Guangzhou Maritime Court of the P.R.C Civil Judgment (2008) Guang Hai Fa Chu Zi No.578 Plaintiff: PICC Property and Casualty Company Limited, Guangzhou Branch Domicile: West side of Fl.1, Fl.2, 6, 14 & 22, No.303, 305 Guangzhou Avenue Central., Yuexiu District, Guangzhou, Guangdong Person in charge: Duan Anhong, 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: Elite Master International Limited, Shenzhen Branch Domicile: 404 Shuiwan Tower, Taizi Road, Shekou, Nanshan District, Shenzhen, Guangdong Defendant: ORIENT OVERSEAS CONTAINER LINE LIMITED Domicile: Fl. 33, Harbor Center, No.25 Harbor Road, Hong Kong S.A.R. Legal representative: Wang Decheng, director Agent ad litem: Cao Yanghui, lawyer of Wang Jing & Co. Law Firm Agent ad litem: Wu Kai, 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 Defendant: SHERRIFSVILLE CORPORATION Domicile: Rm. 401, Tung Ning Building, No. 249-253 Des Voeux Road Central, Hong Kong Legal representative: Situ Yan, director Agent ad litem of the above two defendants: Huang Hui, lawyer of Huang & Huang Co. Law Firm Agent ad litem of the above two defendants: Zhang Jing, lawyer of Huang & Huang Co. Law Firm With respect to the case arising from dispute over contract of carriage of goods by sea filed by the plaintiff PICC Property and Casualty Company Limited, Guangzhou Branch against the defendant Elite Master International Limited, Shenzhen Branch (hereinafter referred to as Elite Shenzhen), ORIENT OVERSEAS CONTAINER LINE LIMITED (hereinafter referred to as ORIENT OVERSEAS), WANGFOONG SHIPPING LIMITED (hereinafter referred to as WANGFOONG SHIPPING) and SHERRIFSVILLE CORPORATION, the plaintiff instituted an action to this court on 27th November 2008. After accepting this case on 1st December, this court organized the collegial panel consisting of the judge Xu Yuanping, Deng Jinbiao and the deputy judge Li Mintao to try the case in accordance with the law. On 2nd June 2009, this court summoned all parties concerned to exchange evidences before hearing and held an open trial. Qiu Biaoshan, the agent ad litem of the plaintiff PICC Guangzhou, Cao Yanghui and Wu Kai, the agents ad litem of the defendant ORIENT OVERSEAS, Huang Hui and Zhang Jing, the agents ad litem jointly appointed by the defendant WANGFOONG SHIPPING and SHERRIFSVILLE CORPORATION attended the hearing. The defendant Elite Shenzhen did not attend the hearing after being summoned by this court by ways of public announcement. This court tried the case by default of Elite Shenzhen. The subject case has now been concluded. The plaintiff PICC Guangzhou alleged that in February 2008, Jinpin Electrical Company Ltd. Zhuhai S.E.Z. (hereinafter referred to as “Jinpin Electrical”) purchased 5,000 pieces of plasma module from LG Electronics (Nanjing) Plasma Co., Ltd. (hereinafter referred to as “LG Electronics”), which was transported from Nanjing to Zhuhai via Hongkong by waterway. LG Electronics covered cargo transportation insurance for the subject goods and the plaintiff issued therefor an insurance policy to cover the subject goods in line with the Institute Cargo Clauses (A). As the shipper, LG Electronics entrusted Elite Shenzhen to transport the foregoing goods from Hongkong to Zhuhai by means of CY-CY. Elite Shenzhen accepted the entrustment and issued B/L No.EM08020006 in replenishment on 19th February. Through its Hongkong agent WORLD CHANCE SHIPPING LTD (hereinafter referred to as WORLD CHANCE), Elite Shenzhen entrusted the actual transportation of the subject goods to ORIENT OVERSEAS who signed and issued B/L No.OOLU3030344080 on 17th February. After accepting the entrustment, ORIENT OVERSEAS entrusted the actual transportation of the subject goods to WANGFOONG SHIPPING, who, after receiving the goods and issuing the B/L, loaded the subject goods on board “WANGFOONG 10” owned by SHERRIFSVILLE CORPORATION for shipment from Hongkong to Zhuhai. On 18th February, while “WANGFOONG 10” was sailing in the Hongkong waters, 3 out of the 6 loaded containers fell overboard and the rest 3 containers were damaged due to contact and crush. As the cargo insurer, the plaintiff paid an insurance indemnity of USD 1,115,419.02 to the insured LG Electronics as agreed in the insurance contract and obtained the subrogation right in accordance with the law. Pursuant to relevant provisions in Maritime Code of the P.R.C, Elite Shenzhen, as the carrier, ORIENT OVERSEAS, WANGFOONG SHIPPING and SHERRIFSVILLE CORPORATION, as the actual carrier, shall be jointly and severally liable for the subject cargo damage. The plaintiff requested the court to adjudge the four defendants to be jointly and severally liable, to compensate the plaintiff USD1,115,419.02, HKD3,046, RMB8,000 and the interests incurred thereof for cargo damage and bear the litigation fee for the subject case. The plaintiff submitted the following evidential documents within the time limit for burden of proof: 1. Insurance Policy and Cargo Transportation Insurance Clauses; 2. Payment Voucher; 3. Certificate for Rejection of Goods; 4. Bill for Survey Fees, Debit Note, Bank Notice of Expenditure, Invoice for Survey Fees and Bank Remittance Slip; 5. Subrogation Form; 6. Purchase Order and Invoice; 7. Delivery Note and Packing List; 8. B/L No.EM08020006; 9. B/L No.OOLU3030344080; 10. Accident Report issued by WANGFOONG TRANSPORTATION LIMITED (hereinafter referred to as WANGFOONG TRANSPORTATION); 11. Claim letter; 12. Survey Report; 13. Appraisal Certificate on Cargo Damage, Business License of the survey institute and Qualification Certificate of the surveyor; 14. Retrofit Survey Report; 15. Tender Form. After the court hearing, the plaintiff supplemented the certificate concerning “WANGFOONG 10” issued by the MSA of Hongkong S.A.R. The defendant Elite Shenzhen neither attended the court hearing to make defense, nor submitted any evidences. The defendant ORIENT OVERSEAS alleged that: 1. the plaintiff shall not be entitled the right to sue. Since the insured LG Electronics did not have the right to claim for compensation against ORIENT OVERSEAS, the plaintiff shall not be entitled the right to claim for compensation against ORIENT OVERSEAS after paying LG Electronics the insurance indemnity. Elite Shenzhen, not being the agent of ORIENT OVERSEAS, did not issue the subject B/L stating LG Electronics as the shipper for and on behalf of ORIENT OVERSEAS. ORIENT OVERSEAS did not accept the entrustment of the insured LG Electronics to transport the subject goods and the shipper and consignee stated in the subject B/L were not LG Electronics. LG Electronics, not being the shipper, consignee or notify party in the B/L, has no transportation contractual relationship with ORIENT OVERSEAS and thus could not exercise the right to claim for compensation as per the contractual relationship. The subject B/L issued by ORIENT OVERSEAS was a straight B/L stating Jinpin Electrical as the consignee, to whom the rights and obligations of the shipper under the transportation contract evidenced by such B/L has been transferred, thus LG Electronics shall not be entitled to claim for compensation by right of the B/L issued by ORIENT OVERSEAS. 2. ORIENT OVERSEAS was not the actual carrier for the subject transportation. ORIENT OVERSEAS was entrusted by WORLD CHANCE rather than the carrier Elite Shenzhen to transport the goods and then ORIENT OVERSEAS entrusted WANGFOONG SHIPPING with the actual transportation of the subject goods. ORIENT OVERSEAS did not confirm with the provisions on actual carrier as stipulated in the Maritime Code of the P.R.C and hence is not the actual carrier in the subject transportation and shall not bear the compensation liabilities for the subject cargo damage. 3. The subject cargo loss was caused by the fault of LG Electronics, for which the defendant ORIENT OVERSEAS shall not be liable. The purchase contract of the subject goods did not reach any agreement on rejection of goods, and the Chinese laws or international conventions did not have any provisions on rejection of goods, either. In the subject case, a majority of the goods remained intact, as a result, LG Electronics shouldn’t have accepted the goods rejected by Jinpin Electrical but should collect the cargo payment through the bank, otherwise, it shall be liable for all the legal consequences incurred therefrom. 4. It was stated clearly in the subject insurance policy that the premium was 10% higher than the actual cargo value, and the compensation amount claimed by the plaintiff exceeded the actual cargo loss, thus as to the part of insurance indemnity that exceeded the cargo value, the plaintiff shall not be entitled to subrogation right. 5. Pursuant to the B/L issued by ORIENT OVERSEAS, ORIENT OVERSEAS shall be entitled to limitation of liabilities for compensating the subject cargo damage within the amount of USD100,080. However, if calculated as per relevant provisions in Maritime Code of the P.R.C, the limitation of liabilities is USD407,928.12. The defendant requested the court to reject the claims filed by the plaintiff PICC Guangzhou. The defendant ORIENT OVERSEAS submitted the following evidential documents within the time limit for evidence submission: 1. copy of the B/L No.OOLU3030344080; 2. copy of the B/L No.WF5008033031; 3. accident report issued by WANGFOONG TRANSPORTATION. After the court trial, copy of B/L No.OOLU30105717060, hard copy of the email concerning the shipping order sent by ORIENT OVERSEAS CONTAINER LINE (H.K.) LIMITED (hereinafter referred to as ORIENT OVERSEAS (H.K.) to WANGFOONG SHIPPING, hard copy of the email concerning confirmation on shipping order sent by WANGFOONG TRANSPORTATION to ORIENT OVERSEAS (H.K.), hard copy of the email sent by WANGFOONG TRANSPORTATION to ORIENT OVERSEAS (H.K.) concerning packing list, list of containers not falling into sea and containers retrieved from sea as well as the Notarial Certificate certifying the above emails issued by Guangzhou Notary Public. The defendant WANGFOONG SHIPPING rebutted that: 1.Haven’t obtained the legal subrogation right, the plaintiff was not the qualified litigant in the subject case and shall not be entitled the right to sue. Since the subject goods were sold by the insured LG Electronics to Jinpin Electrical, after LG Electronics delivered such goods to Elite Shenzhen for shipment, the ownership of the goods and risks of loss and damage were transferred to Jinpin Electrical, therefore, at the occurrence of the subject insurance accident, LG Electronics could no longer benefit from the insurance interest of the said goods. The plaintiff mistakenly paid the insurance indemnity to the insured and thus failed to obtain the legal subrogation right. 2. The plaintiff failed to submit evidences to either prove WANGFOONG SHIPPING as the shipowner and bareboat charterer of “WANGFOONG 10”, or as the actual carrier of the subject carriage, consequently it shall bear the unfavorable consequence for failure of burden of proof. 3. The survey report on cargo damage submitted by the plaintiff could not prove that the cause contributing to cargo damage and the cargo damage occurred during the carrier’s liable period, thus the plaintiff shall not be entitled to claim for cargo damage against the carrier. 4. The amount claimed by the plaintiff exceeded the actual cargo loss, lacked factual and legal basis, and was irrational. 5. WANGFOONG SHIPPING shall be entitled to limitation of liabilities for compensation. The defendant requested the court to reject the litigation requests filed by the plaintiff PICC Guangzhou. The defendant WANGFOONG SHIPPING did not submit any evidential documents within the time limit for evidence submission. The defendant SHERRIFSVILLE CORPORATION argued that it agreed with the defense opinions of WANGFOONG SHIPPING. In addition, SHERRIFSVILLE CORPORATION alleged that the plaintiff failed to provide Certificate of Ship’s Ownership to prove SHERRIFSVILLE CORPORATION the shipowner and bareboat charterer of “WANGFOONG 10”. SHERRIFSVILLE CORPORATION was not the actual carrier for the subject transportation and shall bear no compensation liabilities for the subject cargo damage. SHERRIFSVILLE CORPORATION shall be entitled to limitation of liabilities for compensation and thus the plaintiff could only be compensated within the limitation of liability as per the ratio of his claimed amount out of the total claimed amount for cargo loss and damage due to the subject accident. The defendant requested the court to reject the litigation requests filed by the plaintiff PICC Guangzhou. The defendant SHERRIFSVILLE CORPORATION did not provide any evidential documents within the time limit for evidence submission. Examination shows that on 10th January 2008, Weixing Digital Co., Ltd purchased 5,000 pieces of 32-inch LG plasma module from LG Electronics for and on behalf of Jinpin Electrical. The unit price was USD253.40, the total price USD1,267,000 and the terms of payment was CIF Zhuhai. The subject goods were loaded into six containers No. OOLU1665836, OOLU7320976, OOLU7727067, OOLU7729115, OOLU7831298 and OOLU7832416. After the goods were transported by ORIENT OVERSEAS to Hongkong, LG Electronics entrusted Elite Shenzhen to carry the goods from Hongkong to Zhuhai and Elite Shenzhen afterwards entrusted ORIENT OVERSEAS via its delivery agent WORLD CHANCE. On 17th February, the foregoing goods were loaded on board “WANGFOONG 10” in Hongkong and transported to Zhuhai. Elite Shenzhen issued in replenishment B/L No. EM08020006 in the title of Elite Shenzhen and in the name of ORIENT OVERSEAS on 19th February, which stated that the shipper was LG Electronics, the consignee to the order of Bank of East Asia (China) Ltd, the notify party Jinpin Electrical, the delivery agent WORLD CHANCE, the carrying vessel “WANGFOONG 10”, the voyage 449N, the port of loading Hongkong, the port of discharge Zhuhai, the cargo 32-inch LG plasma module, quantity 417 pallets, gross weight 50,040 kilograms. ORIENT OVERSEAS (H.K.) issued B/L No.OOLU3030344080 on 17th February 2008 for and on behalf of ORIENT OVERSEAS, stating that the shipper was WORLD CHANCE, the consignee Jinpin Electrical, the notify party Elite Shenzhen, the carrying vessel “WANGFOONG 10”, the voyage 499N, the port of loading Hongkong, the port of discharge Zhuhai, the transportation terms FCL/FCL and CY/CY, the cargo 32-inch LG plasma module, quantity 417 pallets, gross weight 50,040 kilograms and freight prepaid. On 18th February 2008, while “WANGFOONG 10” was sailing in Tai A Chau Waters in the vicinity of North Lantau Mountain, Hongkong during its voyage to Zhuhai, the tug cable suddenly broke off and three loaded containers No.OOCLU7831298, OOCLU7320976 and OOLU7832416 fell overboard. Containers No.OOCLU7831298 and OOCLU7320976 were salvaged while container No.OOLU7832416 could not be retrieved. Under the entrustment of PICC Guangzhou, the Min An Insurance Company (Hong Kong) Limited (hereinafter referred to as Minan Insurance) appointed Eurasia Marine Consultants Co., Ltd to meet with Mr Rodricks of Andrew MOORER & Associates who was appointed by the carrier and Mr Li of J & S Survey Co., Ltd who was appointed by the barge P & I Club and arrive at WANGFOONG TRANSPORTAOTN located at Hing Wah Street (W), Lai Chi Kok, Kowloon, Hongkong S.A.R. before 27th February to conduct a survey on the cargo loss condition of Container No.OOCLU7831298 and OOCLU7320976 as well as Container No.OOLU7832416 which hasn’t been retrieved and issue a survey report on 28th May afterwards. According to the report, the two containers loaded with goods were damaged to varying extent, with the wrapping materials of contents soaked and rotten, goods exposed, and those stowed at the bottom contaminated with mud; the cause of the water damage of goods was attributed to contact with sea water; the three containers that fell into the sea were loaded with 2808 pieces of 32-inch LG Plasma Module, with USD 253.40 for each piece and USD 711,547.20 in total; the salvage value of the rescued goods was HKD 3,000.00/MT and the total salvage value of goods stowed in Container No.OOCLU7831298 & Container No.OOCLU7320976 was not less than USD 6015.42 (converted as per the exchange rate of USD 1 to HKD 7.78); as the three containers were under strict control and management of M/V “WANGFOONG 10” at the time of the subject accident, M/V “WANGFOONG 10” shall be held liable therefor. PICC Guangzhou effected payment of HKD 3,046.00 to Ming An Insurance for survey fee, agent/handling fee, as well as postage and facsimile charges. Container No.OOLU1665836, Container No.OOLU7727067 & Container No.OOLU7729115 that didn’t fall into the sea were shipped to Zhuhai, the port of destination, and then delivered to Jinpin Electrical. Jinpin Electrical returned the goods on the grounds of damage it sustained thereto. On 14th March 2008, Jinpin Electrical entrusted China Certification & Inspection Group Zhuhai Co., Ltd. with the appraisal of damage on the goods stowed in Container No.OOLU1665836, Container No.OOLU7727067 & Container No.OOLU7729115. The appraisal report thereof indicated that: of all the 2,192 pieces of 32-inch LG Plasma Module stowed in the three containers under survey, 1,992 pieces were observed with no damage in appearance, 20 pieces with slight damage in appearance, and 180 pieces with serious damage in appearance; calculated as per the unit price of USD 225.00 as stipulated in the contract, the loss value amounted to USD 41,850.00; the base day of such value was 9th January 2008, the date of contract. PICC Guangzhou paid RMB 8,000.00 to China Certification & Inspection Group Zhuhai Co., Ltd. for the appraisal. After occurrence of the subject cargo damage, LG Electronics sent a letter of claim to Orient Overseas for the aforesaid total loss of goods in an amount of USD 1,393,700.00. LG Electronics arranged cargo transportation insurance for the subject goods with PICC Guangzhou who issued Insurance Policy No. PYIE200844019360E01195 to LG Electronics to underwrite the insurance. The insurance policy specifies: the insured is LG Electronics, the insured goods 32-inch LG Plasma Module of 5000 pieces, insurance amount USD 1,402,500.58, date of departure 6th February 2008, and the means of conveyance M/V “KAI TONG 6” Voy. 8006E or M/V “OOCLKAOHSIUNG” Voy. 021W or M/V “WANGFOONG 