cargoes in its own name against liable parties after having received prepayment of insurance indemnity made by Pacific Insurance Shanghai Branch is in conformity with law and shall be sustained. Therefore, pursuant to law, both Defendants’ defense that “the insurance indemnity of RMB 4,500,000 prepaid by the insurance company to the Plaintiff shall be deducted from the amount claimed by the Plaintiff” shall be dismissed. It’s reasonable for the Plaintiff to claim for a compensation for the subject cargo loss at their purchase price. Based on evidences such as Products Purchase/Sales Contract and VAT Invoices provided by the Plaintiff, the collegial bench ascertains that the value of the subject cargoes amounts to RMB 15,958,497.24; the Defendant Honghai Company’s defense that the amount of 17% value-added tax shall be deducted from the value of the subject cargo losses is legally groundless and shall not be sustained. In accordance with the Agreement of Carriage by and between the Plaintiff and Hailian Company, the freight claimed by the Plaintiff should be paid within one month of arrival of the subject cargoes at the port of destination. The subject cargo losses occurred in the course of carriage and the Plaintiff didn’t pay the freight; thus there is no evidence to support the Plaintiff’s claim for freight. In accordance with the Agreement of Carriage by and between the Plaintiff and Hailian Company, the insurance premium is included in the freight; as indicated in evidences available in this case, Hailian Company was the insurance applicant and the Plaintiff failed to adduce any evidence to prove it had paid for the insurance premium, thus there is neither any evidence to support the Plaintiff’s claim for insurance premium. According to the Civil Judgments (2010)YGFMSZZ No.86, 87 made by the Higher People’s Court of Guangdong Province, the Defendant Honghai Company and the Defendant OOCL (UK) shall respectively bear 40% and 60% of the liabilities for the cargo losses by paying RMB 6,383,398.90 and RMB 9,575,098.34 respectively to the Plaintiff. Since the Defendant Honghai Company is entitled to limitation of liability for maritime claims and, as adjudicated by this Court and the Higher People’s Court of Guangdong Province in the trials of first instance and second instance, the limitable liability of the Defendant Honghai Company for losses arising from the subject ship collision shall be limited to the amount of RMB 2,642,925.24; therefore, the Defendant Honghai Company may compensate the Plaintiff for an amount of RMB 2,642,925.24 only; any amount claimed exceeding the limit shall not be compensated by Honghai Company. The Defendant Honghai Company’s allegation that reasonable expenses incurred for searching for and refloating the sunken ship and cargoes in this case shall be deducted proportionally from the limited amount of compensation for liabilities in this case is legally groundless and shall not be sustained. The Plaintiff’s request that “the interest shall be borne by the two defendants and calculated at the enterprise working-capital loan interest rate of the same period announced by the People’s Bank of China from the date of occurrence of the subject ship collision (i.e. 21 October, 2008) till the date of compensation payment as determined under this judgment” is reasonable and shall be sustained. The Plaintiff’s application for property preservation was against properties of the Defendant Honghai Company and this Court has ascertained that the Defendant Honghai Company shall be liable for the subject cargo losses; therefore, the cost of application for property preservation shall be borne by the Defendant Honghai Company because it’s caused by the Defendant Honghai Company. In accordance with provisions of Article 7 of Several Provisions of the Supreme People's Court on the Trial of Cases of Disputes over the Limitation of Liability for Maritime Claims, the cost of application for registration of creditor’s rights paid by the Plaintiff shall be borne by the Defendant Honghai Company. In accordance with provisions of Paragraph 1 and Paragraph 2 of Article 169, Article 204 and item (1) Paragraph 1 of Article 207 of the Maritime Code of the People’s Republic of China, the judgment is rendered as follows: (1) The Defendant Beihai Honghai Shipping Co., Ltd. shall compensate the Plaintiff Shanghai Oriental Shipping & Resource Co., Ltd. the amount of RMB 2,642,925.24 plus interest (the interest shall be calculated at the enterprise working-capital loan interest rate of the same period announced by the People’s Bank of China from 21 October, 2008 till the date of compensation payment as determined under this judgment); (2) The Defendant OOCL (UK) shall compensate the Plaintiff Shanghai Oriental Shipping & Resource Co., Ltd. the amount of RMB 9,575,098.40 plus interest (the interest shall be calculated at the enterprise working-capital loan interest rate of the same period announced by the People’s Bank of China from 21 October, 2008 till the date of compensation payment as determined under this judgment); (3) The Defendant Beihai Honghai Shipping Co., Ltd. shall compensate the Plaintiff Shanghai Oriental Shipping & Resource Co., Ltd. the cost of application for property preservation in an amount of RMB 20,000. (4) The Defendant Beihai Honghai Shipping Co., Ltd. shall compensate the Plaintiff Shanghai Oriental Shipping & Resource Co., Ltd. the cost of application for registration of creditor’s rights in an amount of RMB 1,000. (5) Other litigation claims put forward by the Plaintiff Shanghai Oriental Shipping & Resource Co., Ltd. are overruled. The Plaintiff has prepaid an amount of RMB 120,549 for the court fee and requested to reduce the claim amount before completion of court investigations. As such, the court fee should be recalculated and RMB 1,183.81 should be refunded to the Plaintiff. The actually charged court fee for this case is RMB 119,365.19, of which the amount RMB 29,841.30 shall be borne by the Plaintiff, the amount of RMB 19,098.43 shall be borne by the Defendant Honghai Company and the amount of RMB 70,425.46 shall be borne by the Defendant OOCL (UK). The above obligations of payment shall be performed within 10 days of the effective date of this Judgment. If above obligations of payment fail to be performed within the specified period of time under this Judgment, the interest will be pay in double for the overdue period of late performance in accordance with provisions of Article 229 of the Civil Procedure Law of the People’s Republic of China. In event of dissatisfaction with this Judgment, the Plaintiff and the Defendant Honghai Company may, within 15 days, while the Defendant OOCL (UK), may, within 30 days of service of this Judgment, submit a Statement of Appeal to this Court with copies according to the number of relevant parties to this case, appealing to the Higher People’s Court of Guangdong Province. Presiding Judge XU Yuanping Judge ZHANG Kexiong Acting Judge WU Guining (Official Chop of Guangzhou Maritime Court Affixed) 20 August, 2012 Certified to be true to the original Clerk YANG Qian The translation is provided by Wang Jing & CO.
  • Case of dispute over damage compensation arising from ship collision as filed by Beihai Honghai Shipping Co.,Ltd., against Orient Overseas Containers Line Limited, Orient Overseas Container Line (U.K.) Limited and Swan National Leasing(Commercials)Limited

    2015-10-10

    Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2009)GHFCZ No.4 & No.292 Plaintiff : Beihai Honghai Shipping Co., Ltd. (Defendant in Counter-Claim Case) Address : No.C, Fl.15, Quanjing Building, Beihai Road, Beihai City, Guangxi Zhuang Autonomous Region Legal Representative : Chen Feijing, General Manager of the Company Agent ad litem : Chen Yusheng, Attorney from Lin Yi Hua & Co. Law Office Agent ad litem : Wang Silv, Attorney from Lin Yi Hua & Co. Law Office Defendant : Orient Overseas Containers Line Limited (Plaintiff in Counter-Claim Case) Address : 33/F, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong Legal Representative : Wang Decheng, Director of the Company Agent ad litem : Chen Xiangyong, Attorney from Wang Jing & Co. Law Firm Agent ad litem : Cao Yanghui, Attorney from Wang Jing & Co. Law Firm Defendant : Orient Overseas Container Line (U.K.) Limited (Plaintiff in Counter-Claim Case) Address : 33/F, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong Legal Representative : Dai Shengjian, Director of the Company Agent ad litem : Chen Xiangyong, Attorney from Wang Jing & Co. Law Firm Agent ad litem : Cao Yanghui, Attorney from Wang Jing & Co. Law Firm Defendant : Swan National Leasing (Commercials) Limited (Plaintiff in Counter-Claim Case) Address : 8 Canada Square, E14 5HQ, London, United Kingdom Agent ad litem : Chen Xiangyong, Attorney from Wang Jing & Co. Law Firm Agent ad litem : Cao Yanghui, Attorney from Wang Jing & Co. Law Firm With respect to the case of dispute over damage compensation arising from ship collision as filed by the Plaintiff, Beihai Honghai Shipping Co., Ltd., against the Defendants, Orient Overseas Containers Line Limited (hereinafter referred to as “OOCL”), Orient Overseas Container Line (U.K.) Limited (hereinafter referred to as “OOCL U.K.”), and Swan National Leasing (Commercials) Limited (hereinafter referred to as “Swan Company”), this Court, after accepting the case, formed a collegiate bench in accordance with law to conduct hearings on the case. The three Defendants raised counter claims on 2 June 2009, and the Court combined the two cases into one for hearing. The Court organized the parties hereto to carry out pre-trial exchange of evidence on 15 July, and the Court also conducted public hearing on the case. The following persons had appeared in court to attend the litigation: the agents ad litem entrusted by the Plaintiff, namely Chen Yusheng and Wang Silv; and the agents ad litem as jointly entrusted by the three Defendants, namely Chen Xiangyong and Cao Yanghui. This case has been closed. The Plaintiff alleged that: on 16 October 2008, M/V “Xinghai 688” owned by the Plaintiff was sailing from Zhang Jiagang to Guangzhou Longxue Shipyard with steel loaded onboard. At about 0540hrs on 21 October, M/V “Xinghai 688” collided with M/V “OOCL EUROPE” owned by the three Defendants in the waters near Dangan Fairway, which caused M/V “Xinghai 688” to sink. The Plaintiff sustained a loss in an amount of about RMB12,700,625 (excluding the cargo loss and the possible pollution damage) due to the aforesaid accident. M/V “OOCL EUROPE” disregarded the safe navigation rules, and caused the occurrence of the accident. Furthermore, after the accident, M/V “OOCL EUROPE” escaped from the accident scene without giving any thought to the safety of life and property at sea. Therefore, M/V “OOCL EUROPE” shall be fully responsible for the accident. The Defendant, OOCL, is the operator of M/V “OOCL EUROPE”, the Defendant, OOCL U.K. is the bareboat charterer, whilst the Defendant, Swan Company, is the registered owner of the vessel, and in accordance with the law the aforesaid three Defendants shall be jointly and severally liable for the accident. The Plaintiff requested the Court to order that: 1. the three Defendants shall be jointly and severally liable to compensate the loss sustained by the Plaintiff arising from the sinking of the vessel due to the collision accident, in a total amount of RMB12,700,625; 2. the three Defendants shall be jointly and severally bear the acceptance fee, application fee for constitution of limitation fund, and public announcement fee in a total amount of RMB97,300, and other litigation fees relating to this case. The Plaintiff had submitted the following evidence during the period for adducing evidence: 1. Certificate of Vessel’s Nationality, Survey Certificate, Certificate of Vessel’s Registration, Safety Management Certificate, and Certificate of Compliance of M/V “Xinghai 668”, and Certificate of Competency of the crew on watch; 2. Ship Information Search for M/V “OOCL EUROPE”; 3. Letter of Undertaking; 4. Report on Maritime Accident; 5. Report on Water Traffic Accident; 6. Maritime Accident Investigation Form; 7. Sea Chart; 8. Methods for Management of Pear River and its Estuary; 9. Correspondences; 10. Procedures for Dealing with the Act of Escaping from Water Traffic Accident Scene; 11. Notice for Strengthening the Investigation Work on Water Traffic Accident; 12. Examples of Cases; 13. Application for Investigation on Maritime Accident; 14. Ship Sales Contract; 15. Ship’s Delivery Note; 16. Receipt of Payment; 17. Ship Repair Contract for M/V “Xinghai 668”; 18. Settlement List issued by Minjiang Shipyard; 19. Receipt of Payment issued by Minjiang Shipyard; 20. Charter Party; 21. Accounting Book of Hire and Receipt of Payment; 22. Agreement on Underwater Inspection for Sunken Ship; 23. Invoice for Underwater Inspection Fee; 24. Application Form for Settlement issued by the Bank of Communications; 25. Survey Report issued by Guangzhou Haijiang Surveyors and Adjustors Co., Ltd. (hereinafter referred to as “Haijiang Company”); 26. Bill of Haijiang Company; 27. Receipt of Payment issued by Haijiang Company; 28. List of Collection, Expense Claim Form, two groups of Accounting Vouchers 29. Report of Losses; 30. Application for Settlement; 31. Letter of Entrustment for Salvage of Sunken M/V “Xinghai 688”; 32. Agreement on Salvage of Sunken M/V “Xinghai 688” and the Cargo; 33. Agency Agreement. The three Defendants jointly alleged that: 1. they basically did not have any objection to the time (hours) of the occurrence of the accident, but have objection to the minutes, and the three Defendants claimed the accident occurred at 0545hrs on 21 October 2008; 2. the accident occurred in the waters of Hong Kong, and after occurrence of the accident, M/V “OOCL EUROPE” reported to Hong Kong Marine Department, whilst Guangzhou MSA did not carry out any substantive supervision on the accident in dispute; 3. the three Defendants did not have any objection to the qualification of the three Defendants to be the Defendant in this case, but the liability resulted from the collision accident shall be borne by the registered bareboat charterer, namely the Defendant, OOCL U.K., and the other two Defendants shall be not held liable; 4. with respect to the liability arising from the accident, at the time of the occurrence of the accident, the two vessels was in a crossing situation, M/V “OOCL EUROPE” was on the starboard side of M/V “Xinghai 668”, whilst M/V “Xinghai 668”, as a give-way vessel, failed to take avoiding action in ample time, giving rise to a close-quarters situation, and therefore shall bear the major liability for the collision accident; 5. M/V “OOCL EUROPE”, after occurrence of the collision accident, immediately reported to Hong Kong Marine Department, and there existed no action of escaping from the accident scene. The three Defendants had jointly submitted the following evidence during the period for adducing evidence: 1. Certificate of Vessel’s Registration; 2. Ship’s Certificates, Crew List, Certificate of Competency of the Crew on Watch; 3. Pre-departure Checklist; 4. Pilot Card; 5. Deck Logbook, Engine Logbook and Bell Book; 6. GPS Position; 7. Records of Auto Pilot; 8. Sea Chart; 9. Sea Protest; 10. Statement of Facts; 11. Weather forecast; 12. Position and Tracks of the Two Ships as marked by the VTS Radar of Hong Kong Marine Department; 13. VTS Radar Video and Communication Recording of Hong Kong Marine Department; 14. Accident Investigation Form. The three Defendants jointly raised the counter claims by alleging that: the collision accident between M/V “OOCL EUROPE” and M/V “Xinghai 668” had caused damage to M/V “OOCL EUROPE”. As per the preliminary adjustment/calculation, the loss sustained by the three Defendants due to the accident is in an amount of USD618,261.92 and SGD551,081.50. Such loss shall be borne by the Plaintiff according to the proportion of liability on her side. The three Defendants held that, M/V “Xinghai 668” shall bear 70% of liability for the accident, and the Plaintiff shall compensate the three Defendants for the loss in an amount of USD432,783.34 and SGD385,757.05. The three Defendants requested the Court to order that: 1. the Plaintiff shall compensate according to the proportion of liability on her side the three Defendants for the loss in an amount of USD432,783.34 and SGD385,757.05, plus the interest calculated from the date of 21 October 2008 to the date of actual payment of compensation as per the loan interest rate published by the People’s Bank of China at the corresponding period; 2. the litigation fee, and all the expenses paid by the three Defendants for handling this case shall be borne by the Plaintiff. The three Defendants submitted, in addition to the evidence as provided by the three Defendants for this case, the following supplementary evidence in the counter-claim case: 15. Damage Survey Report; 16. Classification Survey Report; 17. Diving Report; 18. Invoice for Repair Costs; 19.Payment Voucher for Repair Costs; 20. Deck Logbook dated 22 October to 3 November; 21 Market Report on Hire Rate; 22. Bunker Sounding Record; 23. Monthly Report on Consumption of Fuel Oil, and Voyage Report; 24. Invoice for Fuel Oil; 25 Invoice for Survey Fees and Payment Voucher; 26. Invoice for Diving Survey Fee and Payment Voucher; 27. Invoice for Classification Survey Fee; 28. Port Charges and the Invoice thereof. The Plaintiff defended against the counter claims lodged by the three Defendants by alleging that: 1. it is the statutory obligation for the parties involved in the collision to salvage the wrecked ship, report the accident to the port authority, stay at the accident scene waiting for investigation, and to exchange information with the other vessel. If such parties violate these obligations, then the act of such parties constitutes “hit and run”. The act of M/V “OOCL EUROPE” has constituted “hit and run”, and therefore in accordance with law M/V “OOCL EUROPE” shall be fully responsible for the loss sustained by the Plaintiff; 2. under the circumstance of “hit and run”, the liability resulted from a traffic accident is mainly decided according to the rule of “determination of liability under hit and run”, whilst the movement of and the actions taken by the two vessels before the collision shall be the minor elements to determine the liability, or the aforesaid movement or actions did not matter as to the determination of liability. Even so, the failure of M/V “OOCL EUROPE”, as a vessel crossing the channel, to observe the sailing rules for a ship to cross the channel and to perform the obligation to keep out of the way of the vessel sailing in the general direction of traffic flow for that lane was the main cause of the collision accident, and therefore M/V “OOCL EUROPE” shall bear the major liability for the accident; 3. the losses alleged by the three Defendants is factually and legally groundless. The three Defendants failed to provide evidence to prove the damage sustained by M/V “OOCL EUROPE” was caused by the collision with M/V “Xinghai 668”; the repair costs, loss of hire and port charges as alleged by the three Defendants are factually groundless, and obviously have been exaggerated, and are not reasonable; even if the loss of bunker alleged by the three Defendants did exist, such loss was caused by the negligence of the crew in checking and management. By court hearing, the colligate bench ascertains the facts as follows: I. Ship’s Particulars The ship’s particulars of M/V “Xinghai 668” are as follows: gross tonnage: 996tons; net tonnage: 558tons; overall length: 65.49m; moulded breath: 11.2m; moulded depth: 6.10m; navigation area and trade area: A1+A2; maximum speed: 8.5knots; port of registry: Beihai, China; type of ship: dry cargo ship; material of hull: steel; when built: 26 August 1986; when rebuilt: 26 May 2008; date of ship’s registration: 6 April 2008; name of builder: YAMANAKA Shipbuilding Co., Ltd.; name of rebuilder: Second Shipyard in Shaqiao, Suburb, Beihai; the Plaintiff is the registered owner and the operator of M/V “Xinghai 668”. The Plaintiff holds the following certificates of M/V “Xinghai 668”: International Tonnage Certificate, Certificate of Seaworthiness for Cargo Ship at Sea, International Oil Pollution Prevention Certificate, International Load Line Certificate, and Minimum Safe Manning Certificate. The aforesaid certificates are all valid at the time of occurrence of the accident in dispute. The ship’s particulars of M/V “OOCL EUROPE” are as follows: gross tonnage: 89,097tons; net tonnage: 55,204tons; overall length: 309.2m; moulded breath: 42.8m; moulded depth: 20.23m; type of ship: container ship; material of hull: steel; port of registry: Hong Kong; distinctive letters: VRBX7; registered number: HK-1716; date of registration: 26 July 2006; IMO number: 9300805; main engine type: diesel engine/12K98MC-C; main engine power: 68,520kw; when built: year of 2006; name of builder: Samsung Heavy Industries Co., Ltd.; full speed under full load: 16.8knots; full speed under empty load: 17.4knots. The Defendant, Swan Company, is the registered owner of M/V “OOCL EUROPE”, the Defendant, OOCL, is the operator, while the Defendant, OOCL U.K., is the bareboat charterer, with the chartering period starting from 26 July 2006 to 14 July 2018. At the time of occurrence of the collision accident in dispute, the following certificates of M/V “OOCL EUROPE” are all valid: Certificate of Classification, Safety Management Certificate, International Load Line Certificate; International Oil Pollution Prevention Certificate; Cargo Ship Safety Construction Certificate; Cargo Ship Safety Equipment Certificate, and Certificate of Compliance etc.; the manning of the crew onboard is in compliance with the requirements as set forth by the Minimum Safe Manning Certificate. II. Process of Accident M/V “Xinghai 668” completed loading steel at the Gang Hai Li quay No.9 of Zhangjiagang at 1945hrs on 16 October 2008, and then departed from the port, bound for the quay of Longxue Shipyard in Guangzhou. At about 0500hrs on 21 October, M/V “Xinghai 668” sailed in Dangan Fairway from east to west, with the intended course of 268°, and M/V “Xinghai 668” observed the look-out by radar and the crew on watch. At about 0418hrs on 21 October, M/V “OOCL EUROPE” started sailing from Tsing Yi in Hong Kong to Singapore. At about 0500hrs, M/V “OOCL EUROPE” entered Dong Bo Liao Fairway by abeam LCS3 with the course of 150°, and kept look-out by radar and sight. Later, M/V “OOCL EUROPE” kept sailing along the outbound channel of Dong Bo Liao Fairway. M/V “Xinghai 668” and M/V “OOCL EUROPE” saw each other at first sight at about 0537hrs, with the distance of about 3nm. At this time, the course of M/V “Xinghai 668” was about 272°, and the speed was about 7.5knots, while the course of M/V “OOCL EUROPE” was about 148°, and the speed was about 16knots. At 0544hrs, M/V “OOCL EUROPE” started to alter her course to port, and lower her speed, with the course of 146° and the speed of 16knots; at 0545hrs, the course of M/V “OOCL EUROPE” was 100°, and the speed was 12.5knots. At 0543hrs, the course of M/V “Xinghai 668” was 272°, and the speed was 8knots, and M/V “Xinghai 668” started to alter her course to starboard; at 0545hrs, the course of M/V “Xinghai 668” was 329°, and the speed was 7knots. At about 0547hrs, the starboard side of M/V “OOCL EUROPE” collided with the bow of M/V “Xinghai 668” at the juncture of Guangzhou waters and Hong Kong waters, at the position of about 22°08.9N,114°12.67E. The bow of M/V “Xinghai 668” sank into water, and at about 0615hrs, M/V “Xinghai 668” sank near the light buoy No.1. The position where M/V “Xinghai 668” sank was 1.1nm away from the position where the collision occurred, and the position where M/V “Xinghai 668” sank belongs to Hong Kong waters. The crew was rescued by Hong Kong Marine Department. M/V “Xinhai 668” alleged that at the time of observing M/V “OOCL Europe” she connected with the same via VHF channel 16 requesting for crossing red to red. However there was no response from M/V “OOCL Europe”. M/V “OOCL Europe” stated M/V “Xinhai 668” was displaying two mast head lights at the first sight, and the two vessels did not connect with each other. After the collision, M/V “OOCL Europe” reported to Hong Kong Marine Department the close-quarter situation between her and another small vessel without contact and requested for inquiry of the name of such small vessel for fear of any accident. Hong Kong Marine Department replied that it has not received any report from the said small vessel so that it is unable to find any related information. M/V “OOCL Europe” resumed her voyage to Singapore with heading of 90°. The said three Defendants admitted during the trial that after crossing each other, M/V “OOCL Europe” suspected that she has collided with M/V “Xinhai 668”. On 24 October 2008, master of M/V “OOCL Europe” made a Sea Protest in Singapore Port stating that M/V “OOCL Europe” collided with a Chinese coasting vessel at buoy No. 1 in the south of Bo Liao Channel at about LT 0547 hrs on 21 October 2008, and on 22 October, the starboard cargo hold No. 21 was found with hole which was 2 m long, 30 cm broad and 16-17 high from the hull bottom, and was between frame No.274 and stern; Furthermore, there were four dents. At the time of accident, the visibility was good. III Losses claimed by the Plaintiff Losses claimed by the Plaintiff are as follows: 1. The loss of value of the vessel in an amount of RMB 4,371,975; 2. Loss of hire in an amount of RMB 590,000; 3. Crew repatriation in an amount of RMB 16,500; 4. Compensation for termination of labor contract in an amount of RMB 178,000; 5. Loss of property onboard in an amount of RMB 149,150; 6. Cost of scanning of sunken ship in an amount of RMB 85,000; 7. Cost of salvaging sunken ship and cargo in an amount of RMB 7,300,000; 8. Cost of survey of M/V “OOCL Europe” in an amount of RMB 10,000; 9. Litigation fee in an amount of RMB 97,300. Amount the aforesaid expenses, the cost of salvaging sunken ship and cargo has not actually incurred, and the Plaintiff did not pay for the acceptance of such claim by this Court. Thus, such loss claimed by the Plaintiff shall not be ascertained. In addition, as per the actual situation of this case, the Plaintiff and Defendant agree to calculate all the losses sustained by the Plaintiff excluding the cost of salvaging sunken ship and cargo. In accordance with the Provisions of the Supreme People’s Court about the Trial of Compensation for Property Damages of the Cases of Ship Collision, as per the losses alleged to be sustained by the Plaintiff, the collegiate bench ascertains as follows: 1. Loss of Vessel Value. The Plaintiff provided the Contract of Sale of Ship, Letter of Delivery of a Ship, receipts, Repair Contract in respect of M/V “Xinghai 668”, final statement and receipt and alleged that M/V “Xinghai 668” was purchased at the price of RMB 3,680,000 and converted at the cost of RMB 691,975. The said three Defendants believe that receipts should not be deemed as evidence, and provided the Value Evaluation Report of M/V “Xinghai 668” issued by Guangdong Maritime Consulting and Surveying Company (hereinafter referred to as “GMCS”) as rebuttal evidence claiming that the reasonable value of M/V “Xinghai 668” is RMB 3,010,000. The collegiate bench holds as follows: M/V “Xinghai 668” sank so that she can not be inspected. According to the Value Evaluation Report of M/V “Xinghai 668” provided by the said three Defendants, the actual value of M/V “Xinghai 668” can not be evaluated precisely by reason that the materials provided by the three Defendants are too simple to support the evaluation. Thus the evaluation result shall not be adopted. The information indicated by evidence provided by the Plaintiff and certificates of M/V “Xinghai 668” corroborate each other, the evidence provided by the Plaintiff shall be ascertained as true and authentic. The Plaintiff did purchase M/V “Xinghai 668” at the price of RMB 3,680,000 and converted the same at the cost of RMB 691,975. However, it is unreasonable to claim the whole loss without deduction of depreciation. In accordance with the provisions of Article 8 of the Provisions of the Supreme People’s Court about the Trial of Compensation for Property Damages of the Cases of Ship Collision, the calculation of losses of vessel’s value shall be determined by the market price of a similar vessel at the time when the vessel collision occurred. Where there is no market price for reference, the losses of the vessel’s value should be calculated by the construction cost or purchase price of the original vessel minus depreciation (the rate of depreciation is 4-10% per year.) The value of M/V “Xinghai 668” should be calculated with yearly depreciation of 8%. The Plaintiff obtained M/V “Xinghai 668” in April 2008, and converted the same in May 2008. Therefore, the value of M/V “Xinghai 668” should be calculated with yearly depreciation of 4% which is RMB 4,197,096. 2. Losses of Hire. The Plaintiff has provided Charter Party in respect of M/V “Xinghai 668” claiming that the losses of hire sustained by M/V “Xinghai 668” for two months are in an amount of RMB 590,000. The Charter Party was entered into by and between Yangpu Jinhao Shipping Co., Ltd. (hereinafter referred to as “Yangpu”) and the Plaintiff, of which the term of hire shall commence from 11 May 2008 to 10 May 2009, and the hire is RMB 295,000 per month. The Plaintiff provided relevant vouchers, receipts indicating that it has received the hire of M/V “Xinghai 668” from July to October from Yangpu, namely, RMB 295,000 per month. The said three Defendants alleged that the hire should be deducted by operating cost. The collegiate bench holds that in accordance with the provisions of Article 11 of the Provisions of the Supreme People’s Court about the Trial of Compensation for Property Damages of the Cases of Ship Collision, where the charterer to the Charter Party suspends the hire or fails to pay the hire due to collision accident, loss of hire shall be calculated with the deduction of the savable expense. The loss of two months’ hire claimed by the Plaintiff is reasonable. However, it should be deducted by savable expenses. The Plaintiff claimed during the trial that crew’s wages fall into expenses savable, and other taxes paid are not refundable which can not be deemed as savable expenses. The Plaintiff claimed for compensation for termination of labor contract, of which wages of two months shall be paid to each crew member which amount to RMB 178,000 in total. Therefore, the losses of hire sustained by the Plaintiff are in an amount of RMB 412,000. 3. Repatriation Expenses. The Plaintiff provided the list of collection signed by the master, expense claim form, and accounting vouchers as evidence claiming for repatriation expenses of RMB 16,500 of which every crew shall be paid with RMB 1,500. Such expenses are essential and necessary. The collegiate bench ascertains the same. 4. Compensation for Termination of Labor Contract. The Plaintiff provided the list of collection signed by the master, expense claim form, and accounting vouchers as evidence claiming for compensation for wages to the crew in an amount of RMB 178,000 of which every crew shall be paid with wages of 2 months. The collegiate bench ascertains such expenses. 5. Loss of Property Onboard. The Plaintiff failed to provide any evidence in support of its claim for loss of property onboard in an amount of RMB 149,150, and requested for discretion of the court during the trial. In accordance with provisions of Article 64(1) of the Civil Procedure Law of the People’s Republic of China, it is the obligation of a party to an action to provide evidence in support of his allegations, and in case of any failure to provide relevant evidence, such party shall bear the adverse consequences arising therefrom. The loss of property onboard claimed by the Plaintiff shall not be supported. 6. Cost of Underwater Inspection. The Plaintiff provided the Agreement on Underwater Inspection for Sunken Ship, Application Form for Settlement issued by the Bank of Communications, relevant invoices and etc. as evidence. The Agreement on Underwater Inspection for Sunken Ship was made by and between Shenzhen Xinlong Dive Engineering Co., Ltd. (hereinafter referred to as “Xinlong”) stipulating that Xinlong is responsible for underwater inspection for M/V “Xinghai 668” and the cost and expenses thereof are in an amount of RBM 85,000. Xinlong issued an invoice specifying the underwater inspection fee in an amount of RMB 85,000 was received from M/V “Xinghai 668”. The said three Defendants have no objection to such cost. Therefore the collegiate bench ascertains the same. 7. Cost of Survey of M/V “OOCL Europe” in an amount of RMB 10,000. The Plaintiff provided the survey report, bills and receipts as evidence. The collegiate bench holds that such cost was actually incurred, but was not the necessary expenses due to the collision accident. Therefore, such cost shall not be ascertained. 8. Application Fee and Announcement Fee. On 11 February 2009, the Plaintiff applied to this Court for constitution of limitation fund of liability for maritime claims. This Court approved such application by issuing Civil Ruling GHFCZ (2009) No. 116. The Plaintiff paid relevant application fee in an amount of RMB 10,000, as well as announcement fee in an amount of RMB 40,500. However, the Plaintiff failed to constitute limitation fund with the time limit stipulated by this Court. The collegiate bench held as follows: the Plaintiff did pay the aforesaid fees. However, the Plaintiff exercised its lawful right to apply for constitution of limitation fund of liability for maritime claims for the purpose of avoiding distrainment. The cost and expenses thereof were not directly incurred by the collision accident. Furthermore, after obtaining the approval of constitution of limitation fund of liability for maritime claims from this Court, the Plaintiff did not actually constitute any limitation fund. The Plaintiff’s claim for such costs against the Defendants lack both factual and legal basis. Therefore, such claim shall not be supported. In summary, the losses actually sustained by the Plaintiff due to the subject collision accident are in an amount of RMB 4,888,596. IV Losses Claimed by Three Defendants Losses claimed by three Defendants are as follows: 1. Repair cost in an amount of SGD 510,000; 2. Loss of hire in an amount of USD 494,617.5; 3. Loss of bunker in an amount of USD 119,145.35; 4. Survey fee in an amount of USD 7,016, SGD 9,280 and SGD 12,470; 5. Pilotage in an amount of USD 4,499.08; 6. Port charges in an amount of SGD 19,331.5; In total, the losses claimed are in an amount of USD 618,261.92 and SGD 551,081.5. The Defendants alleged that the aforesaid losses should be calculated as per the exchange rate of SGD 1= RMB 4.7, and USD 1 = RMB6.8. The aforesaid losses are examined and ascertained by the collegiate bench as follows: 1. Ship Repair Cost. The said three Defendants provided the Survey Report issued by Ocean Shipping & Advisory (Far East) Co., Ltd. (hereinafter referred to as “Ocean Shipping”), Classification Survey Report issued by American Bureau of Shipping (ABS), Diving Report, invoice and payment vouchers of repair cost and etc. as evidence. According to the survey report issued by Ocean Shipping, there are damage found on the starboard shell below draft of 15.0 m and between the waterline and No.21 slot, and the damage extended astern; There were large area of oil stain in the end of the damaged area as well as two breakage on the shell plating; Furthermore, it was otherwise reported by the divers that they discovered some scratch/dent 3.0m below No.21 slot. After inspection by the surveyor, the front end of No.2 starboard wing bunker is damaged. The aforesaid inspection company believes that the damage to M/V “OOCL Europe” was caused by the collision with a small merchant ship, and ascertained the area requiring for steel replacement. The repair cost is estimated as about SGD 400,000. ABS suggested in the survey report to carry out permanent repair of the damaged area, and that the result should satisfy the requirements of surveyor before the vessel resuming her voyage. However, the vessel can proceed to Singapore terminal for discharging and then proceed to place of repair in Singapore. As per the invoice issued by Green Ocean Pte Ltd., the repair cost of M/V “OOCL Europe” is SGD 510,000. According to the payment vouchers issued by the bank, OOCL U.K. has paid to Green Ocean Pte Ltd. SGD 510,000 through Hong Kong and Shanghai Banking Corporation (HSBC). The Plaintiff raised a dissention on the ship repair cost claimed by the Defendants, and provided the survey report issued by Haijiang Company as rebuttal evidence. On 27 December 2008, Haijiang Company carried out inspection of M/V “OOCL Europe” at Shekou Terminal in Shenzhen. The surveyors inspected the damaged part outboard from a commuter, and estimated the reasonable cost of repair of M/V “OOCL Europe” as USD 15,059. The collegiate bench held as follows: It is reasonable for M/V “OOCL Europe” to repair the damaged part caused by the collision at the port of destination, Singapore, after accomplishing the voyage involved in this case. The survey report provided by the Plaintiff was issued after M/V “OOCL Europe” was repaired, and the relevant surveyor carried out inspection based on visual observation and their estimation of repair cost was made as per domestic price standard. Therefore, such survey report is unable to prove the cost of repair of M/V “OOCL Europe” in Singapore. As per the evidence provided by the said three Defendants which corroborate each other, and in view of the ascertained facts of the collision accident, repair of M/V “OOCL Europe” in Green Ocean Pte Ltd in Singapore is directly related to the collision accident. The Defendant, OOCL U.K. has already paid SGD 510,000 for the repair of M/V “OOCL Europe”. Such cost shall be ascertained. 