10” Voy. 2008-033, and the transport route from Nanjing via Hong Kong to Zhuhai, as well as risks to be covered as per I.C.C. (A) dated 1/1/1982 and Institute War Clauses dated 1/1/1982 and Institute S.R.C.C. Clauses. After occurrence of the accident, PICC Guangzhou paid USD 600,000.00 and USD 515,419,02.00 which totals USD 1,115,419.02 as insurance indemnity to LG Electronics on 2nd July and 9th December respectively. LG Electronics signed the Receipt and Release on 6th January 2009 to confirm receipt of payment of USD1,115,419.02 from PICC Guangzhou as insurance indemnity for claim for damage to the plasma modules carried by M/V “WANGFOONG 10” from Hong Kong to Zhuhai on 18th February 2008 under Insurance Policy No. PYIE200844019360E01195 and receipt of survey fee in the amount of HKD 3,046.00 and RMB 8,000.00 paid in advance by PICC Guangzhou, and agreed to transfer all the rights and interests of the subject-matter insured and rights of recourse within the limit of the aforesaid payment to PICC Guangzhou. In addition, it was ascertained that Elite Shenzhen had the qualification of NVOCC. The plaintiff submitted the certification on M/V “WANGFOONG 10” issued by the Marine Department of the Hong Kong Special Administrative Region to prove that the owner of the subject vessel was SHERRIFSVILLE. The defendant Orient Overseas confirmed such evidence. However, the defendants WANGFOONG SHIPPING and SHERRIFSVILLE maintained that the aforesaid evidence failed to be submitted within the period for producing evidence and that it was formed in Hong Kong but failed to go through the procedures of notarization and certification and therefore did not confirm its evidential effect. The collegiate bench was of the opinion that the aforesaid evidence had been checked with the original by this court; although the defendants WANGFOONG SHIPPING and SHERRIFSVILLE repudiated such evidence, they failed to provide proof to the contrary; therefore the aforesaid evidence shall be admitted. Given the above, it was ascertained that SHERRIFSVILLE was the owner of M/V “WANGFOONG 10”. The plaintiff submitted the Accident Report made by WANGFOONG TRANSPORTATION to demonstrate the fact and circumstance of the subject damage of goods. The defendant Orient Overseas also submitted the Accident Report made by WANGFOONG TRANSPORTATION to prove that the subject damage of goods took place within the period of carriage by M/V “WANGFOONG 10”. WANGFOONG TRANSPORTATION alleged in the Accident Report submitted by the plaintiff that: on 18th February 2008, M/V “WANGFOONG 10” encountered strong wind and rough sea on the voyage; and the vessel had its steel cable fractured in a sudden and its hull swaying violently which caused parts of the containers onboard to fall into the sea. WANGFOONG TRANSPORTATION alleged in the accident report submitted by Orient Overseas that: en route to Zhuhai, containers onboard of M/V “WANGFOONG 10” fell into the sea as a result of terrible weather condition; the containers of Orient Overseas that sustained damage thereby were Container No.OOCLU7831298, Container No.OOCLU7320976 and Container No.OOLU7832416. Both reports specified that WANGFOONG TRANSPORTATION was the agent of WANGFOONG SHIPPING. The defendants WANGFOONG SHIPPING and SHERRIFSVILLE repudiated the authenticity of the above two accident reports. The collegiate bench was the opinion that the two reports were not only found mutually corroborated in contents, but also consistent with each other when it came to ascertaining the distress occurring to the subject goods in transit carried by “WANGFOONG 10” and shall be therefore confirmed by this court. The Plaintiff submitted the Return-to-factory Service Internal Report to evidence that loss amount of goods stowed in the three containers that did not fall into the sea was USD 339,612.66. The three defendants argued that such evidence was copies without being checked with the original and was unilaterally provided by the insured with its content specified therein in contradiction with that of the Damage Appraisal Report, and thereby did not recognize its authenticity. The collegiate bench was the opinion that the aforesaid report was unilaterally provided by the insured with its content therein in contradiction with that of the Damage Appraisal Report and therefore was not confirmed by this court. The Plaintiff provided the Bidding Proposal to evidence the salvage value of the goods stowed in the three containers that fell into sea. It was stipulated in the Bidding Proposal that the highest bid for the damaged goods stowed in Container No.OOLU7320976 and Container No.OOLU7831298 was HKD 56,000.00. The three defendants held that the evidence was copies without being checked with the original and hence did not recognize its authenticity. The collegiate bench was of the opinion that although the aforesaid Bidding Proposal was copies, the salvage value of goods stowed in the two damaged containers specified therein was higher than USD 6015.42 as assessed by the survey report, which was against the plaintiff; under the circumstance of no any other evidence on the handling of salvage value of goods provided by either party, the authenticity of the Bidding Proposal shall be confirmed. It could be therefore ascertained that the salvage value of the damaged goods stowed in Container No.OOLU7320976 and Container No.OOLU7831298 was HKD 56,000,00, equivalent to USD 7,197.94. The defendant Orient Overseas submitted copies of B/L No.WF5008033031 and added after court copies of B/L No.OOLU30105717060, printouts of e-mail on Booking Order sent by Orient Overseas H.K. to WANGFOONG SHIPPING, printouts of e-mail on Booking Confirmation sent by WANGFOONG TRANSPORTATION to Orient Overseas H.K., and printouts of e-mail on the cargo lists, the list of containers that did not fall into the sea and salvaged containers that had fallen into the sea sent by WANGFOONG TRANSPORTATION to Orient Overseas H.K., as well as the notarial certificates of such e-mails mentioned above, to evidence that Orient Overseas entrusted WANGFOONG SHIPPING with the actual carriage of the subject goods. The plaintiff recognized the effect of such evidence as provided by the defendant. The defendants WANGFOONG SHIPPING and SHERRIFSVILLE maintained that B/L No.WF5008033031 was copies without either being checked with the original, or signed by anyone and thus did not recognize its evidential evidence; the printouts of e-mail on Booking Order sent to WANGFOONG SHIPPING, printouts of e-mail on Booking Confirmation sent by WANGFOONG TRANSPORTATION to Orient Overseas H.K., and the printouts of e-mail on the cargo lists, the list of containers that did not fall into the sea and salvaged containers that fell into the sea mentioned above sent by WANGFOONG TRANSPORTATION to Orient Overseas H.K. failed to be submitted within the period for producing evidence; besides these evidences were formed in Hong Kong but failed to go through relevant procedures of notarization and certification, and they were merely mails between Orient Overseas and WANGFOONG TRANSPORTATION which did not involve WANGFOONG SHIPPING and thus had nothing to do with WANGFOONG SHIPPING. The collegiate bench was of the opinion that there was neither original of the copies of B/L No.WF5008033031 for checking nor other evidence to support them; besides, they bore no signature and thus shall not be admitted; the copies of B/L No. OOLU3010571760 were not signed either, and moreover the bill of lading stipulated that Orient Overseas was in charge with the carriage of the subject goods, which failed to prove that the subject goods were carried by WANGFOONG SHIPPING as alleged by Orient Overseas. Orient Overseas failed to provide other evidence to prove that the addresser and addressee of the aforesaid e-mails submitted was WANGFOONG SHIPPING; and according to the contents of such e-mails, the addresser and addressee thereof was WANGFOONG TRANSPORTATION. Although the aforesaid e-mails that were noted with “WANGFOONG TRANSPORTATION as agent of WANGFOONG SHIPPING”, based on the content thereof however, WANGFOONG TRANSPORTATION failed to indicate that he acted as the agent of WANGFOONG SHIPPING. Therefore, the evidences provided by Orient Overseas were insufficient to prove that WANGFOONG SHIPPING accepted his entrustment and carried the subject goods. The collegiate bench was the unanimous opinion that this case arose from dispute over contract of carriage of goods by sea. Pursuant to the provision of Article 11 of Stipulations by the Supreme People's Court on the Scope of Cases to be Heard by Maritime Court, this case shall be under the specific jurisdiction of maritime courts. The destination of carriage of the subject goods fell within the jurisdiction of this court; pursuant to the provisions of Article 28 of Civil Procedural Law of the People’s Republic of China, this court had jurisdiction over this case. The parties concerned made no stipulation on the application of laws to the contract of carriage of goods; The plaintiff PICC Guangzhou and the defendants Orient Overseas, WANGFOONG SHIPPING and SHERRIFSVILLE all cited the laws of the People's Republic of China to raise claim and make defense. Pursuant to the stipulations of Paragraph 2 of Article 4 of Provisions by the Supreme People's Court on Several Issues Concerning the Application of the Law in Trials of Foreign-related Civil and Commercial Contract Disputes that “where parties concerned have not yet chosen the application of laws to the contract dispute but cited the laws of one country or region and raised no objection thereto, it shall be deemed that the parties concerned have made their choice over the laws that shall apply to the contract dispute”, the substantive dispute of this case shall be settled with the application of the laws of the People’s Republic of China. The goods underwritten by the plaintiff PICC Guangzhou were 5,000 pieces of 32-INCH LG Plasma Module carried by M/V “WANGFOONG 10” from Hong Kong to Zhuhai. Although the voyage number for the goods underwritten shown on the insurance policy was different from that was different from that on the bill of lading, other information therein was consistent with what had been found out about the carriage of the subject goods. Thereby, the subject goods carried by sea was the subject-matter insured underwritten by PICC Guangzhou. After the occurrence of insurance accident to the subject-matter insured, PICC Guangzhou effected payment of indemnity to the insured. Pursuant to the provisions of Paragraph 1 of Article 252 of Maritime Code of the People's Republic of China, PICC Guangzhou obtained the right of subrogation and was entitled to lodge a claim for loss of goods against the carrier by subrogating the insured on the strength of the contract of carriage of goods by sea. Pursuant to the provisions of Article 42 of Maritime Code of the People's Republic of China, “Carrier” means the person by whom or in whose name a contract of carriage of goods by sea has been concluded with a shipper; “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. In this case, LG Electronics entrusted Elite Shenzhen with the carriage of the subject goods, and Elite Shenzhen, in the name of agent of Orient Overseas, issued the bill of lading to the insured with the shipper as the insured. But there was no evidence demonstrating that Elite Shenzhen was the agent of Orient Overseas, and Orient Overseas denied in court that Elite Shenzhen issued the bill of lading as his agent. Pursuant to the provisions of Article 66 of General Principles of the Civil Law of the People's Republic of China that “The principal shall bear civil liability for an act performed by an actor with no power of agency, beyond the scope of his power of agency or after his power of agency has expired, only if he recognizes the act retroactively. If the act is not so recognized, the performer shall bear civil liability for it”, under the circumstance that Orient Overseas did not recognize Elite Shenzhen as his agent retroactively, Elite Shenzhen shall solely bear civil liability for issuing the bill of lading. Therefore, Elite Shenzhen was the carrier of the carriage of the subject goods. The subject goods turned out to be loaded onboard of “WANGFOONG 10” for actual carriage; without any proof to the contrary, SHERRIFSVILLE shall be the actual carrier. Article 46 of Maritime Code of the People's Republic of China prescribes that the carrier shall be liable for loss of or damage to the goods carried in containers which took place during the period 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 when the carrier is in charge of the goods. The subject goods sustained loss en route to the destination in this case. Elite Shenzhen and SHERRIFSVILLE as the carrier and actual carrier respectively, failed to provide evidence to prove that the subject loss of goods was attributable to the causes from which they were entitled to exoneration from liability as prescribed in Article 51 of Maritime Code of the People's Republic of China; and therefore Elite Shenzhen and SHERRIFSVILLE shall be jointly and severally held for liability for the loss of goods during the period of their responsibility in accordance to the provisions of Paragraph 1 of Article 60 and Article 63. PICC Guangzhou had indemnified the insured for the subject loss of goods, thus Elite Shenzhen and SHERRIFSVILLE shall indemnify the plaintiff in accordance with laws. The request of PICC Guangzhou that Orient Overseas and WANGFOONG SHIPPING bear joint and several liabilities lacked legal grounds and therefore was not supported. As for the responsibilities of Orient Overseas and WANGFOONG SHIPPING during the carriage of the subject goods, parties concerned can separately settle such claim as per their legal relationship. The subject goods were stowed in 6 containers in total, of which, 2 suffered from wet damage as a result of falling into the sea, 1 fell into sea with its whereabouts unknown and could be determined as total loss, another 3 did not fell into water but still sustained loss resulted from squeeze. Upon survey and with the salvage value deducted, the loss of goods of the three containers that fell into the sea amounted to USD 704,349.66, whereas that of the other three that did not fall into the sea amounted to USD 41,850.00. However, the Survey Report and the Damage Appraisal Certificate made their calculation on a different basis of unit price, with USD 253.40 for the Survey Report and USD 225.00 for the Damage Appraisal Certificate. The Damage Appraisal Certificate was issued by a competent inspection institution of our country and was made on the basis of the Purchase of Sales Contract provided by the insured as well as such information as customs manifest; hence the unit price of USD 225.00 for calculation of the subject loss of goods specified on the Damage Appraisal Certificate was more convincing. In view of the above, the loss amount of the subject loss could was calculated as USD 666,452.06 in total. Since there was no evidence to prove that the subject loss of goods was resulted from the reckless act or omission of the carrier Elite Shenzhen and the actual carrier SHERRIFSVILLE done with the intent to cause such loss or with knowledge that such loss would be probably resulted therefrom, Elite Shenzhen and SHERRIFSVILLE were entitled to limit their liability in accordance with Article 56 of Maritime Code of the People's Republic of China. Paragraph 1 of Article 56 of Maritime Code of the People's Republic of China prescribes that the carrier’s liability for the loss of or damage to the goods shall be limited to an amount equivalent to 666.67 Units of Account per package or other shipping unit, or 2 Units of Account per kilogram of the gross weight of the goods lost or damaged, whichever is the higher. The bill of lading issued by Elite Shenzhen as the carrier specified that subject goods of the 6 damaged containers stowed in 417 pallets and weighed 50,040 kg. Therefore, the liability for the loss of or damage to the subject goods shall be limited to an amount equivalent to 278,001.39 Units of Account as per the packages of the subject goods, or 100,080.00 Units of Account as per the gross weight thereof. And 278,001.39 Units of Account shall prevail in accordance with laws. “Unit of Account” mentioned in Maritime Code of the People's Republic of China refers to the Special Drawing Right as defined by the International Monetary Fund. The limit of indemnify for loss of the subject goods was calculated as USD 438,604.22 as per the rate of 1 US dollar: 0.633832 SDRs as promulgated by the International Monetary Fund on 18th February 2008. For amount of loss as claimed by PICC Guangzhou that exceeded the aforesaid limit, it shall not be supported. The loss of interest that occurred after PICC Guangzhou effected payment of insurance indemnity shall be borne by the defendants in accordance with laws. PICC Guangzhou paid USD 600,000.00 and USD 515,419,02.00 as insurance indemnity to the insured on 2nd July and 9th December respectively; thus the interest shall be calculated from 2nd July 2008, on a principal in RMB converted from USD 438,604.22 as per the USD exchange rate against the RMB and based on the interest rate for a Renminbi loan over the corresponding period as promulgated by the People's Bank of China, to the date of payment set by this Judgment. As for the survey fee and insurance agent fee as claimed by PICC Guangzhou, since it was not insurance indemnity directly paid by PICC Guangzhou to the insured but necessary expenses PICC Guangzhou paid for settlement of claim, such request for claim lodged by PICC Guangzhou shall not be supported by this court. Since this case arose from dispute over contract of carriage of goods by sea, the counterplea raised by Orient Overseas pertaining to the Purchase and Sales Contract concluded between the insured LG Electronics and the consignee Jinpin Electrical went beyond the cognizance of this court, and thereby was not supported by this court. To sum up, Pursuant to the provisions of Article 130 of Civil Procedural Law of the People's Republic of China, Paragraph 1 of Article 46, Paragraph 1 of Article 56, Article 63, and Paragraph 1 of Article 252 of Maritime Code of the