2. Loss of Hire. The three Defendants claimed the time spent by M/V “OOCL EUROPE” for inspection and repair in Singapore was 9.5 days, and by calculating the hire rate to be USD52,065/day, then the loss of hire sustained by M/V “OOCL EUROPE” is USD494,617.5. The three Defendants provided the deck logbook and the emails of the ship broker as evidence. The Plaintiff raised objection by alleging that it was not reasonable for the three Defendants to claim for loss of hire on the basis of the daily hire in an amount USD52,065 as stated by the ship broker through the emails. The collegiate bench holds that, in accordance with the provisions of Article 11 of the Provisions of the Supreme People’s Court about the Trial of Compensation for Property Damages of the Cases of Ship Collision, the calculation of the loss of hire is generally determined by the average net profit of two voyages before and two voyages after, the collision, if the aforesaid voyages do not exist, then the calculation of the loss of hire is determined by the average net profit of other corresponding voyages; where a collision causes the charterer of a time charter party to stop hiring the vessel or not to pay for the hire, the losses should be calculated by the amount of hire during the off-hire period or the non-paid hire deducting the charges which can be saved. At the time of occurrence of the collision accident involved in this case, M/V “OOCL EUROPE” was under carriage of container liner. The three Defendants did not provide the average net profit of the two voyages respectively before and after the collision as the standard for calculation of the loss of hire, but only submitted the daily hire for the vessels of the same type as provided by the ship broker. The evidence provided by the three Defendants could not prove the costs that can be saved, and the reasonable loss of hire. In accordance with provisions of Article 64(1) of the Civil Procedure Law of the People’s Republic of China, it is the obligation of a party to an action to provide evidence in support of his allegations, and in case of any failure to provide relevant evidence, such party shall bear the adverse consequences arising therefrom. Such loss claimed by the three Defendants shall not be ascertained. 3. Loss of Bunker. The three Defendants provided the evidence, such as the bunker sounding record, the report issued by the Chief Engineer, and the bunker invoices etc., claiming the collision accident involved in this case had caused M/V “OOCL EUROPE” to lose 320.65 tons of bunker and consume extra 142.5tons of fuel oil during the anchorage and repair at Singapore, resulting in the loss in an amount of USD119,145.34. The Plaintiff refused to ascertain such loss. The collegiate bench holds that, the collision accident involved in this case occurred at 0547hrs at 21 October 2008; M/V “OOCL EUROPE” also realized she might have collided with an unknown small vessel, and then reported to Hong Kong Martine Department, but M/V “OOCL EUROPE” did not give high attention to this event, and the chief engineer of M/V “OOCL EUROPE” stated that the Master did not inform him of any passing with another ship at a close distance; the chief engineer did not find out the reading of the hold No.2 was very low on the computer until on the morning on 22 October, and then the chief engineer measured the hold No.2, confirming that 320.65tons of bunker had leaked out. Therefore, the consequence that all the bunker of the hold No.2 had leaked out was not caused by the collision accident alone, and the great negligence of M/V “OOCL EUROPE” was the main cause of such consequence. M/V “OOCL EUROPE” shall be responsible for the extended loss. It is unable to distinguish the reasonable loss from the extended loss, and under such circumstance, the loss of bunker as claimed by the three Defendants shall not be ascertained. With respect to the consumption of fuel oil during the stay of M/V “OOCL EUROPE” in Singapore for inspection and ship repair, such consumption of fuel oil is an actual loss, and therefore shall be ascertained. After examination and calculation, M/V “OOCL EUROPE” had consumed 133.3tons of oil during the period from 24 October to 3 November 2008, at the unit price of USD257.25/ton, in a total amount of USD34,291.43. 4. Survey Fees. The Plaintiff provided the survey report, invoices for survey fee, and payment voucher, claiming the following three items of survey fees had incurred to M/V “OOCL EUROPE” in Singapore due to the collision accident: the survey fee in an amount of SGD12,470 to Ocean Shipping; the diving fee in an amount of SGD9,280 to Winton Marine Services Pte Ltd.; classification survey fee in an amount of USD7,016.03. The collegiate bench holds that these three surveys have already been carried out, and the fees also have been paid by the Defendant, OOCL U.K., and furthermore, it is necessary to carry out these surveys. The aforesaid survey fees shall be ascertained. 5. Pilotage Fee. The three Defendants withdrew the claim for compensation of pilotage fee during the court hearing, and therefore such fee need not to be examined. 6. Port Charges. The three Defendants claimed the extra port charges in an amount of SGD19,331.5 had incurred during the period of the inspection and ship repair of M/V “OOCL EUROPE” in Singapore, and provided the documents and invoices issued by the Maritime and Port Authority of Singapore, and an email as evidence. The invoices issued by the Maritime and Port Authority of Singapore stated that the port charges in an amount of USD26,905 incurred from 24 October to 4 November 2008 for M/V “OOCL EUROPE” in the port of Singapore; the email sent by Alex Goh (OPS-OSPL/SIN) stated that under the normal circumstance, the estimated fee of M/V “OOCL EUROPE” is SGD7,573.5, and the extra port charges resulted from the collision is SGD19,331.5. The three Defendants alleged this email was sent by the owner’s agent in Singapore. The collegiate bench holds that, the stay of M/V “OOCL EUROPE” in Singapore for inspection and ship repair will unavoidably give rise to extra port charges than the normal call of M/V “OOCL EUROPE”. According to the common practice, the port agents are quite familiar with these fees, and the statement provided by these port agents can be taken as reference. Therefore, this Court ascertains the extra port charges sustained by M/V “OOCL EUROPE” incurred from the collision accident to be SGD19,331.5. In summary, the losses sustained by M/V “OOCL EUROPE” due to the collision accident include: repair cost in an amount of SGD510,000; loss of bunker in an amount of USD34,291.43; damage survey fee in an amount of SGD12,470; diving fee in an amount of SGD9,280; classification survey fee in an amount of USD7,016.03; and extra port charges in an amount of SGD19,331.5. The total amount of the aforesaid losses is SGD551,081.5 and USD41,307.46. The exchange rate of SGD 1= RMB 4.7 and USD 1 = 6.8 as claimed by the three Defendants is lower than the intermediate price of the exchange rate from the date of occurrence of the accident to the date of the filing of the complaint as published by the People’s Bank of China, and therefore shall be supported. The losses sustained by M/V “OOCL EUROPE” are calculated, based on the aforesaid, to be in an amount of RMB2,870,973.7. The collegiate bench holds that this case is a case of dispute over damage compensation arising from ship collision. The collision accident involved in this case occurred at the juncture of Guangzhou waters and Hong Kong waters, and in accordance with the provisions of Article 273(1) of the Maritime Code of the People’s Republic of China, the law of the People’s Republic of China shall apply to this case to settle the substantive disputes. During the court hearing, the parties to the case also agreed that this case is under the jurisdiction of this Court, and that the law of the People’s Republic of China shall apply to this case. M/V “OOCL EUROPE”, with the cargos heavily loaded onboard, was sailing along the outbound channel of Dong Bo Liao Fairway, and was going to enter Dangan Fairway, bound for Singapore by sailing through the outbound channel of Dangan Fairway. M/V “Xinghai 668”, with the cargos heavily loaded onboard, was sailing along the inbound channel of Dangan Fairway. The two vessels crossed each other at the precautionary area connecting the two traffic separation lanes. The two vessels, when sailing near or enter the precautionary area, shall maintain high precaution, strength the look-out, and low the speed to act against any dangerous situation. However, at the time of first sight, the two vessels were both going full astern, and after first sight, the two vessels both failed to promptly lower their speed, and did not communicate with each other through VHF, as a result of which, the two vessels could not promptly take proper actions to avoid each other. It was the fault jointly committed by the two vessels under the collision accident involved in this case. M/V “OOCL EUROPE” and M/V “Xinghai 668” saw each other at first sight at 0537 on the date of the occurrence of the accident, and after first sight, a crossing situation developed between the two vessels. Under the aforesaid crossing situation, M/V “Xinghai 668” was the give-way vessel, and was obliged to keep out of the way of the opposite vessel. As the give-way vessel, M/V “Xinghai 668” shall lower her speed so far as possible, and alter her course to starboard substantially, in order to avoid the stand-on vessel, but M/V “Xinghai 668” did not alter her course until 0543hrs, and thus the timing had been delayed, which is one of the causes for the danger of collision involved in this case. M/V “OOCL EUROPE”, as a stand-on vessel, was obliged to keep her course and speed. In addition, M/V “OOCL EUROPE” was sailing outward from Dong Bo Liao Fairway, and was going to cross the traffic separation lane. In accordance with the provisions of Rule 10 of International Regulations for Preventing Collisions at Sea, 1972 (hereinafter referred to as “COLREG 1972”), M/V “OOCL EUROPE” shall proceed outward from the terminations of the traffic separation schemes, and shall do so with particular caution when navigating in areas near the terminations of traffic separation schemes, and furthermore shall cross on a heading as nearly as practicable at right angles to the general direction of traffic flow. Therefore, M/V “OOCL EUROPE” shall proceed along the outbound traffic separation lane of Dong Bo Liao Fairway, sailing towards the outbound traffic separation lane of Dangan Fairway, and then alter her course to port. However, M/V “OOCL EUROPE” did not take every effective measure to keep proper look-out, and failed to make a reasonable judgment: at 0544hrs on the same day, M/V “OOCL EUROPE” immediately altered her course to port substantially soon after her entry into the precautionary area at the termination of the traffic separation schemes of Dong Bo Liao Fairway, which caused the development of a close-quarters situation between the two vessels. The three Defendants made a defense against the aforesaid by alleging that, since M/V “Xinghai 668” did not alter her course to starboard in ample time to avoid collision, M/V “OOCL EUROPE” was forced to take action to avoid collision by her manoeuvre alone in accordance with Rule 17a(2) of COLREG 1972. However, in accordance with Rule 17a(3) of COLREG 1972, even if M/V “Xinghai 668” did not keep well clear in ample time, under the circumstance at that time, the action taken alone by M/V “OOCL EUROPE” to avoid collision shall not be the action to alter course to port for M/V “Xinghai 668” on her port side. Furthermore, M/V “OOCL EUROPE”, after finding that M/V “Xinghai 668” had altered her course to starboard to avoid collision, still kept altering her course to port substantially. The wrong action taken by M/V “OOCL EUROPE” is the main cause for the danger of collision involved in this case. In summary, M/V “OOCL EUROPE” violated Rule 5, 6, 7a, 8, 10(2), 10b,c,&f, and Rule 17 of COLREG 1972, which is the main cause for the occurrence of the collision accident involved in this case, and therefore shall bear the major liability of 60%; M/V “Xinghai 668” violated Rule 5, 6, 7a, 8, and Rule 16 of COLREG 1972, which is another cause for the occurrence of the collision accident involved in this case, and therefore shall bear the minor liability of 40%. M/V “OOCL EUROPE” did not find out the vessel had been damaged and the oil tank was leaking until the next day after the occurrence of the accident, namely 22 October 2008, which indicated that M/V “OOCL EUROPE” was not sure whether a collision had occurred or not; furthermore, after occurrence of the accident, M/V “OOCL EUROPE” then reported to Hong Kong Marine Department through VHF, requesting for the information of the small vessel, and at that time, the Master of M/V “OOCL EUROPE” still considered the two vessels did not contact with each other. The aforesaid situation indicates that M/V “OOCL EUROPE” did not have the intention to escape from the accident scene with the awareness of the occurrence of collision accident, and therefore the allegation as raised by the Plaintiff that M/V “OOCL EUROPE” had “hit and run” shall not be admitted. Article 169a of the Maritime Code of the People’s Republic of China provides that if the colliding ships are all in fault, each ship shall be liable in proportion to the extent of its fault; Article 4 of the Provisions of the Supreme People’s Court on Some Issues concerning the Trial of the Cases of Ship Collision provides that the compensation liability resulted from ship collision shall be borne by ship owners, or shall be borne by the bareboat charterer if the ship collision occurs during the bareboat chartering period and the bareboat chartering has been registered in accordance with law. Based on the facts that have been ascertained by this Court, the Defendant, OOCL U.K., is the registered bareboat charterer of M/V “OOCL EUROPE”, and therefore the loss sustained by the Plaintiff as resulted from the collision accident in dispute shall be borne by the Defendant, OOCL U.K. It is legally groundless for the Plaintiff to request the Defendants, Swan Company and OOCL, to bear the joint and several liabilities, and therefore such request raised by the Plaintiff shall not be supported. The loss sustained by the Plaintiff due to the collision accident is in an amount of RMB4,888,596, and the Defendant, OOCL U.K. shall bear 60% of liability, namely RMB2,933,157.6. Since the Defendant, OOCL U.K., is the bareboat charterer of M/V “OOCL EUROPE”, and had paid off the repair cost, survey fee, port charges, and bunker fee etc., OOCL U.K. shall be entitled to claim compensation for the loss sustained by it under this case. The Defendant, Swan Company, is the owner of M/V “OOCL EUROPE”, but did not suffer from any actual loss under this case, and therefore the claim raised by Swan Company shall not be supported. The Defendant, OOCL, is the manager of M/V “OOCL EUROPE”, and the claim raise by OOCL is legally groundless, and therefore shall not be supported. The loss sustained by the Defendant, OOCL U.K., is in an amount of RMB2,870,973.7, and the Plaintiff shall bear 40% of liability, namely RMB1,148,389.4. By setoff, the Defendant, OOCL U.K., shall still compensate the Plaintiff of the amount of RMB1,784,768.2. In summary, in accordance with Article 169a & b of the Maritime Code of the People’s Republic of China, Article 64aof the Civil Procedure Law of the People’s Republic of China, and Article 4 of the Regulations on Some Issues Involved in Cases of Ship Collision promulgated by the Supreme Court, the judgment is rendered as follows: 1. the Defendant, Orient Overseas Container Line (U.K.) Limited, shall compensate the Plaintiff, Beihai Honghai Shipping Co., Ltd., the amount of RMB1,784,768.2; 2. the litigation claims raised by the Plaintiff, Beihai Honghai Shipping Co., Ltd., against the Defendants, Orient Overseas Containers Line Limited, and Swan National Leasing (Commercials) Limited, is rejected by the Court; 3. the counter claim raised by the Defendants, Orient Overseas Containers Line Limited, and Swan National Leasing (Commercials) Limited, against the Plaintiff, Beihai Honghai Shipping Co., Ltd., is rejected by the Court; 4. other litigation claims raised by the Plaintiff, Beihai Honghai Shipping Co., Ltd., is rejected by the Court; 5. other counter claims raised by the Defendant, Orient Overseas Container Line (U.K.) Limited, is rejected by the Court. With respect to the acceptance fee for the case of the original claims in an amount RMB46,800, RMB21,382 shall be borne by the Plaintiff, and RMB25,418 shall be borne by the Defendant, Orient Overseas Container Line (U.K.) Limited; With respect to the acceptance fee for the case of the counter claims in an amount RMB16,766.5, RMB2,833.9 shall be borne by the Plaintiff, and RMB13,932.6 shall be borne by the Defendant, Orient Overseas Container Line (U.K.) Limited. The aforesaid obligations of payment shall be fulfilled within ten (10) days from the effective date of this Judgment. If any party fails to perform the obligation of payment within the period as set forth in this Judgment, in accordance with Article 229 of the Civil Procedure Law of the People’s Republic of China, such party shall pay the interest of the deferred debts during the deferred period. If unsatisfied with this Judgment, the Plaintiff may within fifteen (15) days, and the Defendants, Orient Overseas Containers Line Limited, Orient Overseas Container Line (U.K.) Limited, and Swan National Leasing (Commercials) Limited, may within thirty (30) days, upon service of this Judgment, submit before this Court statements of appeal together with the copies thereof in accordance with the number of the other parties, for appealing before the Higher People’s Court of Guangdong Province. Presiding Judge Xiong Shaohui Judge Zhang Kexiong Acting Judge Gu Enzhen (Official Chop of Guangzhou Maritime Court) 14 December 2009 Certified to be true as the original Clerk Yang Qian The translation is provided by Wang Jing & CO.
  • Case of dispute over contract of carriage of goods by sea filed by PICC Property and Casualty Company Limited Zhuhai Branch against AMANO KAISOTEN and LTD MITSUI O.S.K.LINES, LTD etc

    2015-08-17

    Guangzhou Maritime Court of the People's Republic of China Civil Judgment (2009) GHFCZ No.58 Plaintiff: PICC Property and Casualty Company Limited Zhuhai Branch Domicile: Block No.1, Jida Road Central Section, Zhuhai, Guangdong Province Person in charge: Lin Bincheng, general manager Agent ad litem: Zhao Jinsong, lawyer of All Bright Law Offices Shenzhen Branch Agent ad litem: Qiu Biaoshan, lawyer of All Bright Law Offices Shenzhen Branch Defendant: AMANO KAISOTEN, LTD. Domicile: 2-9-5 Minato Machi, Cingshuei, Shizuoka, Japan Legal representative: Nobushige Konagaya, president Agent ad litem: Li Hai, lawyer of Henry & Co. Law Firm Agent ad litem: Zhu Yushan, lawyer of Henry & Co. Law Firm Defendant: MITSUI O.S.K. LINES, LTD. Domicile: 3-6-32, Nakano Shima, Kitaku, Osaka, Japan Legal representative: Masakazu Yakushiji, director Agent ad litem: Chen Xiangyong, lawyer of Wang Jing & Co. Law Firm Agent ad litem: Cao Yanghui, lawyer of Wang Jing & Co. Law Firm Defendant: WANGFOONG SHIPPING LIMITED Domicile: Fl.3, Harbor Commercial Building, No.122 Connaught Rd. Central, Hong Kong Legal representative: Wu Minyi, director Agent ad litem: Huang Hui, lawyer of Huang & Huang Co. Law Firm Agent ad litem: Zhang Jing, lawyer of Huang & Huang Co. Law Firm Defendant: SHERRIFSVILLE CORPORATION Domicile: Rm. 401, Tung Ning Building, 249-253 Des Voeux Road Central, Hong Kong Legal representative: Situ Yan, director Agent ad litem: Huang Hui, lawyer of Huang & Huang Co. Law Firm Agent ad litem: Zhang Jing, lawyer of Huang & Huang Co. Law Firm After accepting the case arising from dispute over contract of carriage of goods by sea filed by the plaintiff PICC Property and Casualty Company Limited Zhuhai Branch against the defendants AMANO KAISOTEN, LTD (hereinafter referred to as "AMANO") , MITSUI O.S.K.LINES, LTD (hereinafter referred to as "MITSUI"), WANGFOONG SHIPPING LIMITED (hereinafter referred to as "WANGFOONG SHIPPING") as well as SHERRIFSVILLE CORPORATION (hereinafter referred to as "SHERRIFSVILLE"), this court organized the collegial panel in accordance with the law, summoned the parties concerned on 27th May 2009 to exchange evidence before the court hearing and held the court hearing on 27th May and 29th May respectively. Qiu Biaoshan, the agent ad litem of the plaintiff, Zhu Yushan, the agent ad litem of the defendant AMANO, Cao Yanghui, the agent ad litem of the defendant MITSUI, Huang Hui and Zhang Jing, the agents ad litem appointed by the defendants WANGFOONG SHIPPING and the defendant SHERRIFSVILLE jointly were present at the court for evidence exchange before hearing and attended the court hearing. Chen Xiao, the surveyor who was applied by the plaintiff attended the hearing and received the cross-examination. The subject case has now been concluded. The plaintiff alleged that in February 2008, Zhuhai Kyoden Co., Ltd (hereinafter referred to as Zhuhai Kyoden) purchased a batch of relay accessories at C&F price from Kyoei Denko Co. Ltd (hereinafter referred to as "Kyoei Ltd.") who was responsible for carriage of the said goods by sea from Japan to Zhuhai. The plaintiff covered insurance for the said goods under Institute Insurance Clause of the British Association (A) at the cover application of Zhuhai Kyoden. As the shipper, Kyoei Ltd. entrusted AMANO under CY-CY terms to transport the foregoing goods (totaling 1,507 pieces in Container No.MOFU0520996) from Shimizu, Japan to Zhuhai, China, on account of which AMANO signed and issued the sea waybill NO.SS1080056ZHU. AMANO entrusted MITSUI with the actual transport of the goods, and MITSUI in turn signed and issued the sea waybill MOLU217086052 from Shimizu, Japan to Zhuhai via Hongkong under CY-CY terms. During the voyage from Shimizu, Japan to Hongkong, MITSUI arranged MV "MOL OASIA" to carry out the transportation. During the section from Hongkong to Zhuhai, MITSUI entrusted WANGFOONG SHIPPING to transport the goods. After receiving the goods, WANGFOONG SHIPPING signed and issued B/L No. WF5008033107, loaded the goods on board "WANGFOONG 10" owned by SHERRIFSVILLE and transported the goods from Hongkong to Zhuhai. On 18th February 2008, while "WANGFOONG 10" was sailing from Hongkong to Zhuhai, due to weather impact, the goods fell overboard in Hongkong Waters and gave rise to a severe damage. AMANO, as the carrier, and MITSUI, WANGFOONG SHIPPING and SHERRIFSVILLE as the actual carrier, shall bear the compensation liabilities jointly and severally for the cargo loss. The plaintiff paid the insurance indemnity for the cargo loss of Zhuhai Kyoden pursuant to the agreement reached in the insurance contract and thus lawfully obtained the insurance subrogation. The plaintiff requests to adjudge the four defendants to jointly compensate the plaintiff for loss of CNY 2,849,822.06 (including: cargo loss totaling CNY 2,785,663.43, survey fee of CNY1,698.63 and appraisal fee of CNY62,460) and the interests thereof. The four defendants shall bear the litigation fee of this case. The plaintiff submitted the following evidential materials within the time limit for submission of evidence: 1. Cargo Transport Insurance Policy and Insurance Endorsement, Special Invoice for Insurance Business; 2. Cargo Transport Insurance Clause; 3. Bank pay-in slip of payment of insurance indemnity; 4. Cargo survey fee Debit Note and bank transfer voucher; 5. Surveyor and adjuster's fee Debit Note, voucher of wire transfer and invoice; 6. Receipt of insurance indemnity and Letter of Subrogation; 7. AMANO Sea Waybill; 8. MOL Sea Waybill; 9. B/L of WANGFOONG SHIPPING; 10. Incident Report (Dump Barge "Wangfoong 10" -Incident Report on 18 February 2008) of WANGFOONG SHIPPING; 11. Survey Report of Delta Marine Services Ltd.; 12. Final Adjust Report issued by Hengzhun Surveyors & Adjusters Ltd.; 13. Cargo Manifest and Freight List of MITSUI; 14. Letter sent by MITSUI to Ever Gain & Omori Forwarding Ltd. (hereinafter referred to as "Ever Gain Ltd." ), Letter sent by WANGFOONG SHIPPING to MOL (ASIA) LTD, Letter sent by Ever Gain Ltd. to Hongkong Kyoden Co., Ltd (hereinafter referred to as "Hongkong Kyoden"); 15. Situation description of Zhuhai Kyoden; 16. Business Registration Certificate of WANGFOONG SHIPPING; 17. Reply on "WANGFOONG 10"'s Being owned by SHERRIFSVILLE; 18. Contractual Relationship Between the B/L Holder and the Carrier in Hongkong Law, an article by Dai Xikun; 19. Business License of Hengzhun Surveyors & Adjusters. The defendant AMANO defended that: 1. The Sea Waybill No. SS1080056ZHU signed and issued by AMANO as the carrier recorded the shipper to be Kyoei Ltd, the consignee Hongkong Kyoden, the notify party Even Gain Ltd., thus Zhuhai Kyoden shall not be the party concerned in the said sea waybill. The Sea Waybill No. MOLU217086052 signed and issued by MITSUI recorded the shipper to be AMANO, the consignee and notify party to be Even Gain Ltd. and the carrier to be MITSUI, therefore Zhuhai Kyoden is not the party concerned in the said sea waybill, either. The B/L No. WF5008033107 signed and issued by WANGFOONG SHIPPING LIMITED recorded the shipper to be MOL (ASIA) LTD, the consignee to be Zhuhai Kyoden, the carrier WANGFOONG SHIPPING LIMITED, consequently AMANO is not the party concerned in the said B/L. Since sea waybill is a non-negotiable transport document, under the circumstance when Zhuhai Kyoden has not been recorded as the party concerned in the sea waybill singed and issued by AMANO and MITSUI, Zhuhai Kyoden could not be the party concerned because of transference of the sea waybill, nor will there exist any contractual relationship of carriage of goods by sea between Zhuhai Kyoden and AMANO. The plaintiff who subrogated the rights of Zhuhai Kyoden runs short of factual and legal basis to claim against AMANO by right of the sea waybill. In 3 sets of the subject transport documents, Zhuhai Kyoden is merely the consignee in the B/L signed and issued by WANGFOONG SHIPPING and has constituted with WANGFOONG SHIPPING contractual relationship of carriage of goods by sea evidenced by B/L. Since AMANO is not the party concerned in the said B/L, when exercising the subrogation right, the plaintiff could only claim his right against WANGFOONG SHIPPING rather than AMANO by right of the B/L. 2. The plaintiff did not provide sufficient evidence to prove himself the insurer for the subject cargo transport who had actually compensated the insured Zhuhai Kyoden for the loss. The plaintiff did not make necessary elaboration on the loss claimed, nor did he provide corresponding evidences. Basing on the above, the litigation requests filed by the plaintiff against AMANO shall be rejected. The defendant AMANO did not provide any evidence. The defendant MITSUI argued that: Zhuhai Kyoden is not the consignee recorded in the sea waybill singed and issued by MITSUI and does not have any contractual relationship of carriage of goods by sea with MITSUI. The plaintiff who subrogated the right of Zhuhai Kyoden shall not be entitled to claim his right against MITSUI by right of the said sea waybill. MITSUI, merely being the carrier for the section from Japan to Hongkong, is only related to the parties concerned recorded in the sea waybill for such section transport and shall not bear the compensation liability for the cargo loss occurred when WANGFOONG SHIPPING LIMITED was transporting the goods from Hongkong to Zhuhai, nor shall it be jointly and severally liable with WANGFOONG SHIPPING for the compensation liability. According to the above, the litigation requests filed by the plaintiff against MITSUI shall be rejected. The defendant MITSUI submitted the following evidential materials within the time limit for submission of evidence: 1. Sea Waybill No.MOLU217086052; 2. Fax from Ever Gain Ltd; 3. B/L No.WF5008033107; 4. Business Registration Certificate of MOL (ASIA) LTD; 5. Confirmation of Zhuhai Kyoden on Consent to Release of Goods; 6. Accident Report of WANGFOONG SHIPPING. The defendant WANGFOONG SHIPPING and SHERRIFSVILLE jointly contended that: 1. the plaintiff did not provide such evidence as Purchase Contract, Commercial Invoice, Packing List, Declaration Form for Import Commodities to prove Zhuhai Kyoden the buyer for the subject goods under C&F price terms who was entitled the ownership and insurance interest of the goods at the occurrence of the subject accident of cargo damage, thus the premise for the plaintiff to exercise his subrogation right shall not be established; since he is not the qualified plaintiff of the subject case, he shall not be entitled to lodge the subject litigation. 2. In the front side of the B/L WF5008033107, it was clearly stated that "the contract evidenced or contained in this B/L shall be subject to the laws in Hongkong Special Administrative Region". As the consignee in the B/L, Zhuhai Kyoden had no objection to the provisions of application of law stated in the B/L; the plaintiff who lodged litigation by right of the B/L also expressed his accepting the content and clause recorded in the B/L. Therefore, trial on the legal relationship and responsibility between the plaintiff and WANGFOONG SHIPPING & SHERRIFSVILLE shall apply Hongkong law. Pursuant to Hongkong law, only the "carrier" shall bear the compensation liability for the cargo loss or damage occurred during his liable period, and "carrier" merely refers to "shipowner or charterer who concludes contract of carriage with the shipper". Moreover, there is no such concept as "actual carrier" under Hongkong law. Considering that WANGFOONG SHIPPING and SHERRIFSVILLE did not conclude any contract of carriage with Zhuhai Kyoden, nor were they the "carrier" stipulated in Hongkong law, they shall not bear the compensation liability fro the subject cargo damage and the request made by the plaintiff to demand WANGFOONG SHIPPING and SHERRIFSVILLE to bear the liability of the "actual carrier" lacks legal basis. 3. The plaintiff did not have evidence to prove WANGFOONG SHIPPING and SHERRIFSVILLE the shipowner or bareboat charterer of the subject vessel "WANGFOONG 10", thus failed to prove WANGFOONG SHIPPING and SHERRIFSVILLE the actual carrier as stipulated in Article 42 of Maritime Code of the P.R.C (hereinafter referred to as Maritime Code). Provided the plaintiff could evidence that B/L No.WF5008033107 was signed and issued by WANGFOONG SHIPPING, WANGFOONG SHIPPING, as the carrier for transport of the subject goods from Hongkong to Zhuhai Section, shall be liable to MOL (ASIA) LTD, the shipper stated in the B/L in accordance with Maritime Code rather than be jointly and severally liable with the through carrier for the B/L holder or the consignee. 4. The plaintiff did not have evidence to prove the fact of the cargo damage or that the cargo damage occurred during the liable period of WANGFOONG SHIPPING and SHERRIFSVILLE for transport of goods, nor did he possess evidence to testify the authenticity and reasonableness of the loss claimed. Even if the cargo damage occurred during the liable period of WANGFOONG SHIPPING and SHERRIFSVILLE for transport of goods, pursuant to provisions in Article 6 of Convention on Limitation of Liability for Maritime Claims, 1976 acceded to by Hongkong or Article 210 of Maritime Code, WANGFOONG SHIPPING and SHERRIFSVILLE shall be entitled to limitation of liability for maritime claims. The gross tonnage of "WANGFOONG 10" is 2,550.6 tons by calculation, the limitation of liability being 509,283.20 Units of Account, which when converted is CNY5,155,677.55. The plaintiff could only obtain compensation from the limitation of liability as per the proportion of his amount demanded in all of the claim amount arising from the subject marine accident. The defendants WANGFOONG SHIPPING and SHERRIFSVILLE furnished the evidential materials within the time limit for evidence submission as follows: 1. Copy of the Civil Judgment under ref. (2004) Xia Hai Fa Shi Chu Zi No.51 (without stamp), copy of the Civil Judgment under ref. (2005) Min Min Zhong Zi No.106 (without stamp), copy of the Civil Judgment under ref. (1998) Jiao Ti Zi No.3 (without stamp); 2. Copy of Hong Kong Carriage of Goods by Sea Ordinance downloaded from Hongkong Bilingual Laws Information System (copy without legalization and certification); 3. Copy of the Civil Judgment under ref. (2006) Guang Hai Fa Chu Zi No.368. After cross-examination at the court hearing, and taking into account the evidence and Cross-examination Opinion submitted by all parties concerned, the collegial panel ascertained the following facts: On 5th February 2008, the plaintiff signed and issued one set of Cargo Transport Insurance Policy which stated that: the plaintiff is the insurer, Zhuhai Kyoden is the insured; the Insurance Policy No. is PYII200844040096000043; the cargo insured is relay accessories weighing 17,309 kilometers, measuring 46.314 cubic meters, and totaling 1,507 pieces; the cargo marks is 40獠 GP, and the container No./ seal No. is MOFU0520996/MOLU182682; the total amount insured is CNY 3,083,753; the date of shipment is 6th February 2008, the carrying vessel is "MOL OASIA" V.316S/"WANGFOONG 10"V.2008-033; the voyage is from Tokyo, Japan to Zhuhai, via Hongkong; the kinds of risks are Institute Insurance Clause of the British Association (A), additional insurance covering War Risk Clause, additional insurance covering Strike Risk Insurance (Cargo). In accordance with the Institute Insurance Clause of the British Association (A), the insured section is from warehouse to warehouse, but no compensation shall be made for the cargo loss caused by unattended custody of the goods during the period of roadway transport with a deductible of CNY5,000; the Bs/L numbered SS1080056ZHU/WF5008033107; Open policy numbered PYAE200744040096000005; the insurance indemnity is payable in Zhuhai. On 26th February 2008, the plaintiff issued an insurance endorsement for modification of relevant content in the foregoing Insurance Policy, Which stated that: the Agreement No. is PYAE200744040096000005, the Insurance Policy No. is PYII200844040096000043, the Insurance Endorsement No. is EYII200844040096000007; it is hereby endorsed that the insurance amount under this Insurance Policy shall be increased by CNY 8,137, which is CNY 3,091,890 after increase. The insured shall make up for the corresponding insurance premium as contracted in the Agreement; other clauses and conditions remain unchanged. The Special Invoice for Insurance Business No.01799526 issued by the plaintiff on 26th February 2008 revealed that Zhuhai Kyoden paid the insurance premium in amount of CNY2,473.51 for transport of the subject goods. On 6th February 2008, AMANO signed and issued Sea Waybill No.SS1080056ZHU, which stated that: the shipper is Kyoei Ltd, the consignee is Hongkong Kyoden, the notify party and delivery agent is Ever Gain Ltd.; the place of receipt is Shimizu, Japan CY; the carrying vessel and voyage No. is "MOL OASIA" V.316S; the port of lading is Shimizu, Japan, the port of discharge Hongkong and the place of delivery Zhuhai CY; the container No. / seal No. is MOFU0520996 (40) / MOLU182682; packing condition and description of goods: relay accessories, invoice No.KDC-0202P, KDC-0203P, one container (1,507 pieces); total weight 17,309 kilograms, measurement 46.314 cubic meters; freight prepaid, shipped on board on 6th February 2008; one set of original waybill, issued at Shimizu, Japan, with AMANO as the carrier; such waybill is non-negotiable. On 6th February 2008, MITSUI signed and issued the MOL Sea Waybill No.MOLU217086052, which stated that: the booking No. is 217086052-A; the shipper is AMANO; the consignee and notify party is Ever Gain Ltd.; the place of receipt is Shimizu, Japan CY; the carrying vessel and voyage No. is "MOL OASIA" V.316S; the port of loading is Shimizu, Japan, the port of discharge is Hongkong, the place of delivery is Zhuhai CY; the container No./seal No. is MOFU0520996/ MOLU182682/S4; packing condition and description of goods: 1?0 dry container, relay accessories, invoice No.KDC-0202P, KDC-0203P (sea waybill), one container (1,507 pieces); total weight 17,309 kilograms, measurement 46.314 cubic meters; freight prepaid, the goods were loaded on board "MOL OASIA" V.316S at Shimizu, Japan; one set of original waybill, issued at Shimizu, Japan, with MITSUI as the carrier for and on whose behalf SEIWA KAIUN CO., LTD singed the sea waybill. The subject goods were loaded on board "MOL OASIA" at Shimizu, Japan and delivered to Hongkong