People's Republic of China, the Judgment is rendered as follows: 1. The defendant Elite Master International Limited, Shenzhen Branch and the defendant SHERRIFSVILLE CORPORATION shall jointly and severally indemnify PICC Property and Casualty Company Limited, Guangzhou Branch for loss of goods in an amount of USD 438,604.22 and the interest thereof (calculated from 2nd July 2008, on a principal in RMB converted from the aforesaid amount in USD as per the central parity rate of the USD against the RMB promulgated by People's Bank of China on 2nd July 2008 and based on the interest rate for liquid capital load in RMB over the corresponding period as promulgated by the People's Bank of China, to the date of payment set by this Judgment); 2. The claims filed by the plaintiff PICC Property and Casualty Company Limited, Guangzhou Branch against Orient Overseas Container Line Ltd. and WANGFOONG SHIPPING LIMITED is hereby rejected; 3. Other claims filed by the plaintiff PICC Property and Casualty Company Limited, Guangzhou Branch is hereby rejected. The court acceptance fee of this case is RMB 65,408.00, of which, the defendant Elite Master International Limited, Shenzhen Branch and the defendant SHERRIFSVILLE CORPORATION shall jointly and severally bear RMB 25,654.96, and the plaintiff PICC Guangzhou shall bear RMB 39,753.04. The court acceptance fee has been prepaid by the plaintiff, to whom this court will return the part that shall be borne by the two aforesaid defendants. And the two defendants shall pay RMB 25,654.96 to this court. The above obligation of payment shall be fulfilled within 10 days after this Judgment enters into effect. For failure to fulfill the obligation of payment within the period designated by this Judgment, interest on the debt for the delayed period shall be doubled, pursuant to the provisions of Article 229 of Civil Procedural Law of the People's Republic of China. In case of dissatisfaction with this Judgment, the plaintiff PICC Property and Casualty Company Limited, Guangzhou Branch and the defendant Elite Master International Limited, Shenzhen Branch may within 15 days upon the service of this Judgment, and the defendants Orient Overseas Container Line Ltd., WANGFOONG SHIPPING LIMITED and SHERRIFSVILLE CORPORATION may within 30 days upon the service of this Judgment, submit a statement of appeal to this court, together with copies in accordance with the number of the opposite parties. The appellate court shall be Guangdong Provincial Higher People’s Court. Presiding judge: Xu Yuanping Judge: Deng Jinbiao Deputy judge: Li Mintao Guangzhou Maritime Court (stamp) 14th December 2009 This copy is proved to be identical with the original after checking. Clerk: Zeng Huifen The translation is provided by Huang & Huang CO.

Guangzhou Maritime Court of P. R. China Civil Judgment (2008) Guang Hai Fa Chu Zi No.414 Plaintiff: 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 Defendant: 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 Defendant: Schenker China Ltd. Domicile: No.266, Yiwei Road, Pudong New Area, Shanghai City Legal representative: Karl-Heinz Emberger, board director 3rd Defendant: Schenker (H.K.) Ltd. Domicile: 35/F, Skyline Tower, 39 Wang Kwong Road, Kowloon Bay, Hongkong Legal representative: Andrew Blaise Jiling, board director 4th Defendant: 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 four defendants: 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 plaintiff Zuoyou Furniture (Shenzhen) Co, Ltd and the defendants Schenker International (H.K.) Ltd (hereinafter referred to as “Schenker International”) and Schenker China Ltd (hereinafter referred to as “Schenker China”), the plaintiff filed a litigation before this court on 19th August 2008. After accepting entertaining thereof, this court legitimately constituted the collegial panel to try this case. During the trial process, the plaintiff applied to add Schenker (H.K.) Ltd. (hereinafter referred to as “Schenker (H.K.)”) and Schenkerocean Limited (hereinafter referred to as “Schenkerocean”) as the co-defendants on 2nd April 2009 and 19th May 2009 respectively, and was hereby granted by this court. This court summoned the parties concerned for evidence exchange and open trial of this case on 19th May 2009 and 8th July 2009 respectively. The agent ad litem of the plaintiff, Liu Ning and the agents ad litem of the four defendants, Huang Hui and Zhang Jing participated in the court hearing. This case has now been concluded. The plaintiff alleged that: Since April 2007, the plaintiff has concluded a serial of furniture purchase contract with Reid Furniture Ltd. from Britain by email (hereinafter referred to as “Reid Company”), agreeing that the plaintiff would supply Reid Company with furniture such as sofas through different batches. After conclusion of the contract, Reid Company appointed Schenkerocean as the carrier for the goods under the foregoing contract. Ever since June 2007, Schenker China Ltd has advised the plaintiff to make booking with Schenker (H.K.) Ltd Dongguan Office who would make booking with the actual carrier Evergreen Line thereafter. After obtaining shipping space from Evergreen Line, Schenker (H.K.) Ltd Dongguan Office issued the plaintiff an S/O and notified him to arrange shipment. After the shipment is completed, the plaintiff paid Guangzhou Branch of Schenker China Ltd for relevant local operating fees and B/L fees. As the agent of Schenkerocean, Schenker International (H.K.) Ltd has issued the plaintiff three sets of original B/L No.CNCAN1050704825, No.CNCAN1050705063, and No.CNCAN1050705064. As the agent of Schenkerocean, Schenker (H.K.) Ltd. has issued the plaintiff three sets of original B/L No.CNCAN1050704473, No.CNCAN1050704475, and No.CNCAN10507044608. After the goods arrived at the port of destination, the buyer Reid Company did not effect payment against documents as agreed. On 11th March 2008, Schenker International (H.K.) Ltd advised the plaintiff by email that the goods had been delivered to the buyer Reid Company. Under the circumstance when the original Bs/L were not collected, Schenkerocean illegitimately released the goods to Reid Company, caused the plaintiff to loose the property in the goods therein the Bs/L while the Bs/L were still under his possession and resulted in a cargo value 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. The plaintiff held that Schenkerocean, who released the goods at the port of destination without presentation of original B/L, caused failure of the plaintiff to obtain the cargo payment and suffering from loss of export tax refund, interest loss and exchange rate, shall bear the indemnity liabilities for the above losses; and the other three defendants are at fault and shall be severally and jointly liable. The plaintiff requested the court to adjudge the four defendants to indemnify the plaintiff for cargo value 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 bear the litigation fee of this case. The plaintiff submitted the following evidential materials within the time limit for burden of proof: 1. B/L; 2. Packing List; 3. Commercial Invoice; 4. Truck Operation Sheet; 5. Declaration Form; 6. Voucher for Inland Freight and Wharfage; 7. Transportation Invoice; 8. Bill for Local charges; 9. S/O and Evergreen Line’s Booking Notice; 10. Purchase Order of Reid Company; 11.On-line Cargo Inquiry and Tracking Record; 12. E-mail correspondences between the plaintiff and Schenker International (H.K.) Ltd. The defendant Schenker International (H.K.) Ltd defended that: 1. Schenker International (H.K.) Ltd merely accepted the appointment of the carrier Schenkerocean and acted as the agent of Schenkerocean to sign and issue three sets of original B/L No. CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064 for and on his behalf, is faultless in the carrier Schenkerocean’s release of goods without presentation of original B/L and shall not bear any indemnity liabilities for the disputes over release of goods without presentation of original B/L in the subject case in accordance with law. 2. The plaintiff has already received part of the payments from Reid Company, actually approved the carrier Schenkerocean delivering the subject goods to the consignee. The uncollected partial cargo payments were due to the quality defects of the goods, which has no direct cause and effect relation with the alleged release of goods without presentation of original B/L. 3. The claim amount alleged by the plaintiff is unreasonable. Firstly, the plaintiff has already received payment for cargo value in the amount of USD128,526.29 from Reid Company, which should be deducted from the cargo value loss claimed by the plaintiff. Secondly, the relevant evidence submitted by the plaintiff for proving the local freight as well as the operating and handling fee could not corroborate that such fees actually incurred from the subject goods, or that the plaintiff has actually paid for such fees. Even if it was so that such fees incurred from the subject goods and had been actually paid, such fees had been included in the actual value of the goods loaded on board, which would be a repeated claim with that of the cargo value claim. 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 the plaintiff goes beyond the statutory indemnity scope. As a result, the defendant required to reject the litigation requests filed by the plaintiff against Schenker International (H.K.) Ltd. The defendant Schenker International (H.K.) Ltd. submitted the following evidential materials within the time limit for burden of proof: 1. Letter and the attachments thereof sent by Reid Company to Schenker International (H.K.) Ltd; 2. Registration Certificate for Private Limited Company of Reid Company; 3. Payment Voucher for the subject goods; 4. List of Quality Defects of the subject goods; 5. Claim Notice and photos of defected goods sent by Reid Company. All the above evidential materials are notarized and legalized. The defendant Schenker China Ltd defended that: 1.The plaintiff did not provide any evidence to prove that Schenker China Ltd. was the actual forwarder of Schenker International (H.K.) Ltd in Mainland China; 2. Schenker China Ltd did not have any transportation contractual relationship with the plaintiff, nor had ever participated in the carriage and delivery of the subject goods. Therefore, the plaintiff shall not be entitled the right to request Schenker China Ltd to bear any indemnity liabilities for the alleged release of goods without presentation of original B/L in the subject case. The defendant Schenker China Ltd did not submit any evidence within the time limit for burden of proof. The defendant Schenker (H.K.) Ltd defended that: 1. Schenker (H.K.) Ltd only accepted the appointment of the carrier Schenkerocean and acted as the agent of Schenkerocean to sign and issue three sets of original B/L No. CNCAN1050704473, CNCAN1050704475 and CNCAN1050704608 for and on his behalf, is faultless in the carrier Schenkerocean’s release of goods without presentation of original B/L and shall not bear any indemnity liabilities for the disputes over release of goods without presentation of original B/L in the subject case in accordance with law. 2. The goods under the three sets of original B/L signed and issued by Schenker (H.K.) Ltd were delivered to the consignee Reid Company during July 2007 and December 2007 respectively, and the plaintiff confirmed that he was aware of the delivery of the goods on 11th March 2008. The plaintiff did not lodge litigation against Schenker (H.K.) Ltd until 30th March 2009, which exceeded the statutory time limit for lodging litigation. The defendant Schenker (H.K.) Ltd submitted the following evidential materials within the time limit for burden of proof: 1. Certificate of Incorporation, Certificate of Incorporation on Change of Name and Business Registration Certificate of Schenker (H.K.) Ltd.; 2. Certificate of Incorporation, Certificate of Incorporation on Change of Name and Business Registration Certificate of Schenker International (H.K.) Ltd.; 3. Certificate of Incorporation, Annual Return and Business Registration Certificate of Schenkerocean Limited; and 4. Letter of Confirmation. All the above evidential materials are notarized and legalized. The defendant Schenkerocean rebutted that: the goods under the six sets of B/L carried by Schenkerocean were delivered to the consignee Reid Company during the period from July 2007 to December 2007, and the plaintiff confirmed that he was aware of the delivery of the goods on 11th March 2008. The plaintiff did not lodge litigation against Schenker Ocean until 19th May 2009, which exceeded the statutory time limit for lodging litigation. The defendant required to reject the litigation requests filed by the plaintiff. The defendant Schenkerocean did not submit any evidence within the time limit for burden of proof. After cross-examination at the court trial and taking the evidence and cross-examination opinion submitted by all the parties concerned into consideration, the collegial panel ascertained the following facts: Since September 2006, the plaintiff has developed long-term furniture export trade cooperation with Reid Company. The subject goods are furniture under B/L No.CNCAN1050704473, CNCAN1050704475, CNCAN10507044608, CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064, whose total value is USD243,522 as recorded in the B/L. For carriage of the above goods under the six Bs/L, the plaintiff made booking with Schenker (H.K.) Ltd Dongguan Office during the period from June 2007 to October 2007. After obtaining shipping space from Evergreen Line, Schenker (H.K.) Ltd Dongguan Office issued the plaintiff an S/O, notifying him to arrange shipment. After the shipment is completed by the plaintiff, the defendant immediately issued the plaintiff an expense list covering THC, document charges and commission charges, which totals CNY48,853, were paid by the plaintiff to Sinotrans Guangdong International Forwarding Co., Ltd, Guangzhou Branch (hereinafter referred to as “Sinotrans Guangzhou”). Sinotrans Guangzhou issued the plaintiff special invoice of international freight forwarding agency for the expenses incurred under the 6 sets of Bs/L. During the trail, all the involved parties confirmed that cargoes under the 6 bills of lading have been shipped to the port of destination from July to December in 2007, and the carrier, Schenkerocean Ltd, actually released the cargo to the purchaser, Reid Company, without presentation of original B/L. The plaintiff received the email on March 11, 2008 from Schenker International (H.K.) Ltd and was informed that the cargo was delivered to Reid Company at the port of destination. The three original bills of lading with B/L No. as CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064 were stamped by the seal of Schenker International (H.K.) Ltd 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.) Ltd and the personal seal of Zhou Guoqiang. On the left top corner of the said six bills of lading, it was written in large printed letters that “SCHENKERocean”, the shipper is the plaintiff, Reid Company as the consignee and the Notify Party, Shenzhen Yantian as the port of loading and Scotland GRANGEMOUTH as the port of destination. On the right bottom corner, it was written in red letters (other information was all written in black letters) that “Signed and issued as agents for Schenkerocean as Carrier by”, and on the back side of the bills of lading, 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 Ltd”. On the left top corner of all the six Shipping Order of the involved cargoes, it was written that “Schenker (H.K.) Ltd -Dong Guan Office”; on the right top corner “Acknowledgement of Booking only for Schenker (H.K.) Ltd”；in the “document required” column “Schenker Ocean B/L”. The full name of Schenker Ltd -Dong Guan Office is Schenker (H.K.) Ltd -Dong Guan Representative Office，and with Zhou Guoqiang as its chief representative its registered No. is “No. Qi Wai Yue Wai Zhu Zi Di 000393”. During the hearing, all the parties involved was unable to confirm the relationship between Zhou Guoqiang and the forth defendants. With respect to the loss claimed by the plaintiff, all the parties involved have no objection to the value of cargoes, worth USD 243.522, under the six bills of lading, which was also affirmed by the collegiate panel. The defendant, Schenker International (H.K.) Ltd, alleged that the purchaser, Reid Company, has paid USD128.526.29 as part of the payment for goods and submitted the payment vouchers for goods involved in the case. Despite that such payment vouchers as the Scottish Bank remittance slip submitted by the defendant, Schenker International (H.K.) Ltd, could prove that the purchaser, Reid Company, has indeed paid USD128,526,29 in different sums to the plaintiff as payment for goods, due to a long time of partnership and many times of sales and purchases of goods and incurrence of payment for goods between the plaintiff and Reid Company, such payment evidences rendered by Schenker International (H.K.) Ltd, can not be used to refer to cargoes under the six bills of lading, and therefore can not prove the amount of USD 128,526,29 was paid as payment for goods under the six bills of lading. Thus they were not affirmed by the collegiate panel. The RMB48, 853 loss of local freight and relevant handling charges claimed by the plaintiff is charges happened before loading. It was the necessary cost for the plaintiff to export goods. The cost should have been included in the actual value at the time of loading. The plaintiff has no right to double claim the charges. The plaintiff rendered no evidence to prove the USD26.809.42 loss of export rebate it claimed, and therefore was not affirmed by the collegiate panel. The plaintiff claimed a RMB183. 961. 