on 11th February 2008. On 15th February 2008, Ever Gain Ltd. sent a fax to MITSUI alleging: with regard of the second leg carriage of goods under B/L No.MOLU217086052, kindly please arrange the second carrier of 17th February to Zhuhai; the receiving unit is Zhuhai Kyoden; the cargo name in Chinese is relay accessories; the container No. is MOFU0520996/40獠; the No. of pieces is 1,507; the weight is 17,309 (gross weight); the discharging quay is Jiuzhou Port (Zhuhai); the B/L is telex released and the original is kept on board (the goods are directly released to the receiving unit without presentation of original B/L); WANGFOONG TRANSPORTATION LTD. is designated to be the second-leg carrier (hereinafter referred to as WANGFOONG TRANSPORTATION). Such fax bears the stamp of Ever Gain Ltd. On 17th February 2008, WANGFOONG SHIPPING signed and issued B/L No.WF5008033107, which stated: the shipper is MOL (ASIA) LTD, the consignee and notify party is Zhuhai Kyoden; to be delivered to the carrier by means of N/A, the place of receipt and the port of loading is Hongkong, the carrying vessel is "WANGFOONG 10" V. 2008-033, the port of discharge and the place of delivery is Zhuhai; the container is 40獠GP, container No. / seal No. is MOFU0520996 /MOLU182682; pieces, name of goods and kind of package: one 40獠GP container, shipper's load, stow, count and seal, 1,507 pieces of relay accessories. The subject goods were shipped from Shimizu, Japan to Zhuhai via Hongkong and transshipped from "MOL OASIA" V.316S; the gross weight is 17,309 kilograms, the measurement is 46.31 cubic meters; freight prepaid; the original B/L is in triplicate and the contract evidenced or contained herein shall apply the law of Hongkong Special Administrative Region and relevant claim or dispute arising therefrom shall be governed by the court of Hongkong Special Administrative Region; the issuing place of the B/L is Hongkong and WANGFOONG TRANSPORTATION LTD. signed and issued the B/L as the agent of WANGFOONG SHIPPING. On 18th February 2008, WANGFOONG TRANSPORTATION LTD. sent a fax to MOL (ASIA) LTD in the name of WANGFOONG SHIPPING, alleging that: we are regretful to advise you that while "WANGFOONG 10" was sailing to Zhuhai this morning, the containers fell overboard due to the severe weather impact, in response to which we have been taking special measures. Please notify your insurer. Meanwhile, we will keep you duly reported of the development of the case. Please refer to the attachment for detail of the affected containers. We express our great regret for any inconvenience arising from the subject accident. If you have any queries, please contact Mr. TONY KWAN of our company. The attachment stated: "WANGFOONG 10" V.2008-033, estimated time of departure from Hongkong 17/02/2008, CY-MOL-WF5008033107, container No.MOFU0520996/40獠, MOL Sea Waybill No.MOLU217086052, Zhuhai Kyoden. On 19th February 2008, WANGFOONG TRANSPORTATION LTD. sent relevant client Accident Report of Barge "WANGFOONG 10" Dated 18th February 2008 in the name of WANGFOONG SHIPPING LIMITED, alleging that: at 1045 hrs in the early morning of 18th February 2008, Barge "WANGFOONG 10" was towed by tug "RESPONSE" and headed for Zhuhai. Unfortunately, the tug and the barge were caught in strong winds and waves, the steel rope of "WANGFOONG 10" suddenly broke down, and the ship severely swang, causing part of the containers to fall overboard at Latitude 22.11掳and longitude 113.53. After the occurrence of the accident, we immediately reported it to Hong Kong Marine Department. The officers thereof have arrived at the scene of the accident and commenced the investigation. Meanwhile, we were making every effort to salvage the sunken container. The rescue was still in progress by the time we sent the letter. We have informed our cargo insurer of the accident who has accordingly designated surveyors to investigate the accident. If your party has taken out marine cargo insurance on the goods, you are strongly advised to notify the insurer of accident conditions. For a necessary joint survey or the latest progress of the accident, please contact our colleague Mr. TONY KWAN. We deeply regret for any inconvenience this accident brings to you. The accident report is affixed with the seal (Shipping Agency 10) of WANGFOONG TRANSPORTATION LTD. On 19th February 2008, ZHUHAI KYODEN issued the Notice of Claim to the plaintiff, informing him of the insurance accident and requesting him to send immediately staff members to investigate the accident and ascertain the loss, and indemnify ZHUHAI KYODEN for the actual thus sustained as per the agreement specified in the insurance contract. On 7th March 2008, the plaintiff issued to Hengzhun Surveyors & Adjusters the Letter of Appointment with Respect to the Cargo Insurance Case 2008.2.17of ZHUHAI KYODEN CO., LTD, which states: with respect to the cargo under the policy No. PYAE200744040096000005 of the import cargo insurance underwritten by our company for ZHUHAI KYODEN, the insured container (MOFU0520996) with relay materials packed inside in the insurance amount of RMB3,083,753 on board of "Wangfoong 10" fell into the sea as it was passing through the waters of Hong Kong from Japan en route to Zhuahai due to the sudden break of the pulling cable of the tugboat from the chain wheel. After the accident, we entrusted The Ming An Insurance Company (Hong Kong) Limited (hereinafter referred to "Ming An Insurance") to make a survey thereof, ascertain the loss, and investigate the cause of the accident. Delta Marine Services Ltd. has conducted the survey as entrusted by Ming An Insurance. It is said that the sunken container has been salvaged. Upon an open-package inspection, the container was found to have been pressed out of shape, with sea water seeping into it and soaking the whole cargo, thereby causing severe damage to the goods. Considering that the amount involved is quite large and it is rather time-limited, we hereby entrust your company with the survey of the accident, to ascertain the occurrence of the insured event, the cause thereof and the insured liability, as well as to check and ascertain the loss of the cargo and handle the salvage value as soon as possible. Please report the settlement plan to our company for ascertainment before confirming the loss with the insured. And please maintain timely communication and contact with our staff members in charge for the progress of the claim while dealing with the case. The fee thereof shall be in conformity with the charge standard of insurance assessment companies confirmed by your company and the provincial department of our company. On 15th May 2008, ZHUHAI KYODEN sent to Ever Gain Company Limited the Contact Letter which states: with respect to the handling of the damaged goods, we hereby entrust JOHNSON LAM TRADING CO. to take delivery of the goods. Please arrange the time thereof as soon as possible, and do not affect our company's settlement of the insurance claim. On 22nd May 2008, ZHUHAI KYODEN sent to Ever Gain Company Limited the Confirmation of Cargo Release which states: we hereby entrust Ever Gain Company Limited to go through the procedure of taking delivery of the cargo in Hong Kong and take delivery of the whole cargo from your company on behalf of our company. We agree to undertake to assume any liability thus incurred. On 22nd May 2008, ZHUHAI KYODEN sent to Hengzhun Surveyors & Adjusters the Notice which states: we have decided to take delivery of the cargo from the container terminal of Wangfoong at 10:00 a.m. on 26th May 2008. Please inform JOHNSON LAM TRADING CO. to go through the procedure of taking delivery of the cargo in Hong Kong and take delivery of the whole cargo on behalf of our company. On 27th March 2008, Delta Marine Services Ltd. issued the Survey Report which states: with respect to the survey made to the container (MOFU0520996) housed in the container yard of Wangfoong in Hing Wah Street, Lai Chi Kok, Kowloon, Hong Kong, we found that the container seal was in good condition, but the container was pressed out of shape, the goods of different sizes and packages inside the container toppled over and the outer packing was seriously soaked or decomposed, and contaminated by the sludge; according to the commercial invoice issued by Kyoei Co., Ltd., the value of the goods involving the case amounts to JPY42,272,253, equivalent to HKD3,082,043.76; since the container was in the charge of "Wangfoong 10" when the accident occurred, the ship shall be liable therefor. On 10th October 2008, Hengzhun Surveyors & Adjusters issued to the plaintiff the Final Adjust Report which states: three surveys were conducted to the container (MOFU0520996) housed in the container yard of Wangfoong in Hing Wah Street, Lai Chi Kok, Kowloon, Hong Kong on 20th February, 12th March, and 26th May of 2008 respectively. Upon survey and adjustment, the 1507 boxes of relay parts became a constructive total loss; the goods inside the container sustained damage by getting soaked as a result of the accident in the course of carriage which caused the container on board of "Wangfoong 10" to fall into the sea; the accident took place during the period of responsibility of the carrier "Wangfoong 10", therefore the owner of the ship shall be liable for the loss of the goods and the insurer may file a claim for recovery against the owner of "Wangfoong 10" after indemnifying the insured and obtaining the right of subrogation; as per the invoice provided by the plaintiff, the value of the goods is JPY42,272,253 which adds up to JPY 46,499,478.30 with the addition of 10% thereof, and when calculated as per the JPY/CNY exchange rate of 100:6.6448 of Bank of China on 18th February 2008, the ascertained amount of loss of the accident is RMB3,089,797.33; Upon inquiry for the quotation of the damaged goods, the highest quotation is JOHNSON LAM TRADING CO.'s quotation of HKD333,000. With consent of the insurer, the insured, the carrier, and owner of M/V "MOLOASIA" and the owner of "Wangfoong 10", JOHNSON LAM TRADING CO. transferred HKD333,000 into the account of Hengzhun Surveyors & Adjusters for temporary deposit and the damaged goods were all taken delivery of by JOHNSON LAM TRADING CO on 26th May 2008; the salvage value is calculated as RMB299,133.90 as per the HKD/RMB exchange rate of 100:89.83 of Bank of China on 2nd May 2008; the remaining loss amount after the deduction of the salvage value is RMB2,790,663.43; the deductible amount under this policy is RMB5,000, and the remaining amount of adjustment of loss after such deduction is RMB2,785,663.43; we suggest that the insurance indemnity amount paid by the insurer be RMB2,785,663.43, and the salvage value paid by HENGZHUN SURVEYORS & ADJUSTERS be HKD333,000. On 12th June 2008, the plaintiff effected the payment of the survey fee in the amount of HKD1,922 to Ming An Insurance via Bank of China, of which, the survey fee of Delta Marine Services Ltd. is HKD1,372, and the handling fee of Ming An Insurance is HKD550; on 9th December 2008, the plaintiff effected the payment of RMB 2,785,663.43 to ZHUHAI KYODEN for the loss of the goods and RMB 62,460 as the survey fee to HENGZHUN SURVEYORS & ADJUSTERS via Zhuhai City Commercial Bank. The Receipt of Insurance Indemnity and Letter of Subrogation issued by ZHUHAI KYODEN to the plaintiff on 28th November 2008 states: Claim No. CYII200844040098000053, Policy No. PYII200844040096000043; the undersigned hereby confirms the receipt of the amount of RMB2,785,663.43 from the plaintiff as the indemnity amount of the loss of the relay parts carried by M/V "MOL OASIA" 316S/ "Wangfoong 10" 2008-033 shipped from Japan to Zhuhai via Hong Kong under the captioned policy and RMB64,193.53 as the survey fee advanced by the plaintiff; we agree to assign all the rights and interests, and right of recourse of the insured matter to the plaintiff, subject to the limit of insurance indemnity, and invest the plaintiff with full authority and provide any necessary assistance when the plaintiff exercise such rights, but the expense thus incurred shall be borne by the plaintiff. In addition, it is stated in the attachment to the reply of the Hong Kong Marine Department to Qiu Biaoshan, the agent ad litem of the plaintiff on 23rd April 2008 that: the owner of "Wangfoong 10" is SHERRIFSVILLE; the ship is a non-propelled tugboat, with 49.7m as the full length, 22.24m as the maximum breadth, 2,550.6 tons as the gross tonnage and 1,785.42 tons as the net tonnage and it was built in 2001. During the court hearing, the plaintiff, AMANO and MITSUI agreed to apply the laws of the People's Republic of China, whereas WANGFOONG SHIPPING. and SHERRIFSVILLE maintained to apply the laws of Hong Kong Special Administrative Region but they raised no objection to the appliance of the laws of the People's Republic of China. The collegiate members reach the consensus that the plaintiff is the insurer of carriage of the goods in the case, and he has filed a lawsuit on the contract of carriage of goods against the four defendants on the strength of the right of subrogation he obtained after effecting the payment of the insurance indemnity to the insured ZHUHAI KYODEN; however, the goods was shipped from Shimizu, Japan to Zhuhai via Hong Kong and the domicile of both AMANO and MITSUI is Japan while the domicile of both WANGFOONG SHIPPING and SHERRIFSVILLE is Hong Kong. In view of the above, the contractual relationship of the contract of carriage of goods in this case involves foreign element. Thereby this case arises from dispute over contracts of carriage of goods by sea involving foreign element. The destination of carriage of the goods is Zhuhai which falls within the scope of jurisdiction of this court. This court has jurisdiction over the case, pursuant to the provisions of Paragraph 2 of Article 6 of Special Maritime Procedure Law of the People's Republic of China (hereinafter referred to "Special Maritime Procedure Law") and the provisions of Article 28 of Civil Procedure Law of the People's Republic of China (hereinafter referred to as "Civil Procedure Law") that "An action initiated for a dispute over railway, highway, water, or air transport or through transport contract shall be under the jurisdiction of the people's court in the place where the transport starts or ends or where the defendant has his or her domicile". The plaintiff lodged a lawsuit with this court. The four defendants raised no objection to the jurisdiction of the court and responded to the action by making their defense. It shall be deemed that the four defendants have accepted that this court has jurisdiction over the case, as per the provisions of Article 243 of Civil Procedure Law that "If in a civil action in respect of a case involving foreign element, the defendant raises no objection to the jurisdiction of a peoples court and responds to the action by making his defence, he shall be deemed to have accepted that this peoples court has jurisdiction over the case." Article 269 of Maritime Code prescribes that "The parties to a contract may choose the law applicable to such contract, unless the law provides otherwise. Where the parties to a contract have not made a choice, the law of the country having the closest connection with the contract shall apply." During the court hearing, the plaintiff, AMANO and MITSUI agreed to apply the laws of the People's Republic of China, whereas WANGFOONG SHIPPING and SHERRIFSVILLE maintained to apply the laws of Hong Kong Special Administrative Region but they raised no objection to the appliance of the laws of the People's Republic of China. The bill of lading issued by WANGFOONG SHIPPING stipulates that the contract demonstrated or contained thereby applies the laws of Hong Kong Special Administrative Region. Yet WANGFOONG SHIPPING and SHERRIFSVILLE simply provided the copies of Hong Kong Carriage of Goods by Sea Ordinance downloaded from Hong Kong Bilingual Laws Information System, and failed to perform relevant procedures of notarization and legalization. Therefore such evidence was insufficient to be admitted as the law of Hong Kong Special Administrative Region to deal with substantive disputes with respect to a contract of carriage of goods. Besides, Hong Kong follows the English law which is case law. WANGFOONG SHIPPING and SHERRIFSVILLE failed to provide to the court any relevant judgment made by High Court of the HKSAR. Moreover, WANGFOONG SHIPPING and SHERRIFSVILLE also quoted relevant provisions of Maritime Code in their defense. In view of that, the opinion of appliance of the laws of Hong Kong Special Administrative Region to this case maintained by WANGFOONG SHIPPING and SHERRIFSVILLE shall not be supported due to its insufficiency of burden of proof. The domicile of the plaintiff is Zhuhai which is also the destination of carriage of the goods and therefore is the one of places of performance under the contract of carriage. China is the country that has the closest connection with the case and thereby the laws of the People's Republic of China should apply to this case to deal with substantive disputes, pursuant to the principle of the closest connection. ZHUHAI KYODEN, as the consignee, took out marine cargo insurance for the goods shipped from Japan to Zhuhai and the plaintiff issued Cargo Insurance Policy to ZHUHAI KYODEN accordingly. The plaintiff is the insurer of the goods and ZHUHAI KYODEN is the insured. The damage to the goods took place in the course of carriage from Hong Kong to Zhuhai. As the insurer, the plaintiff effected the payment of indemnity to ZHUHAI KYODEN in accordance with the claim application made by the insured ZHUHAI KYODEN. After receipt of the payment of indemnity, ZHUHAI KYODEN issued to the plaintiff the Receipt of Insurance Indemnity and Letter of Subrogation which agrees to assign all the rights and interests of the insured matter within the limit of insurance indemnity to the plaintiff. Accordingly, the plaintiff is entitled to subrogate the insured ZHUHAI KYODEN to claim recovery from the parties responsible for the marine accident within the limit of insurance indemnity, pursuant to the provisions of Paragraph 1 of Article 60 of Insurance Law of the People's Republic of China (hereinafter referred to as "Insurance Law") that "If an insured risk occurs due to the damage of the objects insured by a third party, the insurer shall, starting from the date of paying the indemnities, subrogate the insured to exercise the right to indemnities from the liable third party" and the provisions of Article 93 of Special Maritime Procedure Law that "Where the occurrence of an insured event is caused by a third party, after having paid insurance indemnity to the insured, the insurer may exercise by subrogation the right of the insured to demand indemnity against the third party up to the limit of insurance indemnity". AMANO issued the sea waybill (No. SS1080056ZHU) and MITSUI issued the sea waybill (No. MOLU217086052). Both stipulate Shimizu, Japan as the port of shipment and Hong Kong as port of discharge. In view of that, AMANO and MITSUI are both the carriers of the carriage of goods in the section from Shimizu, Japan to Hong Kong. The shipper as stipulated in the sea waybill issued by AMANO is Kyoei Co., Ltd., and the consignee is Hong Kong KYODEN and the notify party is Ever Gain Company Limited. The shipper as stipulated in the sea waybill issued by MITSUI is AMANO, and the consignee and the notify party is Ever Gain Company Limited. ZHUHAI KYODEN is not the shipper, consignee or notify party of the two sea waybills. Article 80 of Maritime Code prescribes that "Where a carrier has issued a document other than a bill of lading as an evidence of the receipt of the goods to be carried, such a document is prima facie evidence of the conclusion of the contract of carriage of goods by sea and the taking over by the carrier of the goods as described therein. Such documents that are issued by the carrier shall not be negotiable." The two sea waybills respectively issued by AMANO and MITSUI are not negotiable. Without being so stipulated ZHUHAI KYODEN shall not, as a result of the assigned sea waybill, become a party thereto, considering which, there is no relationship with respect to the contract of carriage of goods by sea among ZHUHAI KYODEN, AMANO and MITSUI. In addition, the goods were shipped from Shimizu, Japan to Zhuhai via Hong Kong. However, according to the statement of two sea waybills respectively issued by AMANO and MITSUI, the port of loading is Shimizu, Japan and the port of discharge is Hong Kong. The damage to the goods took place in the section from Hong Kong to Zhuhai which does not fall within the responsibility of carriage of AMANO and MITSUI. Therefore, AMANO and MITSUI shall not be liable therefor. The claim that filed by the plaintiff by subrogating ZHUHAI KYODEN in light of the two captioned sea waybills that there is contractual relationship among ZHUHAI KYODEN, AMANO and MITSUI in terms of contract of carriage of goods and that AMANO and MITSUI shall take several and joint liabilities lacks foundation in fact and legal basis, and thereby shall not be supported. WANGFOONG TRANSPORTATION LTD issued the bill of lading (No.WF5008033107) as agent of WANGFOONG SHIPPING. Thus the bill of lading shall be deemed to be issued by WANGFOONG SHIPPING. It is a straight B/L, with MOL (Asia) Ltd stipulated as the shipper, ZHUHAI KYODEN as the consignee and the notify party, Hong Kong as the place of receipt and the port of loading, Zhuhai as the port of discharge and the place of delivery, and "Wangfoong 10" as the carrying vessel. Pursuant to the provisions of Article 71 of Maritime Code that "A bill of lading is a document which serves as an evidence of the contract of carriage of goods by sea and the taking over or loading of the goods by the carrier, and based on which the carrier undertakes to deliver the goods against surrendering the same", WANGFOONG SHIPPING issued the bill of lading and thereby was the carrier of the goods in the section of carriage from Hong Kong to Zhuhai. ZHUHAI KYODEN was the consignee of the straight bill of lading, and therefore ZHUHAI KYODEN and WANGFOONG SHIPPING contractually related to each other with respect to the contract of carriage of goods by sea certified by the bill of lading. SHERRIFSVILLE, as the owner of the carrying vessel "Wangfoong 10", was the actual carrier of that segment of carriage, as per the provisions of Paragraph 2 of Article 42 of Maritime Code that "'Actual carrier' means the person to whom the performance of carriage of goods, or of part of the carriage, has been entrusted by the carrier, and includes any other person to whom such performance has been entrusted under a sub-contract". The carriage of the goods was container transportation. Pursuant to the provisions of Paragraph 1 of Article 46 of Maritime Code that "The responsibilities of the carrier with regard to the goods carried in containers covers the entire period during which the carrier is in charge of the goods, starting from the time the carrier has taken over the goods at the port of loading, until the goods have been delivered at the port of discharge", the goods was in the charge of WANGFOONG SHIPPING from the time he had taken over it in Hong Kong until it had been delivered to ZHUHAI KYODEN in Zhuhai, which was the period of responsibility of carriage of WANGFOONG SHIPPING. As the actual carrier, the period of responsibility of carriage of SHERRIFSVILLE commenced from the time the goods had been loaded onboard of "Wangfoong 10" in Hong Kong until the goods had been discharged from the vessel in Zhuhai. WANGFOONG SHIPPING and SHERRIFSVILLE shall, as prescribed in Article 48 of Maritime Code, properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried within the their respective periods of responsibility. The damage to the goods took place as the container fell into the sea due to the break of the steel cable on the way from Hong Kong to Zhuhai. The damage occurred within the period of responsibility of carriage of WANGFOONG SHIPPING and SHERRIFSVILLE who failed to bear the burden of proof to certify that the damage was resulted from any cause for which the carrier is entitled to exemption of liability as provided for in Article 51 of Maritime Code. Therefore, it should be deemed that WANGFOONG SHIPPING and SHERRIFSVILLE failed to perform the liability of properly and carefully loading, handling, stowing, carrying, keeping, caring for and discharging the goods carried as the carrier and the actual carrier respectively in the course of carriage, and thereby shall be liable for the loss resulted therefrom. Pursuant to the provisions of Article 63 of Maritime Code that "Where both the carrier and the actual carrier are liable for compensation, they shall jointly be liable within the scope of such liability", WANGFOONG SHIPPING and SHERRIFSVILLE shall be jointly and severally liable therefor. ZHUHAI KYODEN was the consignee of the straight bill of lading issued by WANGFOONG SHIPPING, and was entitled to take delivery of the goods thereunder. The goods fell into the sea in the course of carriage and sustained damage thereby. When the goods was salvaged and shipped back to Hong Kong, it was in effect that JOHNSON LAM TRADING CO. as entrusted by ZHUHAI KYODEN had taken delivery of all the damaged goods. Upon selling the damaged goods at a reduced price, as the consignee of the straight bill of lading, ZHUHAI KYODEN was entitled to indemnity for the loss of the damaged goods after deduction of the salvage value against WANGFOONG SHIPPING and SHERRIFSVILLE who were liable therefor. As the assignee of the right of subrogation, the plaintiff was also entitled to claim recovery for the loss of the damaged goods against WANGFOONG SHIPPING and SHERRIFSVILLE. The defense made by WANGFOONG SHIPPING and SHERRIFSVILLE that the carrier shall only indemnify the shipper for cargo damage/loss taking place during the period of responsibility of carriage and need not to indemnify the consignee, is groundless and shall not be supported. Hengzhun Surveyors & Adjusters, as entrusted by the plaintiff, issued the Final Adjust Report. The four defendants raised objection to the objectivity of the conclusion of the Final Adjust Report, but they did not furnish any evidence to refute it. Therefore, the evidential effectiveness of the Final Adjust Report shall be confirmed. In light of the invoice provided by ZHUHAI KYODEN, the Final Adjust Report confirmed the value of the damaged goods C&F Zhuhai as JPY42,272,253 which was calculated as RMB2,808,906.67 as per the JPY/RMB exchange rate of 100: 6.6448 of Bank of China on 18th February 2008 when the marine accident took place; JOHNSON LAM TRADING CO. bought the damaged goods at the ceiling price of HKD333,000, and effected the payment thereof on 2nd May 2008. Calculated as per the HKD/RMB exchange rate of 100:89.83, the salvage value of the goods amounted to RMB299,133.90. ZHUHAI KYODEN had effected the payment of the premium of the marine cargo insurance to the plaintiff in the amount of RMB2,473.51. Pursuant to the provisions of Paragraph 1 and Paragraph 2 of Article 55 of Maritime Code that "The amount of indemnity for the loss of the goods shall be calculated on the basis of the actual value of the goods so lost, while that for the damage to the goods shall be calculated on the basis of the difference between the values of the goods before and after the damage, or on the basis of the expenses for the repair. The actual value shall be the value of the goods at the time of shipment plus insurance and freight", the actual value of the damaged goods was RMB2,811,380.18 (RMB2,808,906.67 + RMB2,473.51). After deduction of the salvage value of RMB299,133.90, the remaining amount of the loss of the goods was RMB2,512,246.28. WANGFOONG SHIPPING and SHERRIFSVILLE shall effect the payment of RMB2,512,246.28 as well as the interest thereof, calculating from the next day the plaintiff effected the payment of indemnity to the defendant ZHUHAI KYODEN, i.e. 10th December 2008 till the date of payment as ascertained by this judgment and calculated as per the interest rate of working capital loan for enterprises over the corresponding period promulgated by Bank of China, to the plaintiff as indemnity for the captioned loss. The indemnity amount of RMB2,785,663.43 which the plaintiff had paid to ZHUHAI KYODEN and now claimed by the plaintiff exceeds the actual loss of the goods, and thereby the amount in excess shall not be supported. As the insurer, the plaintiff entrusted Delta Marine Services Ltd. and Hengzhun Surveyors & Adjusters with the survey and adjustment, and effected the payment of the survey fee in the amount HKD1,922 and the adjustment fee in the amount of RMB 62,460, for the purpose of investigating and ascertaining the nature and cause of the insured event, and the extent of damage. Pursuant to the provisions of Article 64 of Insurance Law that "The insurer shall bear all necessary and reasonable expenses incurred by the insurer and the insured for the purpose of investigating and ascertaining the nature and cause of the occurrence of the insured event, and the extent of loss or damage to the subject matter of the insurance", the survey fee and adjustment fee paid by the plaintiff shall be borne by himself. And such fees did not fall within the loss of the goods of the insured ZHUHAI KYODEN. Thus the plaintiff exercised the right of subrogation to claim for the captioned fees lacks foundation in fact and legal ground and therefore shall not be supported. WANGFOONG SHIPPING and SHERRIFSVILLE claimed that they were entitled to the limitation of liability for maritime claims which was in the amount of RMB5,155,677.55, and that the indemnity amount claimed by the plaintiff could only be paid from the limit of liability as per the ratio of the loss incurred by the accident. But the amount of the loss of the goods was only RMB2,512,246.28 which was yet to exceed the limit of liability exercised by WANGFOONG SHIPPING and SHERRIFSVILLE. WANGFOONG SHIPPING and SHERRIFSVILLE failed to bear the burden of proof to certify that except for the loss of the damaged goods, there was other loss incurred by the accident. Therefore, the claim by the plaintiff that the amount of indemnity could only be paid from the limit of liability as per the ratio of the loss incurred by the accident lacks foundation in fact and thereby shall not be supported. To sum up, pursuant to the provisions of Article 48, Paragraph 1 and Paragraph 2 of Article 55, and Article 63 of Maritime Code of the Peoples Republic of China, Paragraph1 of Article 60 and Article 64 of Insurance Law of the People's Republic of China as well as Article 93 of Special Maritime Procedure Law of the People's Republic of China, the judgment is as follows: 1. The defendants WANGFOONG SHIPPING and SHERRIFSVILLE CORPORATION shall jointly and severally indemnify the plaintiff PICC Property and Casualty Co. Ltd, Zhuhai Branch for the loss of the goods in the amount of RMB2,512,246.28 plus the interest thereof (calculating from 10th December 2008 till the date of payment ascertained by this judgment, and calculated as per the interest rate of working capital loan for enterprises over the corresponding period promulgated by Bank of China); 2. The litigation request made by the plaintiff PICC Property and Casualty Co. Ltd, Zhuhai branch against the defendants AMANO KAISO TEN. LTD and MITSUI O.S.K. LINES LTD is hereby rejected. 3. Other litigation request made by the plaintiff PICC Property and Casualty Co. Ltd, Zhuhai Branch is hereby rejected. The entertaining fee of this case is RMB 29,599, of which, RMB3,506.15 shall be borne by the plaintiff and RMB26,092.85 by WANGFOONG SHIPPING and SHERRIFSVILLE CORPORATION. As for the entertaining fee prepaid by the plaintiff, this court shall return RMB26,092.85. WANGFOONG SHIPPING and SHERRIFSVILLE CORPORATION shall pay the entertaining fee of RMB26,092.85 to this court. The above obligation of payment should be fulfilled within 10 days after this judgment goes into effect. In case the obligation of payment failed to be fulfilled within the period specified by this judgment, double interest on the debt for the belated payment shall be paid as per the provisions of Article 229 of Civil Procedure Law of the People's Republic of China. In case of dissatisfaction, the plaintiff may within 15 days after receipt of this judgment, and the defendant AMANO KAISO TEN. LTD, the defendant MITSUI O.S.K. LINES LTD, the defendant WANGFOONG SHIPPING, and the defendant SHERRIFSVILLE CORPORATION may within 30 days after receipt of this judgment, submit a statement of appeal to this court, and provide copies of the statement in the number of the other parties concerned, and file an appeal to Higher People's Court of Guangdong Province. Presiding Judge: Xiong Shaohui Acting Judge: Zhang Kexiong Acting Judge: Wu Wenjun 14th December 2009 (Sealed by Guangzhou Maritime Court) Clerk: Yang Qian This copy has been verified as identical with the original. The translation is provided by Huang
  • Case of dispute over contract of carriage of goods by sea filed by AIG UNION DESARROLLO S.A. against Guangzhou Ocean Shipping Company

    2015-07-13

    Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2008)GHFCZ No.101 Plaintiff: AIG UNION DESARROLLO S.A. Domicile: Calle Loma Linda No.265, San Salvador, El Salvador, C.A. Legal representative: Francisco P.R. De Sola, Director-General Agent ad litem: Sun Jingliang, attorney from Wang Jing & Co. Defendant: Guangzhou Ocean Shipping Company Domicile: 412 Huanshi Dong Lu, Guangzhou, People’s Republic of China. Legal representative: Xu Huixing, General Manager Agents ad Litem: Huang Hui, attorney from Huang & Huang Co. Law Firm. Zhang Jing, attorney from Huang & Huang Co. Law Firm. On 22nd February 2008, the Plaintiff AIG UNION DESARROLLO S.A. filed an action before this Court for a dispute arising from the contract of carriage of goods by sea with the Defendant Guangzhou Ocean Shipping Company. The Court, having entertained the case, proceeded to try it by a collegial panel according to law and summoned the parties twice to exchange evidence before the hearing on 4th November 2008 and 21st May 2009 respectively. On 21st May 2009, the Collegial Panel tried the case in public, the agent ad litem Sun Jingliang entrusted by the Plaintiff and the agents ad litem Huang Hui and Zhang Jing entrusted by the Defendant appeared before the Court. This case now has been concluded. The Plaintiff alleged that: In July 2001, M/V “Hengshan” owned by the Defendant were loaded on board three shipments insured by the Plaintiff, and issued B/L F-02, B/L S202 and B/L S203 respectively. In transit, the goods contained in B/L S202 and B/L S203 suffered a total loss, the Plaintiff therefore reimbursed the Insured in a sum of US$ 479,187 as well as a sum of US$ 1,365.41 for charges of cargo disposal. In the mean time, as per Adjustment Report issued by Richards Hogg Lindley, the Plaintiff paid a sum of US$ 14,638.57 to the Defendant for the goods under B/L F-02, as a contribution to the general average. The Defendant, by issuing bills of lading, have assumed the obligations as to diligently and properly stowage and care for the subject goods, and shall also delivered the goods as stated in the Bills of Lading completely and in good condition at the port of destination. The Defendant, due to its default of obligation, however has caused the holder of the Bills of Lading to suffer damages. As an underwriter for the subject goods, the Plaintiff, having reimbursed the holders of the Bills of Lading and paid the contribution to the general average, has already lawfully subrogated with the title to suit the Defendant acting as the carrier. The Plaintiff therefore requested the Collegial Panel to rule that: 1. the Defendant shall reimburse the Plaintiff in a sum of US$ 480,552.41 and the interests accrued thereon for the damaged goods [the damage shall be fixed in a sum of RMB3, 433,643.08 (as converted on 20th February 2008 as the fixing date and relevant interests shall be calculated as per short -term loan interest rates as published by the People’s Bank of China (6 months – 1year) from 5th April 2002 to the actual payment date];2. The Defendant shall reimburse the Plaintiff in a sum of US$ 14,638.57 and the interests accrued thereon for the contribution to general average [such loss shall be fixed in a sum of RMB 104,595.51(as converted on 20th February 2008 as the fixing date and relevant interests shall be calculated as per short-term loan interest rates as published by the People’s Bank of China (6 months- 1 year) from 13th July 2004 to the actual payment date]. 