37 loss of foreign exchange rate. Owing to the contract breach of the defendant, the plaintiff didn’t receive the payment on time, causing the plaintiff 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 the plaintiff should be indemnified by the defendant, and the plaintiff should pay the cargo value in RMB as per the exchange rate on the agreed day of payment. Members of the collegiate panel have agreed that this case is resulted 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 the plaintiff concluding the export trade contract with the purchaser, Reid Company，the plaintiff contacted Schenker (H.K.) Ltd -Dong Guan Representative Office and conducted services like booking, shipment, payment, etc as required by the office. Schenker (H.K.) Ltd -Dong Guan Representative Office stated clearly on the six shipping orders given to the plaintiff that it accepted the booking on behalf of Schenker (H.K.) Ltd. Among the six bills of lading possessed by the plaintiff, the three original bills of lading with B/L No. as CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064 were stamped by the seal of Schenker International (H.K.) Ltd 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.) Ltd and the personal seal of Zhou Guoqiang. However, from the contents of the Bs/L, on the right bottom 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 left top corner “Schenkerocean” in big printed letters. it could be considered that through what was recorded on the bills of lading Schenkerocean Ltd is shown as the carrier, authorizing Schenker International (H.K.) Ltd and Schenker (H.K.) Ltd to issue the bills of lading, and Schenker International (H.K.) Ltd and Schenker (H.K.) Ltd are the agents of Schenkerocean Ltd. The plaintiff had no objection while accepting the bills of lading, thus it could be regarded that the plaintiff recognized the proxy relation between Schenkerocean Ltd and Schenker (H.K.) Ltd and Schenker International (H.K.) Ltd, and was aware that Schenker International (H.K.) Ltd and Schenker (H.K.) Ltd undertook civil legal acts under the name of Schenkerocean Ltd. It also confirmed the establishment of contract of carriage of goods relation with Schenkerocean Ltd. And Even though the plaintiff viewed Schenker International (H.K.) Ltd and Schenker (H.K.) Ltd 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.” Under the circumstances where the plaintiff hasn’t rendered any evidence to prove the involved contract of carriage of goods binds only the plaintiff, Schenker International (H.K.) Ltd and Schenker (H.K.) Ltd, it shall be considered that parties concerned stated on the six bills of lading are the plaintiff and Schenkerocean Ltd. The plaintiff believed that Schenker International (H.K.) Ltd didn’t register with the Administration for Industry and Commerce in China, and didn’t pay taxes in accordance with laws; Schenker (H.K.) Ltd didn’t register with the Administration for Industry and Commerce in China, didn’t pay taxes in accordance with law and didn’t acquire the NVOCC qualification from the Ministry of Communications; Schenkerocean Ltd obtained the NVOCCC qualification, yet it didn’t 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. The acts represent illegal proxy, and the three defendants should take several and joint liabilities. Nevertheless, the plaintiff has not rendered any valid evidence to prove the above facts. According to Article 14 of Supreme Peoples Court, Several Issues Concerning Application of the ‘PRC, Contract Law’Interpretation (1), “‘mandatory provisions’in paragraph 5 of Article 52 of Contract Law means mandatory provision of competence.” Even though the three defendants didn’t establish corporate legal person in China or obtain NVOCC qualification, they violated just mandatory provision of management. It won’t necessarily cause the proxy act or the contract of carriage of goods invalid. The plaintiff filed the lawsuit over the loss caused by the carrier of cargo involved releasing the cargo to the consignee without presentation of original B/L. According to Article 71 of the Maritime Code of the People’s Republic of China, a bill of lading is 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 Ltd is the party liable for the act of releasing goods based on no original B/L. In according with 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 based on no original B/L shall be born by the carrier itself rather than its agent. Since Schenker International (H.K.) Ltd and Schenker (H.K.) Ltd are only agents of the carrier, Schenkerocean Ltd, and not concerned parties in the contract of carriage relation, they shall not be liable for Schenkerocean Ltd’s act of releasing goods based on no original B/L. Given the current evidences, Schenker China Ltd has no connection with the carriage of the goods involved and didn’t participate in any part of the carriage of the goods. Thus it also shall not be liable for Schenkerocean Ltd’s act of releasing goods without the original B/L. Cargoes under the six bills of lading involved in the case arrived at the port of destination during July to December in 2007, and were actually delivered to Reid Company by the carrier, Schenkerocean Ltd. On March 11, 2008 the plaintiff acknowledged that the carrier had already released the goods without obtaining the original B/L before, and on May 19, 2009 applied to add Schenkerocean Ltd as co-defendant of this case. According to Article 14 of Supreme Court, Regulation on Several Issues about Applicable Law for Trailing Cases of Delivery of Goods Based On No Original B/L, “holder of the original B/L filing lawsuit against the carrier for delivery of goods based on no original B/L could be judged by Article 257 of Maritime Code of the P. R. China. The limitation of action is one year, calculated from the supposed day of delivery of goods by the carrier.” The plaintiff was unable to render any valid evidence to prove that the limitation period shall be suspended or discontinued, and its lawsuit against Schenkerocean Ltd has surpassed one year of limitation of action. Therefore, it shall lose the right to win the lawsuit. In conclusion, According 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: To reject the litigation requests filed by the plaintiff Zuoyou Furniture (Shenzhen) Co, Ltd. The court fee of this case is RMB 24,456, all of which shall be borne by the plaintiff. In case of any dissatisfaction, the plaintiff, Zuoyou Furniture (Shenzhen) Co, Ltd, and the defendant, Schenker China Ltd may, within 15 days after the written judgment is served, and the defendants, Schenker International (H.K.) Ltd, Schenker (H.K.) Ltd and Schenkerocean Ltd may, within 30 days after the written judgment is served, submit respectively the appeal petition with the copies of it according to the number of persons in the other party to this court and file an appeal with Guangdong Provincial High Court of People’s Republic of China. Presiding judge: Cheng Sheng Xiang Judge: Zhang Ke Xiong Assistant Judge: Gu En Zhen (Official Chop of Guangzhou Maritime Court affixed) 10th August 2009 Certified as true to the original Clerk: Yang Qian The translation is provided by Huang & Huang CO.

Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2007)Guang Hai Fa Chu Zi No.259 Plaintiff 1: Hiro Shipping Inc. Address: 80 Broad Street, Monrovia, the Republic of Liberia Legal Rep.: Yusuke Hashiguchi, director and president Agent ad litem: Chen Xiangyong, attorney-at-law, Wang Jing & Co. Law Firm Cao Yanghui, attorney-at-law, Wang Jing & Co. Law Firm Plaintiff 2: Yuma Maritime S.A. Address: 53rd Street, Urbanizacion Obarrio, Torre Swiss Bank 16th Floor, Panama, the Republic of Panama Legal Rep.: Masaki Hara, director and deputy general manager Agent ad litem: Chen Xiangyong, attorney-at-law, Wang Jing & Co. Law Firm Cao Yanghui, attorney-at-law, Wang Jing & Co. Law Firm Defendant 1: Nanjing Channel Engineering Bureau of Changjiang River Address: #9, Jiangbian Road, Xiaguan District, Nanjing, Jiangsu Legal Rep.: Yuan Yakang, director Agent ad litem: Chen Longjie, attorney-at-law, Greenleaf Law Firm Shenzhen Office Liu Yun, attorney-at-law, Greenleaf Law Firm Shenzhen Office Defendant 2: Guangdong Yudean Shipping Co., Ltd. Address: Room 1388, 13/F, Labor Building, Hong Hua Yuan, Nanshan District, Shenzhen, Guangdong Legal Rep.: Liang Jian, chairman of the board Agent ad litem: Yang Yunfu, attorney-at-law, Yang & Lin Co. Law Firm Zhu Weikang, attorney-at-law, Yang & Lin Co. Law Firm With respect to the case of dispute over damage compensation arising from ship collision filed by the Plaintiffs, Hiro Shipping Inc. (hereinafter referred to as “Hiro”) and Yuma Maritime S.A. (hereinafter referred to as “Yuma S.A.”) against the Defendants, Nanjing Channel Engineering Bureau of Changjiang River (hereinafter referred to as “Nanjing Channel Engineering Bureau”) and Guangdong Yudean Shipping Co., Ltd. (hereinafter referred to as “Yudean”), this Court, after accepting the case, formed a Collegial Panel according to law, and called upon parties hereto to exchange evidence before trial on January 22, March 19 and April 23, 2008, convened pretrial conferences on June 3 and 4, and heard the case in public on August 6, 7, 8 and 12. Chen Xiangyong and Cao Yanghui as agent ad litem jointly entrusted by the Plaintiffs, Hiro and Yuma S.A., Chen Longjie and Liu Yun as agents ad litem entrusted by the Defendant Nanjing Channel Engineering Bureau, and Yang Yunfu and Zhu Weikang as agents ad litem entrusted by the Defendant Yudean, attended the pretrial evidence exchange and the pretrial conference, and appeared at the Court and participated in the lawsuit. Zhang Jin as the accountant applied for by the Plaintiffs Hiro and Yuma S.A., Lu Daonan, Huang Guangming and Xu Jiangping as the accountants applied for by the Defendant I Nanjing Channel Engineering Bureau, and Tang Qiujin as the accountant applied for by the Defendant II Yudean, appeared at the Court to be questioned. The trial of this case has been closed. The plaitiffs, Hiro and Yuma S.A., jointly alleged: On March 14, 2007, M/V “YUE DIAN 2” collided with M/V “HANG JUN 11” in Lingding channel of Guangzhou Port and subsequently M/V “HANG JUN 11” collided with M/V “SUMIRE”. The three vessels were damaged to different extends. The aforesaid accident of collision mainly resulted from the faults and mistakes of M/V “YUE DIAN 2” and M/V “HANG JUN 11”, so the two Defendants should be liable to indemnify the Plaintiffs for the losses. Hiro is the registered ship-owner of M/V “SUMIRE” and Yuma S.A. is the demise charterer of M/V “SUMIRE”, therefore, both the Plaintiffs are entitled to claim for damages for the losses of M/V “SUMIRE” arising from the accident of collision to. Yudean is the registered ship-owner of M/V “YUE DIAN 2” and Nanjing Channel Engineering Bureau is the registered ship-owner of M/V “HANG JUN 11”, therefore, both the Defendants shall indemnify both the Plaintiffs for the losses. It is hereby requested to order both the Defendants to indemnify the Plaintiffs: 1. USD262,000 as repair cost of M/V “SUMIRE”; 2. USD1,200 as paint repair cost of M/V “SUMIRE”; 3. USD160,947.92 as loss of hire of M/V “SUMIRE”; 4. USD44,980.12 as clean-up cost and anti-fouling cost; 5. USD160,947.92 as classification society survey fee; 6. USD151,451.67 as case handling fee, guarantee fee and survey fee; 7. USD 31,367.27 as additional port agency fee. All amounts to USD 681,924.98. Both the Defendants shall pay both the Plaintiffs the interest on the above mentioned losses (interest shall be calculated at the loan interest rate of working capital of enterprises for the contemporary period of time of bank from March 15, 2007 to the date when both the Defendants pay all the reparations). The litigation costs shall be borne by both the Defendants. Both the Plaintiffs have jointly presented the following evidential materials within the time limit for adducing evidence: 1. Certificates of M/V “SUMIRE”, including Statutory Certificate of Register, International Tonnage Certificate, International Loading Certificate, International Oil Pollution Prevention Certificate, Cargo Ship Safety Radio Certificate, Cargo Ship Safety Equipment Certificate, Cargo Ship Safety Construction Certificate, Certificate of Minimum Manning, Safety Management Certificate, and Statutory License for Radio; 2. Bareboat Charter, Time Charter, Rent Statement; 3. Deck Logbook, Engine Logbook, Bell Book and Pilot Card of M/V “SUMIRE”; 4. Crew List of M/V “SUMIRE”; 5. Maritime Accident Investigation Form; 6. Bill and payment voucher of repair costs; 7. Shipyard’s statement; 8. Bill and particulars for costs of paints; 9. Invoice and payment voucher of survey fee; 10. Note and payment voucher of agency fee; 11. Payment invoice of oil pollution prevention fee and cleanup fee; 12. Survey report on damage of M/V “SUMIRE” arising from the collision issued by China Marine Services Company Ltd. (hereinafter referred to as “CMS”); 13. Legal Opinion from a lawyer in Panama. The Defendant Nanjing Channel Engineering Bureau defended: The collision alleged by both the Plaintiffs was absolutely resulted from the faults and mistakes of M/V “YUE DIAN 2” and M/V “SUMIRE”, so Nanjing Channel Engineering Bureau should not bear any liability. Both the Plaintiffs have not provided any valid evidence which can prove the existence of the asserted loss, and the amount of loss pledged by the Plaintiffs was unreasonably exaggerated. It is hereby requested to overrule the claim of both the Plaintiffs against Nanjing Channel Engineering Bureau. The litigation costs shall be borne by both the Plaintiffs. The Defendant Nanjing Channel Engineering Bureau presented the following evidential materials within the time limit for adducing evidence: 1. Certificate of Vessel’s Nationality, Classification Certificate for Hull, Certificate of Vessel’s Inspection, Certificate of Load Line, Certificate of Oil Pollution Prevention, Certificate of Tonnage, Certificate of Seaworthiness of M/V “HANG JUN 11”; 2. Certificate of Competency of Master Chen Wu, Certificate of Competency of Master Chen Xiping, Certificate of Competency of 2nd Officer Yu Gang, Certificate of Competency of Duty Officer Chen Chunhai, Certificate of Competency of Chief Engineer Qian Ming, Certificate of Competency of Second Engineer Dai Yongqing; 3. Permits for operation above and under water, Notice to Mariners; 4. Logbook; 5. Accident Report, Table of Investigation of Marine Accidents, Nautical Chart. The Defendant Yudean alleged: After the occurrence of the subject accident, Guangdong Maritime Safety Administration of P.R.C. (“Guangdong MSA”) conducted an investigation and produced the Investigation Report of the Collision Accident, which affirms that, with respect to the first collision, m/v “Yu Dian 2” shall bear the primary liability and M/V “HANG JUN 11” shall bear the minor liability; with respect to the second collision, M/V “SUMIRE” shall bear the primary liability and M/V “HANG JUN 11” shall bear the minor liability. Yudean agreed with the Guangzhou MSA on the ascertainment of the liability for the accident. Based thereon, there is no causation between the fist collision and the second collision, and the close quarters situation of the second collision was formed after the first collision, due to that M/V “SUMIRE” continued chasing and finally overtook M/V “HANG JUN 11” without receiving any reply therefrom on whether overtaking was allowed or not, and that M/V “HANG JUN 11” reversed fast in a blind way, therefore, Yudean should not bear any liability for the second collision. Furthermore, the losses asserted by both the Plaintiffs are unreasonable. According to the survey report presented by Yudean, the average repair cost should be USD51,767, and the time for repair shall not exceed 5 days. It is hereby requested to overrule the claim of both the Plaintiffs against Yudean. The litigation costs shall be borne by both the Plaintiffs. The Defendant Yudean presented the following evidential materials within the time limit for adducing evidence: 1. Business License; 2. Certificate of Nationality, Certificate of Ownership, Interim Classification Certificate, Cargo Ship Safety Construction Certificate, Cargo Ship Safety Equipment Certificate, International Tonnage Certificate, International Load Line Certificate, Cargo Ship Safety Radio Certificate, International Oil Pollution Prevention Certificate, Interim International Ship Security Certificate, Certificate of Compliance, Certificate of Exemption, and Minimum Safe Manning Certificate of M/V “YUE DIAN 2” ; 3. Crew List of M/V “YUE DIAN 2”, Certificates of Competency of Crew onboard M/V “YUE DIAN 2”, Seaman’s Record Books of Crew onboard M/V “YUE DIAN 2”; 4. Marine Accident Report; 5. Deck Logbook, Engine Logbook, Deck Bell Book, Engine Bell Book of M/V “YUE DIAN 2”; 6. Survey Report of M/V “SUMIRE”; 7. Supplementary Appraisal Report of Statement of Repair Cost of M/V “SUMIRE”. This Court has obtained the following evidential materials from Guangzhou MSA: 1. Collision Accident Investigation Report issued by Guangdong MSA; 2. Maritime Traffic Accident Report (two pieces) and Maritime Accident Report of M/V “YUE DIAN 2”; 3. Deck Logbook, Engine Logbook, Deck Bell Book, and Engine Bell Book of M/V “YUE DIAN 2”; 4. Interview records taken by Guangzhou MSA of some crews of “Yue Dian 2”, including interview records of Master Jiang Feng, of second officer Cao Junlong, of third officer Qiu Weizhong, of chief engineer Chen Wenqiang, of first engineer Xu Weihe, of third engineer Li Huaxu (two pieces), of A/B Huang Jingqing, of A/B He Jianming; 5. Logbook, Engine Logbook and Maritime Traffic Accident Report of M/V “HANG JUN 11”; 6. On-the-spot Accident Investigation Records on M/V “HANG JUN 11” produced by Guangzhou MSA; 7. Interview records taken by Guangzhou of some crews of M/V “HANG JUN 11”, including interview records of chief officer Chen Xiping (two pieces), of second officer Chen Jiesong, of second officer Yu Gang, of chief engineer Qian Ming, of first engineer Dai Yongqing, of A/B Chen Haichun, of A/B Xielei, of machinist on duty Wang Daohai, of machinist Qi Fei; 8. Interview records taken by Guangzhou MSA of Song Gentong, the project manager of Guangzhou Seaward Passage Project of Nanjing Channel Engineering Bureau; 9. Certificate of Register, Safety Manning Certificate, and Certificate of Competency of crews of M/V “SUMIRE”; 10. Marine Accident Report of M/V “SUMIRE”; 11. Ship Manoeuvring Parameter List and Side View of Bow Structure of M/V “SUMIRE”; 12. Average Survey Report of M/V “SUMIRE” produced by Classification society; 13. Interview records taken by Guangzhou MSA on pilot Zhao Bingxun (two pieces); and 14. Interview records taken by Guangzhou MSA of the Master (two pieces), of the third officer, of the chief engineer, and of the A/B of M/V “SUMIRE”. Based on the joint application filed by the Plaintiffs and Defendants, this Court organized parties to this case to watch VTS video at Guangzhou MSA, and to copy the sound recordings of conversations, and the written records thereof were submitted by the parties to this case. : At the pre-trail conference, both the Plaintiffs and the Defendant Nanjing Channel Engineering Bureau believed that the written record of the sound recording of conversations in VTS submitted by the defendant Yudean Co. is comparatively accurate and confirmed the authenticity of the said written record. Upon hearing and cross-examination, and in combination of the evidences and opinions on cross-examination submitted by parties to the case and statement of accounts, the Collegial Panel ascertains the following facts through investigation: I. Particulars of Ships involved in the Accident M/V “HANG JUN 11”: Gross Tonnage 2,691 tons, Net Tonnage 807 tons, Deadweight Capacity Indication 2,457 tons, Length overall 84.75M, Breadth 15M, Depth 5.5M, Full Load Draft 4.5M; Kind of Vessel: Dredger; Material of Shell: Steel; Navigating Area: Offshore; Number of Watertight Transverse Bulkhead: Six; Port of Registry: Nanjing; Signal Letters: BTYS; Number of Registry: 060102000138; Classification society: CCS; Kind of Main Engine: Diesel Engine/6L28/32; Horse Power of Main Engine: 1,320KW×2; main engine manoeuvring being controlled by the navigation bridge. Where and when built: Hudong Zhonghua Shipbuilding Co.,Ltd, completed on October 26, 1998. M/V “YUE DIAN 2”: Gross Tonnage 36,559 tons, Net Tonnage 23,279 tons, Deadweight Tonnage 70,182 tons, Length overall 225M, Breadth 32.26M, Depth 18.3M, Speed of Vessel 14 Knots. King of Vessel: Bulk Carrier; Material of Vessel: Steel; Port of Registry: Shenzhen; Signal Letters: BRWL; IMO No.: 9077240; Classification society: CCS; Kind of Main Engine: Internal-combustion Engine/SULZER 6RTA62; Horse Power of Main Engine: 8,826KW; main engine manoeuvring being controlled by the engine room; Where and when built: Japan, SUMITOMO HEAVY INDUSTRIES, LTD., completed on July 14, 1994. The Defendant Yudean Co. is the registered ship owner and operator of the ship. M/V “SUMIRE”: Gross Tonnage 14,089 tons, Net Tonnage 7,023 tons, Deadweight Tonnage 17,732 tons, Length overall 163.6M, Breadth 26M, Depth 13.4M; Departure Draft: fore 5.78M, aft 6.82M; Kind of Vessel: Container Ship; Material of Hull: Steel; Speed of Vessel: 18.5 Knots; Port of Registry: Panama; Signal Letters: 3FTA7; IMO No.: 9153070; Kind of Main Engine: Internal-combustion Engine/SULZER 6RTA62; Horse Power of Main Engine: 8,826KW; main engine manoeuvring being controlled by engine room; Classification society: NK (Nippon Kaiji Kyokai); Where and When built: Japan, IMABARI SHIPBUILDING CO. LTD., completed on October, 1997. The Plaintiff Hiro is the registered owner of this ship. The Plaintiff Hiro and Yuma concluded a Bareboat Charter and a Purchase Contract on March 24, 1997, therein it was agreed that the Plaintiff Yuma hired M/V “SUMIRE” in the way of bareboat charter, however, no registration of bareboat charter of M/V “SUMIRE” had been conducted. II. Details of the Accident At 1910 hrs on 14 March 2007, M/V “YUE DIAN 2” departed Guangzhou port in ballast condition, bound for Huang Ye Port. The draft at departure was: fore 3.4m, after 6.3m. Master, Jiang Feng, was in charge of commanding the vessel, the Third Officer was in charge of the engine bell operation and assisted in look-out, while two A/B took turn to operate the rudder and assisted in look-out. At 2228 hrs, M/V “YUE DIAN 2” reported to VTS Guangzhou through VHF that she had passed Humen Bridge, and later this vessel entered into Lingding Channel and sailed full ahead. At 2335 hrs, M/V “YUE DIAN 2” passed Buoy No.36. When passing between Buoy No.33 and No.34, the Master, by observing the radar, detected a vessel (namely M/V “HANG JUN 11”) sailing before M/V “YUE DIAN 2” along the channel. At that time M/V “HANG JUN 11” was 4nm away from M/V “YUE DIAN 2” with the speed of about 3knots. The Master judged that M/V “HANG JUN 11” was an outbound dredger. The monitoring materials of VTS Guangzhou indicated that at 2340 hrs, M/V “YUE DIAN 2” had already passed Buoy No.34, with the course at 162°, the speed of 16.5knots, and the position at the middle of the channel alongside the red buoy. The Master, by observing the radar, detected another ship (namely M/V “SUMIRE”) sailing at the middle of the channel, with the distance of about 6.5nm away from M/V “YUE DIAN 2” and the speed of about 15knots. At 2344 hrs, M/V “YUE DIAN 2” just passed Buoy No.32, with the course at 163° and the speed of 17knots, sailing alongside the red buoy. At 2345 hrs, the A/B took the shift, one person in charge of rudder operation and the other assisting in look-out. At about 2347 hrs, M/V “YUE DIAN 2” just passed Buoy No.30, and the course and the speed of the vessel did not change. At 2348 hrs, M/V “YUE DIAN 2” contacted M/V “HANG JUN 11” through VIF for three times to communicate on the overtaking. M/V “HANG JUN 11” made a reply to M/V “YUE DIAN 2” and agreed M/V “YUE DIAN 2” to overtake her from the port side. At about 2349 hrs, the Master of M/V “YUE DIAN 2” order the vessel to make hard to port, and reported through VHF that she was turning to port. At 2350 hrs, M/V “YUE DIAN 2” passed Buoy No.28 with the speed of 17knots. At about 2351 hrs, M/V “YUE DIAN 2”, on the position of the back side of the starboard draft marks at the bow, collided with the bow of M/V “HANG JUN 11” almost at a right angle. The GPS position of M/V “YUE DIAN 2” at the time of collision was: 22°31′N, 113°44′.5E, heading about 136°, and speed at about 10knots. After collision, M/V “YUE DIAN 2” clashed out of the channel, and grounded at the eastern side of the channel at about 0003 hrs in 15 March. The GPS position of M/V “YUE DIAN 2” at the time of grounding was: 22°30′.7N, 113°45′.E. At about 0600 hrs, M/V “YUE DIAN 2” was relieved from grounding by taking the chance of tide and under the assistance of two tugs. At 2320 hrs on 14 March 2007, M/V “HANG JUN 11” was carrying out dredging operation at Lingding Channel, the Second Officer, Yu Gang and the A/B went to the bridge for taking the duty. At 2325 hrs, the Second Officer ordered the A/B in charge of harrow operations to lift up the harrow, and sailed the vessel out of the eastern side of the channel, checked and cleaned the harrow tools for shift taking. After completion of shift turning outside the channel, the Second Officer, Yu Gang, who took the duty, was in charge of the manoeuvring of the vessel and the dredging operation. One A/B was in charge of rudder operation, and the other A/B was in charge of harrow operations. Two sets of ARPA radars at the bridge platform had been turned on, with the presentation of comparative movement, and the heading upward, and with the measurement distance separately set up at 1.5nm and 3nm. One set of depth sounder, AIS, GPS, and one set of DGPS, and 4 sets of VHF had been turned on. 2 sets of VHF were set up at Channel 9, while the other 2 sets of VHF were set up at Channel 16. The sailing lights had been turned on, displaying the sidelights on the starboard side and the port side, and the fore and after masthead lights, and stern lights, and vertically displacing three all-round lights of red, white and red colors. The two illuminative lights at deck had been turned on. At 2339 hrs, the Second Officer instructed M/V “HANG JUN 11” to sail into the channel, and carried out operations along the channel at the place between the Green Buoy No.25 and No.27. Soon after the vessel carried out operation within the channel, the Second Officer first saw a coming vessel sailing near Buoy No.36 alongside the red buoy, displaying red and green side lights, and fore and after masthead lights. In accordance with the monitoring record of VTS Guangzhou, at about 2343 hrs, the course of M/V “HANG JUN 11” was about 321° with the speed of about 1.5knots. At 2346 hrs, the course of M/V “HANG JUN 11” was about 341° with the speed of about 2knots. At 2348 hrs, the course of M/V “HANG JUN 11” was about 342° with the speed of about 2knots. At this time M/V “HANG JUN 11” receive the calling from M/V “YUE DIAN 2” through VHF, and later the Second officer made a reply to M/V “YUE DIAN 2”, agreeing M/V “YUE DIAN 2” to overtake her from the port side. M/V “HANG JUN 11” immediately lifted up the harrow, and stop the main engine to observe the movement of the coming vessel. At about 2349 hrs, the course of M/V “HANG JUN 11” was about 342° with the speed unchanged, and at this time, M/V “YUE DIAN 2” called M/V “HANG JUN 11” through VHF to inform that she was turning to port. The Second Officer on duty, Yu Gang, after knowing the coming vessel had already taken the action to turn to port, immediately ordered to move slow astern both then full astern both. Soon after the orders to move astern were given, at 2351 hrs, the starboard side at the bow of M/V “YUE DIAN 2” collided with the bow of M/V “HANG JUN 11”, with the collision angle at about 90°. The two vessels immediately separated from each other after collision, and the bow of M/V “HANG JUN 11” turned to starboard and went astern to the port side of the entering channel. At about 2354 hrs, M/V “HANG JUN 11” collided with an approaching vessel, M/V “SUMIRE”, in the middle between the red buoy No.26 and No.28., to the edge of the channel. The bow of M/V “SUMIRE” clashed into the part slightly before the midship at the starboard side of M/V “HANG JUN 11”. The heading of M/V “HANG JUN 11” at the time of collision was about 40°, and the vessel was moving astern at the speed of about 7knots. At 1245 hrs on 11 March 2007, M/V “SUMIRE”, laden with the container No.822TEU (7,282.7tons of cargos), departed from KOBE, Japan, and proceeded to Xinnansha Port in Guangzhou. At 2210 hrs in 14 March, M/V “SUMIRE” arrived at Guishan Anchorage in Guangzhou for the pilot to embark the vessel. The pilot, Zhao Bingxun, embarked the vessel. After acquiring information on the engines and rudders from the Master, the pilot discussed with the Master and then decided to instruct the vessel to enter into the port by making the main engine stand by with the speed of rotation at 100RPM, and the speed of 15knots. The Master told the pilot that the maximum draft of the vessel was 6.8m. The pilot thought the channel was comparatively clean, and hence started to pilot the vessel to enter into Nansha Port, while the Master, the Third Office and one A/B in charge of rudder operation were all at the bridge. The pilot, Zhao Bingxun, gave instructions on the operation of the engine bell and the rudder to pilot the sailing, and the Third Officer was in charge of engine bell operation and assisted with look-out, while the A/B was in charge of rudder operation. Two sets of radar, GPS, AIS had been turned on. The pilot used the ARPA radar to observe the situation by alternating the range between 1.5nm and 3nm. The speed of the vessel was maintained at about 15knots. At 2240 hrs, the Master left the bridge. At about 2340 hrs, M/V “SUMIRE” was near Buoy No.21 and No.22, with the speed of about 14knots and the course at 351°. The pilot saw a vessel in front near Buoy No.25 and No.26, placing three lights with the color of red, white and red in a vertical line. The pilot got the information through AIS that the name of the vessel in front was M/V “HANG JUN 11”. The course of M/V “HANG JUN 11” was 340°, and the speed was very slow, while M/V “HANG JUN 11” was about 3.2nm away from M/V “SUMIRE”. The pilot also detected through radar M/V “YUE DIAN 2” near the position between Buoy No.31 and No.33, sailing towards the exit and alongside the red buoy at the main channel and with the distance of about 6.5nm away from M/V “SUMIRE”. At about 2342 hrs, M/V “SUMIRE” passed Buoy No.21 and No.22, with the course at 352° and the speed of 15.1knots. The pilot visually saw that there was no obvious change in the sailing movement of both M/V “HANG JUN 11” and M/V “YUE DIAN 2”. At 2344 hrs, the pilot ordered M/V “SUMIRE” to lower the speed. The monitoring material of VTS Guangzhou showed that the speed of the vessel was about 14knots. The Master immediately went to the bridge after he felt that the speed of the vessel had changed. At 2347 hrs, M/V “SUMIRE” was sailing near Buoy No.23, and the course was changed into 343°, and at this time the speed was about 14knots, while M/V “SUMIRE” was about 1.7nm away from M/V “HANG JUN 11”. The pilot considered to come across first with M/V “YUE DIAN 2”, which was sailing toward the exit, and then passed M/V “HANG JUN 11” from her port side. At about 2349 hrs, M/V “SUMIRE” informed M/V “HANG JUN 11” through VHF of her overtaking intention, and requested M/V “HANG JUN 11” to maintain her course. M/V “HANG JUN 11” replied and expressed her agreement. Soon after the VHF communication, the pilot saw the bow of M/V “YUE DIAN 2” obviously turn to port, and the pilot found that there was a collision risk between M/V “YUE DIAN 2” and M/V “HANG JUN 11”. At the same time, the pilot heard through VHF that M/V “YUE DIAN 2” kept changing her order between hard to port and hard to starboard. The pilot felt that M/V “YUE DIAN 2” was quite nervous. At that time, the distance between M/V “SUMIRE” and M/V “HANG JUN 11” was about 1.2nm. VTS Guangzhou had reminded M/V “SUMIRE” to slow the engine for 4 times within one minute, and to pay attention to the vessel sailing towards the exit and the dredger in front. At about 2351 hrs, M/V “YUE DIAN 2” collided with M/V “HANG JUN 11”, while M/V “YUE DIAN 2” clashed out of the channel. At such time, the course of M/V “SUMIRE” was 343°, with the speed of 15.3knots, and M/V “SUMIRE” had already approached Buoy No.26, about 0.8nm away from the position where the aforesaid two vessels collided, while M/V “HANG JUN 11” did not stop moving astern, and M/V “SUMIRE” intended to overtake M/V “HANG JUN 11” from the stern of M/V “HANG JUN 11”. At about 2352 hrs, when finding M/V “HANG JUN 11” moving astern sideling at a high speed towards the port side of the entering channel, the pilot immediately called M/V “HANG JUN 11” through VHF, telling her not to move astern, and the pilot also ordered M/V “SUMIRE” to make port 10°. When M/V “SUMIRE” turned her course to 320°, the pilot found M/V “HANG JUN 11” still moving astern, and then he ordered M/V “SUMIRE” to make hard to port, later immediately changed the order to make hard to starboard, and to stop the main engine. At about 2353 hrs, the distance between M/V “SUMIRE” and M/V “HANG JUN 11” was already less than 0.2nm. At about 2354 hrs, the bow of M/V “SUMIRE” clashed into the part slightly before the starboard midship of M/V “HANG JUN 11”, with the collision angle of about 70°. The heading of M/V “SUMIRE” at the time of collision was about 330°, and the speed was about 10.2knots. According to the monitoring record of VTS Guangzhou, the position where the two vessels collided was 22°31′N, 113°44′.4E. After collision, the two vessels did not separate from each other immediately and M/V “SUMIRE” dispatched two cables to M/V “HANG JUN 11” to fasten the two vessels. At about 0040 hrs in 15 March, water came into the fore hold and the engine room of M/V “HANG JUN 11”. At about 0108 hrs, M/V “SUMIRE” grounded. At 0410 hrs, M/V “SUMIRE” separated from M/V “HANG JUN 11”. At 0535 hrs, M/V “HANG JUN 11” grounded at the western side of Buoy No.24 under the assistance of two tugs, with the grounding position at 22°28′.5N, 113°43′.5E. At about 0730 hrs, M/V “SUMIRE” got refloated. At the time of the occurrence of the accident: overcast, visibility 4 to 5nm, easterly wind with the force of 4, ebb tide, and current speed about 1.5knots. After occurrence of the accident, Guangdong MAS carried out investigations thereto in accordance with the law, and issued the Investigation Report on the Collision Accident among M/V “YUE DIAN 2”, M/V “HANG JUN 11” and M/V “SUMIRE”, which presented the following opinions: this was an accident involving three vessels respectively with two collisions under a special circumstance; for the first collision between M/V “YUE DIAN 2” and M/V “HANG JUN 11”, M/V “YUE DIAN 2” shall bear the major liability, while M/V “HANG JUN 11” shall bear the minor liability; for the second collision between M/V “HANG JUN 11” and M/V “”SUMIRE, M/V “”SUMIRE shall bear the major liability, while M/V “HANG JUN 11” shall bear the minor liability; III. Losses Claimed by Both Plaintiffs After the accident, M/V “SUMIRE” berthed alongside CSSC Guangzhou Huangpu Shipbuilding Co., Ltd (hereinafter referred to as “CSSC”) for average repair on 4 July 2007, and left CSSC after completion of the average repair on July 17, 2007. With respect to the losses claimed by both the Plaintiffs arising from the subject accident, the Collegial Panel ascertains each plainitff’s losses separately as follows: （I）Repair Cost and Paint Repair Cost of M/V “SUMIRE” Both the Plaintiffs alleged that the repair cost of M/V “SUMIRE” was USD262,000 and the paint cost was USD1,200, and presented the invoice and the payment voucher of repair cost, the certificate issued by CSSC and the Inspection Report issued by CMS as evidences. Invoice of repair cost was issued by CSSC on July 18, 2007 to confirm that the final amount of the repair cost of M/V “SUMIRE” is USD460, 000 and to request Kitaura Kaiun Co., Ltd. to remit the repair cost into the account of the CSSC. As recorded on the payment voucher, SEA GREEN SHIPPING S.A. altogether paid USD460, 000 on July 13 and September 14, 2007, and the information of remittance indicates th Kitaura Kaiun Co., LTD., M/V “SUMIRE”. CSSC issued a certificate on December 18, 2007 which indicated that USD460,000 had been paid by M/V “SUMIRE”. As recorded on the Inspection Report issued by CMS, surveyors Zhang Jian and Guo Xinyu of CMS entrusted by Huatai Insurance Agency Co, Ltd., went to Guangzhou Nansha Port on March 15, 2007, to Guangzhou Gangshajiao Anchorage on 20th March, and to CSSC on 7th July to carry out inspection on M/V “SUMIRE” and issued the Inspection Report on May 15, 2008. Surveyors believed that permanent repair shall be