3.The Defendant shall burden the litigation costs as well as other relevant legal expenses. The Plaintiff provided following evidence within the time limit for adducing evidence: 1. Documents relevant to the insurance indemnity, to prove the settlement of the insurance claim; 2. The Fire Accident Report of M/V “Hengshan” (No.0110-131) issued by GWF Franklin S.A, to prove the fire accident occurred in No.2 cargo hold of M/V “Hengshan” and goods under B/L S202, B/L S203 suffered a total loss as well as the value of the goods; 3. Adjustment Report issued by Richards Hogg Lindley, to prove contribution of the goods under B/L F-02 to general average shall be 25.606% of the goods value; 4. the Charterparty dated 28th June 2001, to prove that there has been a charterparty concluded between the Defendant and the shipper, and the charterparty has been incorporated in the Bill of Lading; 5. The Harbor Entry Declaration Form,to prove the Defendant deliberately made false declaration of the quantity of the dangerous goods; 6. A List of Dangerous Goods, to prove the Defendant misrepresented the quantity of the dangerous goods and thus had fault in causing the fire accident. Among the evidence abovementioned, No.042866 Open Policy, No.035031 Insurance Certificate and Extension Clause contained in Evidence 1 and Evidence 3are authentic by verification with the original copies, others are duplicate copies. The Defendant argued that: 1. The Plaintiff is not a proper claimant in this Case and thus not entitled to file the action. The Insurance Certificate provided by the Plaintiff was unilaterally issued by itself, and was not an Insurance Contract. The Plaintiff was unable to provide evidence to prove the insured under the Insurance Policy was the exact lawful holder of the subject Bills of Lading or the exact consignee of the subject goods and who also had insurable interest over the goods when the incident occurred. 2. By bringing a time-barred claim, the Plaintiff has lost its right of winning the claim, the claim or the litigation requests therefore shall be rejected according to law. 3. The Plaintiff was unable to prove the total loss of the goods under in B/L S202 and B/L S203, who was therefore not entitled to claim for the cargo damage against the Defendant. 4. Assuming but not conceding that there was a real total loss of the goods under B/L S202 and B/L S203, the Carrier was entitled to exempt from the liability for fire and without taking any liability for compensation. 5. The general average was attributable to the fire which fell into the ambit of the exemptions the Carrier could enjoy, the Plaintiff was not entitled to claim for the contribution to general average according to law. The Defendant therefore requested the Collegial Panel to reject this lawsuit or claims filed by the Plaintiff, and ordered whom to bear the litigation costs. The Defendant provided following evidence within the time limit for procuring evidence: 1.Certificates of M/V “Hengshan” (Including: Cargo Ship Safety Construction Certificate, Cargo Ship Safety Equipment Certificate, International Oil Pollution Prevention Certificate, Classification Certificate for Hull, Classification Certificate of China Classification Society, Minimum Safe Manning Certificate) and Crew List for the case-involving voyages, Document of Compliance, Inspection Report issued by Classification Society, Inspection Report issued by authority etc, to prove the seaworthiness of the vessel; 2. Ship’s Log, to prove the Defendant has performed its obligations as to properly keep and care for the goods; 3. Cargo Inspection Report of M/V “Hengshan”, to prove no damage was found after the discharge of the goods under B/L S202 and B/L S203; 4. Inspection Certificate noted as Annex 6 of Adjustment Report issued by Richards Hogg Lindley (selected part), to prove the goods under B/L S202 and B/L S203 suffered no damage; 5. Inspection Certificate noted as Annex 3 of Adjustment Report issued by Richards Hogg Lindley, to prove the subject goods suffered no damage; 6. The Fire Accident Report of M/V “Hengshan” issued by Burgoyne Incorporate on 22nd August 2001, to prove there was no fault and negligence on the part of the Defendant. Evidence 2, 3, 6 are authentic by verification with the original copies, others are duplicate copies. Both parties submitted a selected work of IMDG Code 2000 Edition. In the process of examination of the evidence, the Defendant did not acknowledge the authenticity of the evidence which were provided as duplicate copies by the Plaintiff; as to the Adjustment Report issued by Richards Hogg Lindley, the Defendant did not acknowledge it by reason of want of notarization and certification but did acknowledge the expenses incurred by general average. Besides, the Defendant acknowledged the matters as to the transportation of the subject goods and the fire accident occurred during the transportation as asserted by the Plaintiff. The Plaintiff did not acknowledge the authenticity and relevance of certificates of M/V “Hengshan” as contained in Evidence 1, it however acknowledge other evidence provided by the Defendant. The Collegial Panel confirmed the evidence and facts as acknowledged by the parties and discussed the disputed ones hereinafter. Through investigation, the Collegial Panel ascertained the facts as follows: I. Matters as to cargo transportation and damage On 28th June 2001, MANUCHAR acting as a charterer concluded a GENCON FORM charterparty with the Defendant, the carrying vessel was M/V “Hengshan”. In July, M/V “Hengshan” loaded goods in Shanghai and Tianjin etc and thereafter proceeded to El Salvador etc. On 13th July, The Defendant issued the B/L S203, under which, the shipper is MANUCHAR Company, the consignee is “To Order” and the notify party is INDUSTIAS UNISOLA SA Company, the goods are 800 tons of sodium tripoliphosphate contained in 800 bags. On 14th July, the Defendant issued B/L S202, under which, the shipper is MANUCHAR Company, the consignee is to the order of LEVER El Salvador and the notify party is LEVER DE HONDURAS S.A., the goods are 200 tons of sodium tripoliphosphate II contained in 4000 bags, and each bag weighs 50 kilo grams. The port of Loading as stated in B/L S203 and B/L S202 is Shanghai, China. On 19th July, the Defendant issued B/L F-02, under which, the shipper is MANUCHAR Company, notify party is INDUSTIAS UNISOLA SA Company, the port of loading is Tianjin, the goods are 500 bags(each bag weighs 1 ton) of sodium sulfate. The port of destination as stated in all three Bills of Lading abovementioned is Acajutla, El Salvador and the Charterparty as dated 28th June 2001 were incorporated into these Bills of Lading. On 20th August 2001 at 14:25, M/V “Hengshan” arrived at Manzanillo, Mexico and started to discharge the goods at 17:00 on the same day. On 22nd August at 07:30, No.2 cargo hold was on fire and the vessel sailed to the anchorage with a view to extinguishing fire. On 24th August at 14:20, the fire was extinguished and explosive/poisonous gas was clear out in the No.2 cargo hold thereafter. On 31st August, the Defendant claimed for general average. On 20th September, discharge of the goods resumed. On 11th October, discharge of the goods was completed and the vessel departed from Manzanillo, Mexico and proceeded to the next port. On 30th January 2004, Richards Hogg Lindley issued the Adjustment Report as an adjustor for general average. The Defendant, despite without acknowledging the Report, actually cited the annex of the said Report to prove its claims and confirmed the loss incurred in general average. Thus, the said Report shall be admissible. According to the Report, the contribution of the goods noted in B/L F-02 for general average shall be subject to 25.606% of their value. The Plaintiff has made a payment to the Adjustor in a sum of US $14,638.57 as a contribution to general average for the insured INDUSTRAS UNISOLA S.A. as noted in B/L F-02. The Defendant has acknowledged receipt of the payment via the Adjustor. Having been shipped to the port of Acajulta, El Salvador, the subject goods were inspected by GWF Franklin S.A. and who also issued the Fire Accident Report of M/V “Hengshan” (No.0110-131) on 22nd February 2002. The Defendant did not acknowledge the said Report for the reason that the originals is not provided for checking. The Defendant provided the Cargo Inspection Report of M/V “Hengshan” and annex of the Adjustment Report as evidence to the contrary. The Collegial Panel is of the opinion that from their contents, all of three Reports describe the goods are in apparent good condition except as are smoked and tainted. The Inspection Report and the annex of the Adjustment Report provided by the Defendant do not specify matters as to whether the smoked and tainted goods would have an effect on their use as well as how to deal with the problems etc, while the Inspection Report provided by the Plaintiff further specifies that the goods are deemed to be a constructive total loss by reason of the uselessness of the goods, parts of the facts of three Reports could be mutually proved and the contents noted therein are not contradicted with each other. Thus, the Inspection Report and the annex of the Adjustment Report provided by the Plaintiff shall be admissible and the contents noted therein shall be confirmed. It is alleged from the Inspection Report provided by the Defendant that the surveyor carried out a full inspection of discharge of the goods on the scene on 18th October 2001, it has been found that the goods were free from substantial damage except as were tainted, by which it drew a conclusion that the goods, having been discharged and inspected, appeared to be in apparent good condition and without any indication that they had been damaged except as were tainted. According to the Adjustment Report, there were unknown residues covering the surface of the packing bag on the top tier of No.2 Bottom Cargo Hold, and the goods contained in open packing bags may be contaminated by CO2 or other gas during the fire incident, but the condition of the content will be determined by an expert. Inspector did not determine in details the damages that each of the cargos stowed in No. 2 Cargo Hold suffered, and this shall be done by the individual Consignee when they received the cargo at their installation. According to the Adjustment Report of GWF Franklin S.A. submitted by the Plaintiff, in response to the application of the Plaintiff, GWF Franklin S.A. has carried out inspection on the goods in warehouse No.1 in the Port of Acajutla in Salvador on 24 October 2001. The vessel arrived on 16 October 2001 and the unloading of the goods was finished at 1135 on 22 October 2001. In accordance with the stowage plan, S202 and S202 Shipments were loaded in the bottom of No.2 Cargo Hold; F-02 Shipment was on the upper-deck of Hold 1. Paraffin and other goods in Hold 2 were loaded on the upper-deck; the first shipment, S203 shipment was loaded in the bottom of Hold 2, and the third shipment, i.e. S202 shipment, was loaded on the top of S203 shipment. According to relevant information, fire broke out in Hold 2, which is the same as the inspection results of surveyors, but it seemed that the fire broke out on the upper-deck of Hold 2. Shipments of S203 and S202 were undamaged in their outer appearance but have suffered from fumigation and some of them were broken. Because there was inconsistence in the fluctuation of the source of samples, observed status of the goods and unexplainable test results in the tests carried out in the independent lab, the test results provided by the consignee shall be most accurate. According to the test results provided by the consignee, the particle size and density of the goods do not complied with the specifications. On 11 February 2002, representatives of the consignee LEVER Salvador Company, INDUSTIAS UNISOLA S.A. and the Plaintiff held a meeting in a processing factory in Salvador, and the Consignee alleged that the smoky smell of the goods would be the major problem for the use of the goods because the subject goods would be used as the basic products for manufacturing detergent. Upon estimation, the fees for reprocessing,not including additional charges or any other charges during the transportation of the goods, is about USD 447,100. In consideration of all aspects of this claim, the Inspection Office determined shipments S203 and S202 have constituted total loss. The total value of CIF price on the invoices of the goods under B/L S203 and B/L S202 are USD 386,400 and USD 97,600 respectively, and the total amount is USD 484,000. Because shipment F-02 was loaded in Hold 1, goods were not influenced by the fire and this shipment was delivered at port. In addition, although the Plaintiff did not recognize the evidence, such as ship’s certificates submitted by the Defendant on the ground that these materials are just photocopies, however, these certificates and other evidence are in consistent and mutual proving, therefore they should be adopted in the absence of evidence to the contrary. Upon investigation, M/V “Hengshan” owned by the Defendant is a steel multifunctional general cargo vessel built in 1983 with the vessel official number of 84D1113, IMO number of 8225357, total tonnage of 12,448 and net tonnage of 6548. Both the Ship Minimum Safety Manning Certificate and Cargo Ship Safety Equipment Certificate of the vessel were still valid at the time when the accidence occurred and the subject voyage conforms to the requirement of minimum safe manning. China Classification Society has also issued an Inspection Report indicating that, upon the inspection by the Company certified by the member society of the International Association of Classification Societies, the status of the carbon dioxide system on the vessel was found to be satisfactory. Article 12 of the Charter Party dated 28 June 2001 stipulates that, the Defendant guarantees the vessel can load goods including chemicals, steels and paraffins in an total amount of at least 12,5000 metric tons when it is full loaded, and the deck of the vessel can load up to 230 tons of dangerous goods and cargo holds can load up to 1000 metric tons of dangerous goods; Article 28 stipulates that, the Captain shall be responsible for the stowage plan and supervision of the process of the transshipping, stowing and unloading of the goods. II.Cause for the Occurrence of Cargo Damage The Defendant insisted it has fulfilled its obligations as a carrier according to the Inspection Report of the Fire Incident and Log Book of M/V “Hengshan” issued by Burgoyne Incorporate. The contents of the Log Book and the Report are consistent. According to the Report, the handling of the fire incident and the investigation on the cause of the incident were carried out under the instruction of the Protection and Indemnity Association of the vessel. This vessel is of the length of 157.64 meters, breath of 27.60 meters, and the breath to the upper deck of 12.995 meters. There are altogether 4 cargo holds on the vessel with each hold having a tween deck hold and a bottom hold. The tween deck hold of Hold 2 was separated into left and right sections with the capacities of 1608.3 cubic meters and 1669.8 cubic meters respectively, and the capacity of the bottom hold is 4729 cubic meters. The cargo spaces of the vessel were protected by the total flooding CO2 fire extinguishing system with the installation of slot-in smoke detectors at the same time. The fire incident of M/V “Hengshan” occurred in MANZANILLO of Mexico at the voyage of NO.26, which was right within the time of the unloading of the goods loaded from China. Details of loading and unloading of the cargos and the observations during the fire incident from crew were obtained from the inquiries from different crew members. The subject voyage loaded goods in Shanghai on 13 July and the goods loaded into Hold 2 at the beginning were sodium tripoliphosphate for the shipment to Guayaquil and Acajutla, goods loaded later on the voyage were cascorbic acid, Silicon-manganese and other sodium tripoliphosphate. Later, paraffins were loaded into Hold 2. tween deck hold of Hold 2 started to load goods on 18 July. Several bags of paraffins were loaded in at first, then several drums of Sodium Hydrosulphit were loaded, at last many bags of paraffins and lead ingots were loaded. On 21 July, paraffins were loaded into tween deck hold of Hold 2 in Dalian for the shipment to MANZANILLO. During the voyage, the sea was mild, and ventilation doors of all Holds were open, at the same time, the plenum system was also used for the ventilation of the cargo holds. During the voyage, no one has ever entered into the deck or bottom hold of Hold 2. The smoke detecting system installed in the bridge was kept on working status with a checking for every 4 hours. During the unloading of goods, expect for the standard supervision, no crew has ever entered into the cargo space or participated in the unloading operation. The unloading of the goods of Hold 2 started from unloading paraffins in bags and this unloading continued to 0730 on 22 August when the fire incident was detected for the first time. It was said that no other cargo has been unloaded from Hold 2 before the occurrence of the fire incident. Before the occurrence of the fire incident, there was no abnormal smell during the unloading of the goods. The unloading of paraffins continued to 0700 on 22 August. At 0730 of 22 August, crew member on watch started to patrol and took out the headlight from the tween deck hold of Hold 2 when he found that there was a ball of red light in the bottom hold from the joint of the hatch cover of the second floor tween deck hold with a little smoke. Chief engineer immediately grasp a dry powder fire extinguisher of 6 kilogrammes from the storage room of the boatswain and found that there was a small flame coming out from the joint of the hatch cover of the second floor tween deck hold. It was confirmed that the position of the flame was on the right front of the tween deck hold, a little ahead from the place where drums of Sodium Hydrosulphit were placed. Fire extinguisher did not work at that time and later the hatch cover and the ventilation system were closed. Four fire hoses were connected to cool down the edge of the hatch cover on the right. Later, Co2 was injected into Hold 2. Shortly after the occurrence of the fire incident, several towages approached the vessel and used fire monitors to further cool down the hatch cover. The vessel was shift to berth at anchorage at around 1333. The conclusion is the fire incident was originated at Hold 2 and the goods involved included Sodium Hydrosulphit in drums and paraffins in bags. Crew members on the vessel injected Co2 through the closed hatch cover and took measures such as cooling the edge of hatch cover by using fire hoses, successfully taking control of the fire. Later, inert gas generator was used to purify the toxic and flammable gas with the holds. After that, cargo holds were opened and the unloading of goods started. Investigation shows that the fire incident originated