carried out for the damage of M/V “SUMIRE” arising from the subject accident, and the time limit for the repair shall be 8 working days, and that, upon assessing the final statement issued by CSSC, the reasonable repair cost for the damage arising from the accident shall be USD263,200, including an amount of USD1,200 as paint cost needed for repairing the bulbous bow of M/V “SUMIRE”. Surveyor Zhang Jian stated in the Inspection Report and when being interrogated before the Court that: Before arriving at CSSC, M/V “SUMIRE” requested the shipyard to prefabricate bulbous bow, and finally replaced the whole bulbous bow, thereby shortened the time of stopping for repairing. Furthermore, due to that the bulbous bow was double curcature plate, the flexivity whereof is large and the technology whereof is complicated, the difficulty of technology of sectional repair and replacement is lager than that of overall replacement, and the quality of welding is difficult to guarantee. Therefore, the Inspection Report confirms that the prefabrication and the replacement of bulbous bow conducted by the ship-owner are proper and reasonable. Neither of the Defendants acknowledged the losses claimed by both the Plaintiffs and both believed that the bulbous bow need not be replaced and that it was unreasonable to have 8 days for repairing. The Defendant Yudean submitted the Average Inspection Report of M/V “SUMIRE” and the Appraisal Report on the Final Statement of Average Repair of M/V “SUMIRE” as rebuttal evidence. As recorded in the Average Inspection Report of M/V “SUMIRE”, surveyors went to Shajiao Anchorage to conduct investigation on M/V “SUMIRE” on March 20, 2007 and issued an Inspection Report on January 11, 2008. The Inspection Report states that the damage caused to M/V “SUMIRE” need not to be repaired in shipyard and that the time for the repairing should be about 3 working days and the costs should be about RMB 82,000. As stated in the Appraisal Report on the Final Statement of Average Repair of M/V “SUMIRE”, upon appraising the final statement of repair cost, both the Defendants believed that the reasonable cost of average repair of M/V “SUMIRE” should be USD 51,767. The Collegial Panel believes that the invoice and the payment voucher of repair cost and the certificate issued by CSSC fully demonstrate that the M/V “SUMIRE” was repaired in CSSC and an amount of USD460,000 was actually paid as the repair cost. CMS was qualified to conduct relevant appraisal, and since surveyors of this company had carried out investigations on M/V “SUMIRE” for three times, the Inspection Report submitted whereby was issued based on sufficient evidences, and the explanation on the replacement of bulbous bow was more persuasive and shall be adopted, therefore, it is ascertained that the repair cost arising from the subject accident is USD263,200, including an amount of USD1,200 as paint cost. (II) Loss for Hire of M/V “SUMIRE” Both the Plaintiffs presented evidences such as Logbook, Time Charter and Settlement Statement to claim that the loss of hire of M/V “SUMIRE” was USD160,947.92. Time Charter was concluded by and between the Plaintiffs Yuma S.A. and the charterer Nippon Yusen Kaisha on October 22, 1997. On September 5, 2002, the Plaintiff Yuma S.A., Nippon Yusen Kaisha and Tokyo Senpaku Kaisha jointly concluded an agreement to provide that Nippon Yusen Kaisha assigned the Time Charterer to Tokyo Senpaku Kaisha on October 1, 2002, and that all the rights and obligations before the assignment of contract shall be enjoyed and borne by Tokyo Senpaku Kaisha. The rent agreed on by both the Plaintiff Yuma S.A. and the charterer Nippon Yusen Kaisha on December 16, 1997 was USD10,320 per day or to be calculated based on proportion, including overtime. As for two final statements in favor of T.S.K. Line, the one dated April 19, 2007 states that an amount of USD 71,021.62 for the rent of the period from 2350hrs on March 14, 2007 to 2100hrs on March 21 (6.88194 days) was deducted for the collision with the dredger; the other dated September 18, 2007 states that an amount of USD 134,661.66 for the rent of the period from 1220hrs on July 4, 2007 to 1320hrs on July 17 (13.04861 days) was deducted for dry dock’ entry to Nansha, an amount of USD1,375.14 and that of USD5,991.16 was separately deducted for the FOI and DOI used during the repair period. The above-mentioned amounts add up to USD213,049.58. The Defendant Nanjing Channel Engineering Bureau believed that the loss for hire of charter claimed by both the Plaintiffs shall deduct savable costs, and the Defendant Yudean believed that the time needed for the average project of M/V “SUMIRE” was less than that needed for ship-owner project, therefore, both the Plaintiffs had not suffered loss of hire, and even if there was losses for hire, such losses shall be calculated on the basis of 5 days. The Collegial Panel believes, the evidence presented by both the Plaintiffs proves that the subject accident and the average repair of M/V “SUMIRE” happened during the period of charter, the rent of which is USD10,320 per day, and that the charterer Tokyo Senpaku Kaisha deducted the corresponding rent. Though the repair of M/V “SUMIRE” includes both the ship-owner project and the average project, the Plaintiffs do not forfeit their rights of claiming for the loss of hire of the average project. According to the report issued by CMS which is adopted by the Collegial Panel, the time for to the accident-related average repair of M/V “SUMIRE” is 8 days, based thereon, it is ascertained that the loss of hire under the Time Charter of M/V “SUMIRE” arising from the subject accident shall be the loss of hire of both the period of accident handling and the repair period, a total whereof is USD153,581.62. In addition the two plaintiffs claim the bunker expense which was deducted by the charterer. Such is the actual loss arising from the repair of M/V “SUMIRE”. The charterer deducted an amount of USD7,366.30 in total as the bunker expense for 13.04861 days during the period of repair and off hire, therefore, an amount of USD4,516.22 is related to the subject accident (USD7,366.3÷13. 04861days×8days). To sum up, the loss of hire of M/V “SUMIRE” is ascertained as USD158,097.84. (III) Expenses for Emergency Handling in relation to the Accidents such as Expenses of Pollution Clean-up and Prevention The Plaintiffs presented the Settlement Agreement concluded by them and both the Defendants with Guangzhou MSA and the invoice issued by Guangzhou Port Pearl River Pollution Prevention Co., Ltd. to prove that the Plaintiffs had paid RMB337,126 as expenses of pollution clean-up and prevention. Both the Defendant had no objection to the said expenses and confirmed that the total amount of the said expenses arising from the subject accident was RMB 1,011,378 and that each party paid RMB337,126 averagely. The Collegial Panel believes that the Settlement Agreement concluded by the Plaintiffs and the Defendants with Guangzhou MSA which provides that such expenses is paid in advance under the circumstance that the proportion of liability is unclear is not the confirmation of the proportion of liability for the collision, therefore, the above-mentioned payment shall not affect the parties’ right of recourse according to the finally confirmed proportion of liability for the collision. Whereas the said expenses arising from the emergency measures such as salvation, pollution clean-up and prevention and precaution which were adopted after the grounding of M/V “HANG JUN 11” is not related to the losses arising from her collision with M/V “SUMIRE”, the said expenses is not to be treated in this case, which shall be borne by parties to this case according to the proportions of liability for the collision prescribed in (2007) GHFCZ No.127 and No. 184. (IV) Class Survey Fee Both the Plaintiffs presented three invoices and three remittance detail lists issued by Japanese Marine Corporation on March 30 and July 31, 2007 to prove that an amount of USD29,978 was paid as survey fee. Both the Defendants lodged objection to the relatedness between the said survey fee and the present case. The Collegial Panel believes that, since M/V “SUMIRE” was damaged in the subject accident, it is necessary to have the classification society conduct a survey on M/V “SUMIRE” to testify her seaworthiness. According to the invoices and remittance detail lists submitted by both the Plaintiffs, it can be ascertained that the Plaintiffs had paid an amount of USD29,978 to Japanese Marine Corporation as survey fee. (V) Case-handling Fee, Guarantee Fee and Inspection Fee Both the Plaintiffs presented the bill and receipt issued by Huatai Insurance Agency Co. Ltd, the Credit Notice and the Bill of Inspection Fee issued by Bank of China, and the receipt issued by CMS as evidences to prove that the Plaintiffs had paid inspection fee of USD42,000, China Re guarantee fee of USD95,371.67, agent fee for Huatai of USD 13,040, and other miscellaneous fees of USD1,040, all of which amounts to USD151,451.67. Neither Defendants had objection to the truthfulness of the evidence, nevertheless, they believed that neither Plaintiffs were entitled to claim for the above-mentioned fees. The Collegial Panel believes that, though the Plaintiffs had actually paid the above-mentioned fees, the China Re Guarantee fee, agent fee for Huatai and other miscellaneous fees claimed by the Plaintiffs are not inevitable losses arising from the subject accident, therefore, there is no basis for them to claim for the above-mentioned fees , so such claim is unsupported. Only the inspection fee of USD42,000 is ascertained. (VI) Additional Port Agency Fee Both the Plaintiffs presented two Omnibus Account Detail Lists issued by Sinotrans Shipping Agency Guangdong Co. Ltd., which separately record that the port charge and other fees incurred as M/V “SUMIRE” berthed at Nansha Port from March 14 to 20, 2007 is USD20,287.24; the port charge and other fees incurred when M/V “SUMIRE” berthed at Nansha Port from July 4 to 17, 2007 is USD11,080.03; the payment voucher records that SEA GREEN SHIPPING S.A. had paid the above-mentioned fees of USD31,367.27 to Sinotrans Shipping Agency Guangdong Co. Ltd., the remittance information whereof states Kitaura Kaiun Co., LTD., M/V “SUMIRE”. The Collegial Panel believes that the additional port agency fee of M/V “SUMIRE” arising from the accident shall be supported. According to the Inspection Report issued by CMS which is adopted by this Court, the period of average repair of M/V “SUMIRE” incurred by the subject accident shall be 8 working days, which shall be calculated on the basis of USD849.13 per day, so the port charge and other fees for the said eight days shall be USD6,793.04. With respect to port charge incurred from March 14 to 20, 2007, since both the Plaintiffs failed to tell the charges for normal operation from additional fees arising from the subject accident, this Courts will not ascertain the said fees. To sum up, expenses and losses of M/V “SUMIRE” arising from the subject accident shall be: repair charge of USD 263,200, loss of hire of USD158,097.84, survey fee of Classification society of USD29,978, inspection fee of USD42,000 for CMS Ltd., and additional port agency fee of USD6,793.04, all of which adds up to USD500,068.88 (excluding Emergency Handling Fee). All members of the collegial panel believe that this case is a dispute over damage compensation arising from ship collision. Due to that the collision happened in China, according to 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 be applied to deal with the substantive dispute. During the trial, parties to the case also agreed that laws of the People’s Republic of China shall be applied to deal with the dispute. M/V “YUE DIAN 2” was sailing outward alongside the channel in ballast condition while M/V “HANG JUN 11” was conducting dredging operation as sailing inward alongside the channel at low speed, and the vessels were sailing in opposite directions along their respective starboard side, in a head on situation. With three all-round lights being hanged vertically, M/V “HANG JUN 11” was a ship with limit maneuvering capacity. M/V “SUMIRE” laden with 7,282.7 tons of cargos was sailing inward along the channel after M/V “HANG JUN 11”, and when the pilot discovered M/V “HANG JUN 11” after M/V “SUMIRE” entered the irradiation scope of the taillight of M/V “HANG JUN 11”, she still sailed at the speed of 14 to 15 knots, and the circumstance of overtaking had been formed between the two ships, under which M/V “SUMIRE” was the overtaking ship and M/V “HANG JUN 11” was the overtaken ship. When sailing outward along the channel, M/V “YUE DIAN 2” should have used sight, hearing and all other effective means suitable for the environment and situation of the time to maintain proper lookout so as to make sufficient assessment on the situation and the risk of collision. However, the said ship failed to maintain the proper lookout, and when she sailed between the 33# and the 34# buoy, the master discovered M/V “HANG JUN 11” which was sailing ahead of her by radar but mistook her as a dredger sailing in the same direction and required to “overtake” her, and thereby caused the collision. Such should be the main reason for the collision. Since M/V “YUE DIAN 2” was sailing within the channel, where the density of ships was large and the environment was complicated, she should have sailed at safe speed so as to adopt proper and effective actions for preventing the collision so that she could stop the main engine within the distance suitable for the environment and situation at that time. However, the ship did not use safe speed but still sailed at the high speed of 17 knots after she discovered M/V “HANG JUN 11” and when the distance between the two ships was shortened, with the result that, after the close-quarter situation having been formed, she failed to stop the main engine within safe distance. After the head-on situation being formed between her and M/V “HANG JUN 11”, M/V “YUE DIAN 2” should have exercised good seamanship and actively and timely adopted proper measures to prevent collision so that both the ships might sail within safe distance. However, due to M/V “YUE DIAN 2”’s neglect of lookout and misjudgment and her wrongful alteration of course to port side by hard-a-port for overtaking M/V “HANG JUN 11” as she was sailing at high speed, close-quarter situation was formed between the two ships, which finally led to the collision accident. The above-mentioned acts of M/V “YUE DIAN 2” is in violation of Articles 5, 6, 8 and 14 of International Regulations for Preventing Collision at Sea, 1992 (hereinafter referred to as “Regulations for Preventing Collision”). Since M/V “HANG JUN 11” was conducting dredging operation along the channel where ships were crowded, her operation ability was limited, therefore, she shall take full advantage of all effective means to strengthen her lookout, watch the movement of entering and departing ships and keep communication and contact with them to understand their real intentions. Especially for those vessels sailing in her vicinity, she should take necessary precautions to avoid any collision with them. However, M/V “SUMIRE” did not maintain normal lookout, and without finding out the specific position of M/V “YUE DIAN 2” which was communicating with her on VHF, she recklessly mistook M/V “YUE DIAN 2” as a ship sailing inward after her and agreed the ship to “overtake” her on her port side, thus misleading M/V “YUE DIAN 2” to further believe that both ships were in the situation of “overtaking”. When the close-quarter situation arose as M/V “YUE DIAN 2” turned to port to “overtake” the ship, M/V “HANG JUN 11” failed to use good seamanship, and actively and timely adopted correct preventing measures to prevent collision, but just stopped engine and then reversed engine only when the two vessels were extremely close to each other and it was too late to prevent the collision. The above-mentioned acts of M/V “HANG JUN 11” is in violation of Articles 5 and 8 of Regulations for Preventing Collision. As a overtaking ship, M/V “SUMIRE” shall perform the obligation of giving way, and shall take full advantage of all effective means to maintain proper lookout and keep a close eye on the movement of the overtaken ship and the changing of ship positions so as to make sufficient assessment on the situation and the danger of collision. During the overtaking, she shall sail at safe speed, especially when she overtook other ships at narrow channel and shall take into good consideration of the situations of crowded ships and complicate circumstances, and have the overtaking speed under control so as to adopt proper and effective collision preventing actions when danger of collision emerged and to stop the main engine within appropriate distance at the time. However, M/V “SUMIRE” failed to maintain proper lookout or safe speed, and at about 2349 hrs, soon after she communicated with M/V “HANG JUN 11” on VHF coordinating the overtaking, the pilot had discovered that M/V “YUE DIAN 2” was turning to port and that there was danger of colliding with M/V “HANG JUN 11”, and VTS Guangzhou had warned her to slow down the engine and to pay attention to the ship and the dredger sailed outward before her for four times, however, M/V “SUMIRE” did not pay enough attention thereto and failed to make full assessment of the danger of collision that may exist but still believed that it was able to overtake the ship and the dredger sailed before her and kept sailing at the speed of 15knots to overtake M/V “HANG JUN 11”, thereby she failed to take the measures such as stopping engine or slowing down in ample time to reduce the speed, and finally led to the collision between her and M/V “HANG JUN 11” . This should be the main reason for the accident. When M/V “YUE DIAN 2” collided with M/V “HANG JUN 11”, M/V “SUMIRE” was 0.8 nm away from the position of collision. According to the environment at the time of the collision, if M/V “SUMIRE” had adopted the collision-prevention measures such as stopping engine or moving astern in a prompt way, she would have prevented the collision between her and M/V “HANG JUN 11” or have brought the loss of collision to the least. However, M/V “SUMIRE” was so confident that she believed she might overtake M/V “HANG JUN 11” on the port side, so she still sailed at high speed when she was obstructed by M/V “HANG JUN 11” as the latter ship moved to port after by adopting measures of moving astern for the purpose of avoiding M/V “YUE DIAN 2”, and adopted measures of turning to port for the purpose of overtaking M/V “HANG JUN 11” on her port side. When she was in immediate danger, her adoption of collision-prevention measures such as hard starboard and stopping engine was useless for preventing the collision, so she finally collided with M/V “HANG JUN 11” and brought serious damage to M/V “HANG JUN 11”. The above-mentioned acts of M/V “SUMIRE” are in violation of Article 5, 6, 8 and 13 of Regulations for Preventing Collision. In order to prevent her collision with M/V “YUE DIAN 2”, M/V “HANG JUN 11” adopted measures such as stopping engine and moving astern, which is instinctive behavior for preventing collision and gives little cause for criticism. However, after M/V “YUE DIAN 2” overtook her stern subsequent to the collision between them, M/V “HANG JUN 11” shall be aware of the danger of collision with M/V “SUMIRE” which was overtaking her from her port side as she continued to retire, so at that time, she shall adopt effective measures such as stopping engine and moving ahead to stop the main engine so as to prevent her further moving astern, and she shall pay special attention to the avoidance of her moving astern to the left back of the channel which may obstruct the overtaking route of M/V “SUMIRE”. As M/V “HANG JUN 11” paid all attention to how to keep clear of M/V “YUE DIAN 2” without giving due consideration to the serious consequence that may emerge as she adopted the measure of moving astern, she failed to take actions in favor of preventing collision such as stopping engine and moving ahead so as to maintain her position, which results in the moving astern of the ship to the left back of the outward channel and finally leads to her collision with M/V “SUMIRE”. The above-mentioned acts of M/V “HANG JUN 11” are in violation of Articles 8 and 17 of Regulations for Preventing Collision. The two collisions among the three ships are two independent but related accidents. In the second collision accident, though M/V “YUE DIAN 2” did not directly collided with M/V “HANG JUN 11” and M/V “SUMIRE”, she did lead to the close-quarter situation between her and M/V “HANG JUN 11” due to her default in adopting the measure of turning to port to overtake M/V “HANG JUN 11”. To prevent her collision with M/V “YUE DIAN 2”, M/V “HANG JUN 11” adopted prevention actions such as stopping and moving astern to retire to the left back of the outward channel, thereby caused her collision with M/V “SUMIRE”. Therefore, there is indirect relationship between the two collision accidents, that is, the first collision is one reason of the second collision and M/V “YUE DIAN 2” shall also bear the minor responsibility for the second collision. When M/V “SUMIRE” was overtaking M/V “HANG JUN 11” along the entry of the channel as M/V “YUE DIAN 2” turned to port by adopting hard aport, the close-quarter situation between M/V “SUMIRE” and M/V “YUE DIAN 2” had not yet formed, and M/V “YUE DIAN 2” just turned left for the purpose of overtaking M/V “HANG JUN 11” but not for avoiding M/V “SUMIRE”. Therefore, the overtaking action of M/V “SUMIRE” has no consequence on the first collision accident and M/V “SUMIRE” did not have to bear responsibility for the first collision. The Investigation Report on the Collision Accident among M/V “YUE DIAN 2”, M/V “HANG JUN 11” and M/V “SUMIRE” issued by Guangdong MSA confirms that M/V “YUE DIAN 2” shall shoulder the major responsibility for the first collision, and M/V “HANG JUN 11” shall shoulder the minor responsibility for the first and the second collisions, and M/V “SUMIRE” shall shoulder the major responsibility for the second collision. Though both the Plaintiff and the Defendants Hiro and Yuma challenged the above-mentioned liability apportionment, they failed to present evidence to overturn the above-mentioned verdict. Taking into consideration the degree of fault of each ship in operating and collision preventing, the Collegial Panel ascertains that, M/V “YUE DIAN 2” shall shoulder 80% responsibility for the first collision and 5% percent responsibility for the second collision, and M/V “HANG JUN 11” shall shoulder 20% responsibility for the first collision and 10% percent responsibility for the second collision, while M/V “SUMIRE” shall shoulder 85% responsibility for the second collision. Losses of M/V “SUMIRE” arising from the collision accident includes repair cost of USD263,200, classification society survey fee of USD29,978, inspection fee for CMS of USD42,000, loss of hire of USD158,097.84, and additional port agency fee of USD6,793.04. The repair cost and survey fee mentioned above belong to property loss, while loss of hire and additional port agency fee belong to operating losses. The Plaintiff Hiro, as the registered ship-owner of M/V “SUMIRE”, is entitled to claim for the property loss suffered by her arising from the collision accident. The Plaintiff Yuma S.A., as the bareboat charterer and the disponent owner of the time charter of M/V “SUMIRE”, is the actual operator of M/V “SUMIRE”. Though the bareboat charter of “Sumire” has not been unregistered, the Plaintiff Yuma S.A.’s right to claim for loss of hire as the actual operator is not affected. According to the provisions of Article 4 of Regulation of the Supreme People’s Court on Issues Concerning the Trial of Cases of Ship Collision Disputes, the liability for damage arising from ship collision shall be borne by the ship-owner. Since the Defendant Nanjing Channel Engineering Bureau is the registered ship-owner of M/V “HANG JUN 11” and the Defendant Yudean is the registered ship-owner of M/V “YUE DIAN 2”, both the Defendants shall be liable for damages arising from the subject collision and shall indemnify both the Plaintiffs for losses caused thereby. The losses of Hiro add up to USD335,178, and the losses of Yuma amount to USD164,890.88. Based on the above-mentioned proportions of liability arising from the collision accident between M/V “HANG JUN 11” and M/V “SUMIRE”, the Defendant Nanjing Channel Engineering Bureau shall indemnify the Plaintiff Hiro for her losses of USD33,517.80 the interest thereon and indemnify Yuma S.A. for her losses of USD16,489.09 and the interest thereon; the Defendant Yudean shall indemnify the Plaintiff Hiro for her losses of USD16,758.90 the interest thereon and indemnify Yuma S.A. for her losses of USD8,244.54 and the interest thereon. The principal amount shall be converted from USD to RMB at the exchange rate of 1:7.742 of the date of March 15, 2007, and the interest shall be calculated from March 15, 2007, the next day of the accident, to the payment day prescribed herein at the loan interest rate of working capital of enterprises for the same period as published by the People’s Bank of China. To sum up, according to Paragraphs 1 and 2 of Article 169 and Article 170 of Maritime Code of the People's Republic of China, it is hereby ruled as the following: I. The Defendant Nanjing Channel Engineering Bureau shall indemnify the Plaintiff Hiro for her losses of USD33,517.80 and the interest thereon and indemnify Yuma for her losses of USD16,489.09 and the interest thereon (the interest shall be calculated from March 15, 2007, the next day of the accident, to the payment day prescribed herein at the loan interest rate of working capital of enterprises for the same period as published by the People’s Bank of China); II. The Defendant Yudean shall indemnify the Plaintiff Hiro for her losses of USD16,758.90 and the interest thereon and indemnify Yuma for her losses of USD8,244.54 and the interest thereon (the interest shall be calculated from March 15, 2007, the next day of the accident, to the payment day prescribed herein at the loan interest rate of working capital of enterprises for the same period provided by the People’s Bank of China); and III. Other claims filed by the Plaintiffs Hiro Shipping Inc. and Yuma Maritime S.A. are hereby overruled. The litigation fee of this case is RMB44,224, among which RMB39,359.45 shall be borne by the Plaintiffs Hiro Shipping Inc. and Yuma Maritime S.A., RMB3,243.03 by the Defendant Nanjing Channel Engineering Bureau, and RMB1,621.52 by the Defendant Yudean. The litigation fee of RMB4,864.55 prepaid by the Plaintiffs Hiro Shipping Inc. and Yuma Maritime S.A. shall be returned, and the Defendants Nanjing Channel Engineering Bureau and Yudean shall pay their respective proportion of the acceptance fee to this Court. The obligations of paying the above-mentioned amounts shall be fulfilled within ten days as of the effectiveness of this Judgment. Where any party fails to perform the obligation of paying above-mentioned amounts within the period prescribed herein, such party shall, in accordance with Article 229 of Civil Procedure Law of The People's Republic of China, double pay the interest for the period of delayed performance. In event of dissatisfaction with this Judgment, the Plaintiffs Hiro Shipping Inc. and Yuma Maritime S.A. may, within 30 days upon service of this Judgment, and the Defendants Nanjing Channel Engineering Bureau and Yudean may, within 15 days upon service of this Judgment, file an application with this Court for review, with duplicates being submitted in terms of the number of the other parties, to lodge an appeal with the Guangdong Higher People‘s Court. Presiding Judge Zhan Simin Acting Judge Xiong Shaohui Acting Judge Zhang Kexiong (Official Chop of Guangzhou Maritime Court affixed) June 11, 2009 Certified as true to the original Assistant Judge Gu Enzhen Clerk Liang Xiaolei The translation is provided by Wang Jing & CO.

Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2007)Guang Hai Fa Chu No.184 Plaintiff : Nanjing Channel Engineering Bureau of Changjiang River Address : #9, Jiangbian Road, Xiaguan District, Nanjing, Jiangsu Legal Rep. : Yuan Yakang, director Agent ad litem : Chen Longjie, attorney-at-law, Greenleaf Law Firm Shenzhen Office Liu Yun, attorney-at-law, Greenleaf Law Firm Shenzhen Office Defendant 1 : Guangdong Yudean Shipping Co., Ltd. Address : Room 1388, 13/F, Labor Building, Hong Hua Yuan, Nanshan District, Shenzhen, Guangdong Legal Rep. : Liang Jian, Chairman of the board Agent ad litem : Zhu Weikang, attorney-at-law, Yang & Lin Co. Law Firm Chen Haojie, attorney-at- law of Everwin Law Firm Defendant 2 : Hiro Shipping Co. Ltd. / Hiro Shipping INC. Address : 80 Broad Street Monrovia, Liberia Legal Rep. : Yusuke Hashiguchi, director and general manager Agent ad litem : Chen Xiangyong, attorney-at-law, Wang Jing & Co. Law Firm Cao Yanghui, attorney-at-law, Wang Jing & Co. Law Firm Defendant 3 : Yuma Maritime S.A. Address : 53rd Street, Urbanizacion Obarrio, Torre Swiss Bank 16th Floor, Panama, the Republic of Panama Legal Rep. : Masaki Hara, director and deputy general manager Agent ad litem : Chen Xiangyong, attorney-at-law, Wang Jing & Co. Law Firm Cao Yanghui, attorney-at-law, Wang Jing & Co. Law Firm With regard to the litigation filed by the Plaintiff, Nanjing Channel Engineering Bureau of Changjiang River, against Defendant 1, Guangdong Yudean Shipping Co., Ltd. (hereinafter referred to as Yudean), Defendant 2, Hiro Shipping Co. Ltd. / Hiro Shipping INC. (hereinafter referred to as Hiro), and Defendant 3, Yuma Maritime S.A. (hereinafter referred to as Yuma) for dispute over damages arising out of ship collision, this Court formed a collegial panel according to law convening the parties involved to exchange evidence prior to the hearing on 22 January, 19 March and 23 April in the year of 2008 respectively, holding pretrial conference on 3 and 4 June, and hearing in public session on 6, 7, 8 and 12 August. The agents ad litem of the Plaintiff, Chen Longjie and Liuyun, agents ad litem of Yudean, Zhu Weikang, Chen Haojie, and agents ad litem of the Defendants, Hiro and Yuma, Chen Xiangyong and Cao Yanghui, participated in the pretrial evidence exchange and conference, and appeared in court for the trial. The surveyors Lu Daonan, Huang Guangming and Xu Jiangping appeared in court for court examination as requested by the Plaintiff, the same as the accountant Tang Qiujin as requested by Defendant 1, Yudean, as well as the surveyor Zhang Jindao as requested by Defendant 2 and Defendant 3, Hiro and Yuma. The hearing of this case has now concluded. The Plaintiff claims as follows: On 14 March 2007, M/V “YUE DIAN 2” owned by Yudean, M/V “SUMIRE” owned by Hiro and bareboat chartered by Yuma, and M/V “HANG JUN 11” owned by the Plaintiff encountered a collision accident in Lingding, Shuidao of the Pearl River. This collision accident was due to the faults of M/V “YUE DIAN 2” and M/V “SUMIRE”, the aforesaid three Defendants shall bear joint and several liabilities for damages against the Plaintiff. The losses suffered by the Plaintiff arising from this accident include: 1, Cost of repair of M/V “HANG JUN 11” in sum of RMB 38,577,903; 2, Charges for emergency measures taken by MSA in sum of RMB 337,126; 3, Salvage charges in sum of RMB 8,030,000; 4, Losses of materials and components in sum of RMB1, 503,725; 5, Cost of purchasing clutch in sum of RMB 317,722.54; 6, Cost of oil consumed by trial voyage in sum of RMB 225,900; 7, Losses of personal belongings of seamen in sum of RMB 63,780; 8, Post wages of seamen in the course of repair in sum of RMB 816,074.17; 9, Merit pay of seamen in the course of repair in sum of RMB 337,464; 10, Accommodation fee of seamen in the course of repair in sum of RMB 285,975; 11, Operating loss in sum of RMB 17,912,748.11; 12, Examination fee in sum of RMB 150,000; 13, Costs of accounting and auditing support in sum of RMB 50,000; 14, Accident management fee in sum of RMB 213,328.40; 15, Other supporting costs in the course of repair in sum of RMB 31,635.90. 16, Unexpired insurance premium in sum of RMB 55,616.20. The total amount is RMB 68,908,998.32. The Plaintiff requested this Court to order the three Defendants to jointly and severally indemnity the Plaintiff for loss in amount of RMB60, 000,000.00 and the interests hereof (computed from 15 March 2007 on basis of the loan interest of circulating fund for the same period as published by the bank), and to order the three Defendants to jointly and severally undertake the litigation fees, application fee and enforcement fee for property and evidence preservation prior to litigation and other relevant court fees. The Plaintiff submitted the following evidence within the term of adducing evidence: 1, Certificate of Vessel’s Nationality, Classification Certificate for Hull, Certificate of Vessel’s Inspection, Certificate of Load Line, Certificate of Oil Pollution Prevention, Certificate of Tonnage, Certificate of Seaworthiness of M/V “HANG JUN 11”; 2, Certificate of Competency of Master Chen Wu, Certificate of Competency of Master Chen Xiping, Certificate of Competency of 2nd Officer Yu Gang, Certificate of Competency of Duty Officer Chen Chunhai, Certificate of Competency of Chief Engineer Qian Ming, Certificate of Competency of Second Engineer Dai Yongqing; 3, Permits for operation above and under water, Notice to Mariners; 4, Log book; 5, Accident Report, Table of Investigation of Marine Accidents, Nautical Chart; 6, Contract of Salvage, Payment Voucher for Salvage Fee, Invoice of Salvage Fee; 7, Settlement Agreement stipulating the costs for handling emergency, Invoice and Receipts hereof; 8, Charter Party, Off-hire Notice dated 11 February 2007, On-hire Notice dated 12 March 2007, Off-hire Notice dated 16 March 2007, Statement of Account; 9, Daily Reports of Dredging Operation, Accounting Voucher, Telegraphic Transfer Voucher, Specific Audition Report; 10, Repair Contract and Quotation and Instruction, Work-Done List, Statement of Account, Payment Voucher of Repair Cost, Statement of the Period of Repair, Correspondence in Respect of the Repair; 11, Court’s Receipt of Payment for arresting M/V “SUMIRE”, Court’s Receipt of Payment for arresting M/V “YUE DIAN 2”, Court’s Receipt of Payment for preserving evidence of M/V “YUE DIAN 2”, Court’s Receipt of Payment for filing the case with the Court; 12, List of the Damaged Materials in the Warehouse of M/V “HANG JUN 11”, Table of the Stocks before and after the Accident, Breakdown of Losses of Personal Belongings Onboard M/V “HANG JUN 11”; 13, Insurance Policy, Receipt of Premium, Vouchers of Payment for Premium; 14, No.5, No.6, No.25, No.32, No.34, No.36, No.38, No.41, No.43, No.46, No.47, No.55, and No.58 Payment Vouchers of crew wage, bonus and cost of meals and of handling the accident and expense for the maintenance of vessel during the period of repair; 15, No. 13 and No. 23 Payment Vouchers, Payment Instrument, Notice of Requisition of Merit Pay and Cost of Meal in Sep. Oct. Nov. and Dec; 16, Jindan Hotel’s Statement of Account and Invoices hereof; 17, Memorandum of damage to the clutch provided by Department of Ship Repair of CSSC Guangzhou Shipbuilding Co., Ltd. (hereinafter referred to as CSSC), Telegraphic Transfer Voucher for Payment of purchasing clutch, Price List, Invoices hereof (2 pages), Commercial Invoice; 18, Memorandum of fuel oil used for trial voyage after repair provided by Department of Ship Repair of CSSC, Contract of Fuel Supply, Payment Voucher of Refuel Costs; 19, Table of Crew’s Basic Wage; 20, Inspection Report of M/V “HANG JUN 11” as well as the Appendices, Payment Vouchers of Inspection Fee, Invoice of Cost of Inspection carried out by CCSI; 21, Special Examination Report of Operating Losses of M/V “HANG JUN 11”, Invoice of payment for examination fee. Defendant 1 Yudean made the following defense: I. After the accident, Guangzhou MSA conducted investigation hereof and issued the Investigation Report of the Collision Accident which ascertained that M/V “YUE DIAN 2” should bear major liability and M/V “HANG JUN 11” should bear secondary liability for the first collision, and M/V “SUMIRE” should bear major liability and M/V “HANG JUN 11” should bear secondary liability for the second collision. Yudean agreed at the aforesaid ascertainment