on top of the goods at the right front of the bottom hold and at the very beginning, the flame was found in the gap at the joint of the hatch cover on the deck of second floor in the right front of the tween deck hold. According to the Inspection, no equipment on the vessel within the area where the fire incident originated shall be responsible for the fire incident. No direct tangible evidence proving the specific reasons for the occurrence of the fire incident has been found. The Investigation indicated that the fire incident was not caused by any defect or any fault of any system or equipment onboard the vessel, and there was neither any evidence showing the fire incident was caused by any conduct of any crew member. However, through the method of exclusion, only the following possibilities might be the cause of the fire incident. The occurrence of the fire incident seemed to have connection with the damage or spillage of the Sodium Hydrosulphit in drums during the unloading in MANZANILLO, or flammable matters such as cigarette carelessly disposed by unloading workmen, or hot particles produced during the exhaust of diesel-driven forklift used by unloading workmen for the unloading of goods. From the current stage, the most possible cause of the fire would be the spillage and fire of Sodium Hydrosulphit, because it was very difficult for the lit cigarette or hor particles to cause the bags packing paraffin to catch fire. The Plaintiff did not recognize the reasons for the fire incident. The Plaintiff alleged that, the Defendant deliberately made false declaration with the port authority of Manzanillo with regard to the quantity of dangerous cargo carried onboard, which led to the fact that the port authority and discharging Company failed to supervise or handle properly the discharging as they should do and the stowage of the dangerous cargo was inappropriate, which do not comply with the requirement of International Maritime Dangerous Goods Code (2000), the lack of fire extinguishing equipment on the vessel led to the loss of goods. The Plaintiff therefore submitted the photocopies of the Application Form for Visiting Ships filed with the SECRETARIA DE COMUNICACIONE Y TRANSPORTES of Manzanillo port in Mexico. The Defendant did not recognize this evidence. The Collegiate Bench hold that, on the photocopy of Application for Visiting Ships, the ship’s name has been obviously revised (from HEGSHAN to HENG SHAN), the administration number of the ship is not consistent with the one on the certificate provided by the Defendant, and the signature and seal of the captain is illegible and has no corresponding supporting evidence, thus shall not be adopted as evidence. III.Situation concerning the Sales and Insurance of the Cargo The 042866 open policy, 035031 insurance certificate and extension clauses issued as the documents of insurance settlement for claims rendered by the Plaintiff are original copies, and other evidence such invoices issued by MANUCHAR Company are photocopies. But matters of transportation stated on the invoices are consistent with the relevant notes on the bills of lading, and the open policy and insurance certificate are mutual proving, thus these evidence shall be adopted in the absence of evidence to the contrary. Basic on the above facts, it was found that: Goods under bill of lading of S202 were purchased by LEVER Honduras Company from Belgium MANUCHAR Company with CFR Allah Hu Tel price, in an total amount of USD 97,600. LEVER El Salvador bought “Transport of Merchandise Insurance, Export-Import and Internal Transport” from the Plaintiff., and the then Plaintiff issued a Insurance Certificate numbered as 035351 to the insured LEVER El Salvador ON 20 November 2001, which was one of the insurances under the open policy numbered as 044479. According to the notes on the Certificate of Insurance, shipping units of the goods included many suppliers, and the goods were delivered to LEVER El Salvador to be carried by MV “Hengshan” from Salvador to Central America and Panama. As per the Declaration dated on 31 October 2001, the responsibility period is Warehouse/Warehouse. As indicated on the Declaration, the subject cargo was raw materials bought by LEVER Salvador from affiliated companies in October 2001. The Plaintiff claimed that this shipment was purchased by LEVER El Salvador from LEVER Honduras. Because the Insured did not know about the damage to the cargo until the cargo was delivered to Salvador in October 2001, thus classified the cargo into the Declaration of October. In April 2002, the Plaintiff, as per the insurance contract, pay USD 976,624.00 to the insured, El Salvador LEVER Company as the insurance indemnity. The insured issued a receipt confirming that it had received the above amount. Goods S203 with a value of USD386, 400.00 were bought by INDUSTRIAS UNISOLA SA from Belgium seller MANUCHAR at C&F Acajutla Salvador. GRUPO UNISOLA bought “Transport of Merchandise Insurance, Export-Import and Internal Transport” from the Plaintiff. The insured was GRUPO UNISOLA and its affiliated companies in Central America. The Plaintiff thereby issued open policy No. DM-42866. The risks covered include the damage to goods owned, kept, supervised or controlled by the insured during the transportation. The responsibility period is Warehouse/Warehouse. The insurance is valid from 1 May 2001 to 30 April 2002. The insured is required to make monthly declaration of the value and movement of the goods. Moreover, the deductible amount for loss of marine unfrozen goods is 1% of goods value. The Plaintiff issued an Insurance Certificate numbered as 035031 to the insured on 25 September 2001. According to the Insurance Certificate, the Insured was INDUSTIAS UNISOLA S.A., and shipping units of cargo included many suppliers , cargo to be delivered to INDUSTIAS UNISOLA S.A. to be carried by MV “Hengshan” for shipment from America, Mexico etc. to Salvador and other places as per the Declaration dated on 31 August 2001. In the Declaration Form dated August 2001, the “place of shipment” was “Belgium”. The Plaintiff alleged that it is because the seller was a Belgium Company and it makes no difference with respect to coverage under open insurance. In April 2002, the Plaintiff, as per the insurance contract, paid USD382, 563.00 to the insured, INDUSTIAS UNISOLA SA, as insurance indemnity. The insured issued a Receipt confirming that it had received the above amount. In addition, both the Plaintiff and the Defendant confirmed that the delivery day of the damaged goods shall be dated 29 November 2001 but could not confirm the termination date of the general average adjustment. The Plaintiff alleged that it has filed a lawsuit with Panama No.2 Maritime Court against the Defendant dated 15 October 2002. And on October 17th the Defendant provided a guarantee to the said court via its P&I club. On 22 May 2003, Panama No.2 Maritime Court held that this Court shall have jurisdiction over the dispute, and decided to suspend the litigant action. Since the Plaintiff could not submit evidences to prove the facts, the Defendant did not approve the said statement. In the process of litigation, the Plaintiff filed an application that this Court should make the adjudication on the limitations of action alone, but the defendant objected that. Both parties agreed that the laws of Chinese Mainland shall apply to the handling of the subject disputes. The members of the collegial panel agreed that it is a case concerning disputes over the contract of carriage of goods by sea which is filed by the insured in performing its subrogation right as per the B/L after the insurer paid the indemnity for the loss of goods and the general average adjustment charges according to the insurance contract. The Plaintiff is an El Salvador Company and the goods involved were transported from China mainland to El Salvador and other place which makes this case contains the factor concerning foreign affairs. The Plaintiff instituted an action in this Court. Since the maritime court has specific jurisdiction over the dispute concerning the contract of carriage of good by sea, the place of departure in the contract involved and the place where the Defendant has its domicile are under this Court’s jurisdiction, this Court shall have the jurisdiction over this case in accordance with Paragraph 2 of Clause 2 in Article 6 of The Special Maritime Procedure Law of the People’s Republic of China and Article 28 of the Civil Procedure Law of the People’s Republic of China. During the court hearing, parties concerned agreed that the disputes shall be handled pursuant to the laws of Chinese Mainland. And according to Article 269 of the Maritime Code of the People’s Republic of China, the contract involved shall be handled apply to the laws of Chinese Mainland. I.On the Plaintiff’s Subrogation Right and the Limitations of Action 1.On the Plaintiff’s Subrogation Right The Plaintiff, as the insurer of the carriage of goods involved, obtained the subrogation right after paying insurance indemnity for the loss of goods involved to the insured, El Salvador LEVER Company and INDUSTIAS UNISOLA SA, thus is entitled to perform the subrogation right for the said two companies according to law. The collegial panel heard the case and focused on the carriage contract relationship between the insured and the carrier alone. The matter whether the consignee of the goods involved has insurable interest in the goods or not during the insured incident, goes beyond the cognizance of this Court in hearing the case, thus shall not be heard. In accordance with the B/L and Charter Party, the Defendant is the carrier of the carriage involved; the consignee under B/L S202 is to the order of El Salvador LEVER Company; the consignee under B/L S203 and F-02 is “To Order” and the notify parties under the three B/Ls are El Salvador LEVER Company, INDUSTRAS UNISOLA S.A.. Though, the B/L involved submitted by the Plaintiff has no terms and conditions on the reverse, there are three copies of Insurance Certificate referred to the contents of the B/L which proves that the aforesaid two companies are the consignees of the two shipments of goods involved carried by the Defendant. The Cargo Damage Survey Report issued by GWF Franklin S.A. also shows that the said two companies participated in the settlement of cargo damage as consignees. These facts preliminarily prove that El Salvador Company and INDUSTRAS UNISOLA S.A. are the lawful holders of the three B/Ls involved. The Defendant, as the carrier of the carriage of goods involved, shall bear the responsibility of making delivery and hold the relevant evidences for the delivery. In case the Defendant fails to provide evidence to the contrary, the collegial panel may determine that the consignee under the B/L S202 involved in the subject case is El Salvador LEVER Company, and the consignee under the B/L S203, F-02 is INDUSTRAS UNISOLA S.A.. The Plaintiff, performing the subrogation right for the three consignees of the said three shipments of goods, is entitled to claim against the Defendant in accordance with the B/L. And the Defendant’s defense for the said claim shall be dismissed. 2.On the time bar issue According to the clause of Article 257 of the Maritime Code of the People’s Republic of China, the limitation of action for the Plaintiff to institute an action with respect to contract concerning carriage goods by sea in performing the subrogation right for the consignee according to the B/L shall be 1 year, calculated from the date when carrier make or shall make the delivery. In the subject case, the parties concerned confirmed that the delivery day of the goods under the B/L S202 and S203 shall be on 29 November 2001, and the limitation of action shall be calculated from that day on. Therefore, the limitation of action for the Plaintiff to bring a claim against the carrier with regard to the alleged loss of goods under the B/L S202 and S203 shall be expired on 29 November 2002. The Plaintiff has already paid the general average adjustment charges, and according to Article 263 of the Maritime Code of the People’s Republic of China, the limitation of action for the Plaintiff to pursue recovery from the Defendant in performing its subrogation right for the insured shall be 1 year calculated from the termination date of the adjustment. Since the Plaintiff and the Defendant could not confirm the accurate termination date of the adjustment and the adjustment report shall be issued after completing the adjustment, it is reasonable to calculate the time limit from the day of issuing the adjustment report, which is 30 January 2004. And the limitation of action shall be expired on 30 January 2005. On 22 February 2008, the Plaintiff brought a lawsuit to this Court to make claims against the Defendant for the loss of goods and the general average adjustment charges, and such action were filed after the expiration of the limitation of action. The Plaintiff could not provide evidence to prove that this case has the grounds for suspension and discontinuance as prescribed in Article 267 of the Maritime Code of the People’s Republic of China. The claims brought by the Plaintiff with respect to the loss of goods involved in the case and the apportionment expense after the general average adjustment were filed after the expiration of the limitation period of action, and they should be dismissed according to law. II.Other Issues disputed over by the Parties concerned 1.Whether the goods under the B/L S202 and S203 should be determined as actual total loss or not? The Inspection Report issued by GWF Franklin S.A. and the Adjustment Report submitted by the Plaintiff for proving total loss of the goods, the Cargo Inspection Report of M/V “Hengshan” and the Fire Accident Report submitted by the Defendant conform to each other in recording the cargo transportation, fire accident and the fumigation to goods. The Inspection Report issued by GWF Franklin further shows that the consignee alleged that the fumigation is the major issue because the goods involved will be used as raw materials for detergent. In consideration of the reprocessing expense (not including the surcharge during the transportation of the goods and other expenses) and the various aspects of this claim, the S203 Shipment and the S202 Shipment shall be determined as constructive total loss. In case the evidence submitted by the Defendant could not refute the Inspection Report issued by GWF Franklin S.A., the collegial panel may determined the goods involved as constructive total loss due to fumigation after the fire accident in accordance with the said report. 2.On Causes of the Loss of Goods under B/L S202 and S203 Among the reports submitted by the Plaintiff and the Defendant, only the Fire Accident Report of M/V “Hengshan” issued by Burgoyne Incorporate submitted by the Defendant has analyzed the causes of cargo loss. In case the Plaintiff could not present evidence to the contrary, the collegial panel may determine the cause of cargo loss according to the analysis in the said report, i.e. the most probable reason for causing the damage of goods is the overflow of Sodium Hydrosulphit, which then caused the fire accident. 3.Whether the Defendant, as carrier, failed to provide a vessel both sea-worthy and cargo-worthy, to stow and discharge goods properly and prudently or not? Whether the Defendant could be entitled for fire exemption with regard to the loss caused by the fire accident or not? The vessel certifications submitted by the Defendant show that the vessel involved was sea-worthy and cargo-worthy before and at the beginning of the voyage, and manned with enough crew members. The vessel was also equipped with carbon dioxide extinguisher system which is qualified by classification society. According to International Maritime Dangerous Goods Code (2000), Sodium Hydrosulphit belongs to class 4.2 dangerous goods, and Silicon-manganese belongs to class 4.3 dangerous goods. The two kinds of dangerous goods shall be kept in cool condition during transportation, and be stowed “far away” from heat sources, i.e. they can be stowed in one hold, but the vertical distance between the two shall be no less than 3 meters. During the voyage involved, the two shipments of Sodium Hydrosulphit and Silicon-manganese were stowed separately in the tween deck and the lower hold in Hold 2 which did not violated the stowage provisions of International Maritime Dangerous Goods Code (2000). According to the logbook and the Fire Accident Report of M/V “Hengshan” issued by Burgoyne Incorporate, during the fire accident and afterward, the Defendant has taken rational measures to put out the fire, and adopted proper measures like: ventilation, air change, cleaning, and elimination of smell and so on, to take cake of the goods properly and prudently. The Plaintiff alleged that the damage of goods was caused due to the Defendant’s failure to declare faithfully the actual condition of the dangerous goods on board to the port authority of Manzanillo, Mexico, which makes the port authority and the discharge Company failed to supervise and handle the discharging of goods properly as it should be. However, the factual ground of such alleged causal relationship is insufficient and thus could not be adopted by this court. And the fumigation is an inevitable result of the fire accident. The carrier shall not be liable for the loss of the goods caused by fumigation after a fire accident due to the fault not attributable to the Defendant itself in accordance with Paragraph 2 of Clause 1 in Article 51 of the Maritime Code of the People’s Republic of China. To sum up, this court rendered the following judgment in accordance with Paragraph 2 of Clause 1 in Article 51, Clause 1 of Article 257 and Article 263 of the Maritime Code of the People’s Republic of China: The litigation requests of the Plaintiff, AIG UNIION DESARROLLO S.A, shall be dismissed. The court fee in amount of RMB44, 712 shall be borne by the Plaintiff. In case any party is not satisfied with this judgment, the Plaintiff should, within 30 days after this judgment is served, while the Defendant should, within 15 days after this judgment is served, submit a statement of appeal to this court so as to make appeal with the Higher People’s Court of Guangdong Province. Presiding Judge: Song Weili Acting Judge: Song Ruiqiu Acting Judge: Chang Weiping November 2, 2010 (Sealed by Guangzhou Maritime Court) Court Clerk: Zhu Mingfang This copy has been verified as identical with the original. The translation is provided by Wang Jing & CO.
A total of 9pages,page1.