made by Guangzhou MSA. Accordingly, M/V “YUE DIAN 2” should bear liability in the proportion of 55% for the first collision, and M/V “HANG JUN 11” should bear that in the proportion of 45%. In addition, M/V “YUE DIAN 2” should not be liable for the second collision. II. Although M/V “YUE DIAN 2” misestimated M/V “HANG JUN 11” as an outbound vessel, M/V “HANG JUN 11” also misestimated M/V “YUE DIAN 2” as an inbound vessel and agreed to let her overtake which led to a close-quarter situation. At the time when M/V “HANG JUN 11” and M/V “YUE DIAN 2” was approaching each other, M/V “HANG JUN 11” failed to alter course to port and the two vessels came in to collision thereafter. The master of M/V “HANG JUN 11” was not onboard so that the vessel was not seaworthy. III. The losses claimed by the Plaintiff were not reasonable. As per the Survey Report and Supplementary Appraisal Report of Statement of Repair Cost provided by Yudean, the repair cost of M/V “HANG JUN 11” for the first collision amounts to RMB 271,497, and 20 days of repair were required; and that for the second collision amounts to RMB 29,215,283, and 170 days of repair were required, the reasonable salvage fee is RMB 5,000,000. The Defendant hereby requests the court to overrule the unreasonable claims filed by the Plaintiff against Yudean and to order the Plaintiff to bear the relevant litigation fees. The Defendant 1 Yudean submitted the following evidence within the term of adducing evidence: 1, Business License; 2, Certificate of Vessel’s Nationality, Certificate of Ownership, Interim Classification Certificate, Cargo Ship Safety Construction Certificate, Cargo Ship Safety Equipment Certificate, International Tonnage Certificate, International Load Line Certificate, Cargo Ship Safety Radio Certificate, International Oil Pollution Prevention Certificate, Interim International Ship Security Certificate, Certificate of Compliance, Certificate of Exemption, and Minimum Safe Manning Certificate of m/v “Yue Dian 2”; 3, Crew List of m/v “Yue Dian 2”, Certificates of Competency of Crew onboard m/v “Yue Dian 2”, Seaman’s Record Books of Crew onboard M/V “Yue Dian 2”; 4, Marine Accident Report; 5, Deck Logbook, Engine Logbook, Deck Bell Book, Engine Bell Book of m/v “Yue Dian 2”; 6, Survey Report of M/V “HANG JUN 11”; 7, Supplementary Appraisal Report of Statement of Repair Cost of M/V “HANG JUN 11”. The Defendants Hiro and Yuma jointly made the following defense: I. Hiro is not the proper defendant of this case. With regard to this collision accident, it is the bareboat charterer who should bear the collision liability. Hiro is the registered owner of M/V “SUMIRE” and Yuma is the bareboat charterer of this vessel. The flag state of M/V “SUMIRE” is Panama. Therefore, according to law of Panama, no registration is required for bareboat chartering, i.e. such bareboat chartering shall have the same legal effect as that with registration as required by the other countries. Accordingly, Hir should not bear any collision liability. II. The liabilities borne by each vessel are as follows: 1. There are two collisions involved in this case. Prior to the occurrence of the first collision, M/V “HANG JUN 11” was operating along the approach channel so that her manipulating and avoidance capability was limited. However, M/V “YUE DIAN 2” misestimated M/V “HANG JUN 11” as an outbound vessel and mistakenly and abruptly altered her course to port substantially when she was very close to M/V “HANG JUN 11”, which led to a close quarter situation and made the first collision unavoidable. As a result, M/V “HANG JUN 11” quickly moved astern crossed the channel and blocked the channel completely. When M/V “SUMIRE” was aware of the occurrence of the first collision, she was very close to M/V “HANG JUN 11” so that M/V “HANG JUN 11”’s crossing of the channel directly caused the another close quarter situation which made the second collision unavoidable. The conducts of M/V “YUE DIAN 2” is the primary cause of the aforesaid two collisions. Accordingly, M/V “YUE DIAN 2” should bear major liability hereof; 2. M/V “SUMIRE” and M/V “HANG JUN 11” expressly agreed that M/V “SUMIRE” overtook from the port side of M/V “HANG JUN 11”. M/V “HANG JUN 11” as the overtaken vessel should have kept steady course. Even though she moved astern for the purpose of avoiding collision, she failed to stop engine in time and blocked the channel violating the agreement and navigation rules. The fault of M/V “HANG JUN 11” was the primary cause of the second collision. Therefore, M/V “HANG JUN 11” should bear major liability for the second collision and bear secondary liability for the whole accident; 3. M/V “HANG JUN 11”’ abrupt crossing of the channel directly led to the close quarter situation with M/V “SUMIRE”. However, M/V “SUMIRE” complied with the agreement and navigation rules and avoided collision with her best endeavor, even though she was still unable to avoid the second collision. M/V “SUMIRE” was free of any fault and should not bear any liability for the whole accident. Even though she should bear part of liabilities, such liability should be no more than the proportion of 10%. III. Each vessel involved in the collision shall be liable in proportion to the extent of her fault. It is groundless in law for the Plaintiff to claim for joint and several liabilities against the three Defendants. IV. The losses claimed by the Plaintiff are unreasonable. As per the appraisal of the Respondent, the reasonable repair costs should amount to RMB 30, 000, 000; 2. The operation loss calculated by the Plaintiff is not reasonable. It should be calculated on the basis of the complete hire period including the period of repair and maintenance; 3. The salvage fee in sum of RMB 8, 030, 000 as claimed by the Plaintiff is obviously far more than an reasonable amount which should be no more than RMB 5, 000, 000; 4. The charges for dealing with the case, inspection fee and accounting and auditing fee should be apportioned equally; 5. There is no effective evidence proving the losses of other materials and components. Therefore, it is impossible that all the materials and components were lost or damaged due to the sinking of M/V “HANG JUN 11”; 6. There is no effective evidence proving the rationality and necessity of purchasing clutch and oil for trial voyage. In conclusion, the Defendants Hiro and Yuma request the court to order Yudean to bear major liability, and the Plaintiff should bear corresponding liability as per the extent of fault, to overrule the claims filed by the Plaintiff against Hiro and Yuma, and to order the Plaintiff to bear the relevant litigation fees. The Defendants Hiro and Yuma submitted the following evidence within the term of adducing evidence: 1. Certificates of M/V “SUMIRE”, including Statutory Certificate of Register, International Tonnage Certificate, International Loading Certificate, International Oil Pollution Prevention Certificate, Cargo Ship Safety Radio Certificate, Cargo Ship Safety Equipment Certificate, Cargo Ship Safety Construction Certificate, Certificate of Minimum Manning, Safety Management Certificate, and Statutory License for Radio; 2. Bareboat Charter Party, Time Charter Party, Rent Statement; 3. Deck Logbook, Engine Logbook, Bell Book and Pilot Card of M/V “SUMIRE”; 4. Crew List of M/V “SUMIRE”; 5. Maritime Accident Investigation Form; 6. Survey Report on damage of M/V “SUMIRE” arising from the collision, Appraisal Report of Salvage Fee; 7. Legal Opinion from a lawyer in Panama. This Court has obtained the following evidential materials from Guangzhou MSA: 1. Collision Accident Investigation Report issued by Guangdong MSA; 2. Maritime Traffic Accident Report (two pieces) and Maritime Accident Report of M/V “YUE DIAN 2”; 3. Deck Logbook, Engine Logbook, Deck Bell Book, and Engine Bell Book of M/V “YUE DIAN 2”; 4. Interview records taken by Guangzhou MSA of some crews of “Yue Dian 2”, including interview records of Master Jiang Feng, of second officer Cao Junlong, of third officer Qiu Weizhong, of chief engineer Chen Wenqiang, of first engineer Xu Weihe, of third engineer Li Huaxu (two pieces), of A/B Huang Jingqing, of A/B He Jianming; 5. Logbook, Engine Logbook and Maritime Traffic Accident Report of M/V “HANG JUN 11”; 6. On-the-spot Accident Investigation Records on M/V “HANG JUN 11” produced by Guangzhou MSA; 7. Interview records taken by Guangzhou of some crews of M/V “HANG JUN 11”, including interview records of chief officer Chen Xiping (two pieces), of second officer Chen Jiesong, of second officer Yu Gang, of chief engineer Qian Ming, of first engineer Dai Yongqing, of A/B Chen Haichun, of A/B Xielei, of machinist on duty Wang Daohai, of machinist Qi Fei; 8. Interview records taken by Guangzhou MSA of Song Gentong, the project manager of Guangzhou Seaward Passage Project of Nanjing Channel Engineering Bureau; 9. Certificate of Register, Safety Manning Certificate, and Certificate of Competency of crews of M/V “SUMIRE”; 10. Marine Accident Report of M/V “SUMIRE”; 11. Ship Manoeuvring Parameter List and Side View of Bow Structure of M/V “SUMIRE”; 12. Average Survey Report of M/V “SUMIRE” produced by Classification society; 13. Interview records taken by Guangzhou MSA on pilot Zhao Bingxun (two pieces); and 14. Interview records taken by Guangzhou MSA of the Master (two pieces), of the third officer, of the chief engineer, and of the A/B of M/V “SUMIRE”. Based on the joint application filed by the Plaintiffs and Defendants, this Court organized parties to this case to watch VTS video at Guangzhou MSA, and to copy the sound recordings of conversations, and the written records thereof were submitted by the parties to this case. : At the pre-trail conference, both the Plaintiffs and the Defendant Nanjing Channel Engineering Bureau believed that the written record of the sound recording of conversations in VTS submitted by the defendant Yudean Co. is comparatively accurate and confirmed the authenticity of the said written record. Upon hearing and cross-examination, and in combination of the evidences and opinions on cross-examination submitted by parties to the case and statement of accounts, the Collegial Panel ascertains the following facts through investigation: I. Particulars of Ships involved in the Accident M/V “HANG JUN 11”: Gross Tonnage 2,691 tons, Net Tonnage 807 tons, Deadweight Capacity Indication 2,457 tons, Length overall 84.75M, Breadth 15M, Depth 5.5M, Full Load Draft 4.5M; Kind of Vessel: Dredger; Material of Shell: Steel; Navigating Area: Offshore; Number of Watertight Transverse Bulkhead: Six; Port of Registry: Nanjing; Signal Letters: BTYS; Number of Registry: 060102000138; Classification society: CCS; Kind of Main Engine: Diesel Engine/6L28/32; Horse Power of Main Engine: 1,320KW×2; main engine manoeuvring being controlled by the navigation bridge. Where and when built: Hudong Zhonghua Shipbuilding Co.,Ltd, completed on October 26, 1998. M/V “YUE DIAN 2”: Gross Tonnage 36,559 tons, Net Tonnage 23,279 tons, Deadweight Tonnage 70,182 tons, Length overall 225M, Breadth 32.26M, Depth 18.3M, Speed of Vessel 14 Knots. King of Vessel: Bulk Carrier; Material of Vessel: Steel; Port of Registry: Shenzhen; Signal Letters: BRWL; IMO No.: 9077240; Classification society: CCS; Kind of Main Engine: Internal-combustion Engine/SULZER 6RTA62; Horse Power of Main Engine: 8,826KW; main engine manoeuvring being controlled by the engine room; Where and when built: Japan, SUMITOMO HEAVY INDUSTRIES, LTD., completed on July 14, 1994. The Defendant Yudean Co. is the registered ship owner and operator of the ship. M/V “SUMIRE”: Gross Tonnage 14,089 tons, Net Tonnage 7,023 tons, Deadweight Tonnage 17,732 tons, Length overall 163.6M, Breadth 26M, Depth 13.4M; Departure Draft: fore 5.78M, aft 6.82M; Kind of Vessel: Container Ship; Material of Hull: Steel; Speed of Vessel: 18.5 Knots; Port of Registry: Panama; Signal Letters: 3FTA7; IMO No.: 9153070; Kind of Main Engine: Internal-combustion Engine/SULZER 6RTA62; Horse Power of Main Engine: 8,826KW; main engine manoeuvring being controlled by engine room; Classification society: NK (Nippon Kaiji Kyokai); Where and When built: Japan, IMABARI SHIPBUILDING CO. LTD., completed on October, 1997. The Plaintiff Hiro is the registered owner of this ship. The Plaintiff Hiro and Yuma concluded a Bareboat Charter and a Purchase Contract on March 24, 1997, therein it was agreed that the Plaintiff Yuma hired M/V “SUMIRE” in the way of bareboat charter, however, no registration of bareboat charter of M/V “SUMIRE” had been conducted. II. Details of the Accident At 1910 hrs on 14 March 2007, M/V “YUE DIAN 2” departed Guangzhou port in ballast condition, bound for Huang Ye Port. The draft at departure was: fore 3.4m, after 6.3m. Master, Jiang Feng, was in charge of commanding the vessel, the Third Officer was in charge of the engine bell operation and assisted in look-out, while two A/B took turn to operate the rudder and assisted in look-out. At 2228 hrs, M/V “YUE DIAN 2” reported to VTS Guangzhou through VHF that she had passed Humen Bridge, and later this vessel entered into Lingding Channel and sailed full ahead. At 2335 hrs, M/V “YUE DIAN 2” passed Buoy No.36. When passing between Buoy No.33 and No.34, the Master, by observing the radar, detected a vessel (namely M/V “HANG JUN 11”) sailing before M/V “YUE DIAN 2” along the channel. At that time M/V “HANG JUN 11” was 4nm away from M/V “YUE DIAN 2” with the speed of about 3knots. The Master judged that M/V “HANG JUN 11” was an outbound dredger. The monitoring materials of VTS Guangzhou indicated that at 2340 hrs, M/V “YUE DIAN 2” had already passed Buoy No.34, with the course at 162°, the speed of 16.5knots, and the position at the middle of the channel alongside the red buoy. The Master, by observing the radar, detected another ship (namely M/V “SUMIRE”) sailing at the middle of the channel, with the distance of about 6.5nm away from M/V “YUE DIAN 2” and the speed of about 15knots. At 2344 hrs, M/V “YUE DIAN 2” just passed Buoy No.32, with the course at 163° and the speed of 17knots, sailing alongside the red buoy. At 2345 hrs, the A/B took the shift, one person in charge of rudder operation and the other assisting in look-out. At about 2347 hrs, M/V “YUE DIAN 2” just passed Buoy No.30, and the course and the speed of the vessel did not change. At 2348 hrs, M/V “YUE DIAN 2” contacted M/V “HANG JUN 11” through VIF for three times to communicate on the overtaking. M/V “HANG JUN 11” made a reply to M/V “YUE DIAN 2” and agreed M/V “YUE DIAN 2” to overtake her from the port side. At about 2349 hrs, the Master of M/V “YUE DIAN 2” order the vessel to make hard to port, and reported through VHF that she was turning to port. At 2350 hrs, M/V “YUE DIAN 2” passed Buoy No.28 with the speed of 17knots. At about 2351 hrs, M/V “YUE DIAN 2”, on the position of the back side of the starboard draft marks at the bow, collided with the bow of M/V “HANG JUN 11” almost at a right angle. The GPS position of M/V “YUE DIAN 2” at the time of collision was: 22°31′N, 113°44′.5E, heading about 136°, and speed at about 10knots. After collision, M/V “YUE DIAN 2” clashed out of the channel, and grounded at the eastern side of the channel at about 0003 hrs in 15 March. The GPS position of M/V “YUE DIAN 2” at the time of grounding was: 22°30′.7N, 113°45′.E. At about 0600 hrs, M/V “YUE DIAN 2” was relieved from grounding by taking the chance of tide and under the assistance of two tugs. At 2320 hrs on 14 March 2007, M/V “HANG JUN 11” was carrying out dredging operation at Lingding Channel, the Second Officer, Yu Gang and the A/B went to the bridge for taking the duty. At 2325 hrs, the Second Officer ordered the A/B in charge of harrow operations to lift up the harrow, and sailed the vessel out of the eastern side of the channel, checked and cleaned the harrow tools for shift taking. After completion of shift turning outside the channel, the Second Officer, Yu Gang, who took the duty, was in charge of the manoeuvring of the vessel and the dredging operation. One A/B was in charge of rudder operation, and the other A/B was in charge of harrow operations. Two sets of ARPA radars at the bridge platform had been turned on, with the presentation of comparative movement, and the heading upward, and with the measurement distance separately set up at 1.5nm and 3nm. One set of depth sounder, AIS, GPS, and one set of DGPS, and 4 sets of VHF had been turned on. 2 sets of VHF were set up at Channel 9, while the other 2 sets of VHF were set up at Channel 16. The sailing lights had been turned on, displaying the sidelights on the starboard side and the port side, and the fore and after masthead lights, and stern lights, and vertically displacing three all-round lights of red, white and red colors. The two illuminative lights at deck had been turned on. At 2339 hrs, the Second Officer instructed M/V “HANG JUN 11” to sail into the channel, and carried out operations along the channel at the place between the Green Buoy No.25 and No.27. Soon after the vessel carried out operation within the channel, the Second Officer first saw a coming vessel sailing near Buoy No.36 alongside the red buoy, displaying red and green side lights, and fore and after masthead lights. In accordance with the monitoring record of VTS Guangzhou, at about 2343 hrs, the course of M/V “HANG JUN 11” was about 321° with the speed of about 1.5knots. At 2346 hrs, the course of M/V “HANG JUN 11” was about 341° with the speed of about 2knots. At 2348 hrs, the course of M/V “HANG JUN 11” was about 342° with the speed of about 2knots. At this time M/V “HANG JUN 11” receive the calling from M/V “YUE DIAN 2” through VHF, and later the Second officer made a reply to M/V “YUE DIAN 2”, agreeing M/V “YUE DIAN 2” to overtake her from the port side. M/V “HANG JUN 11” immediately lifted up the harrow, and stop the main engine to observe the movement of the coming vessel. At about 2349 hrs, the course of M/V “HANG JUN 11” was about 342° with the speed unchanged, and at this time, M/V “YUE DIAN 2” called M/V “HANG JUN 11” through VHF to inform that she was turning to port. The Second Officer on duty, Yu Gang, after knowing the coming vessel had already taken the action to turn to port, immediately ordered to move slow astern both then full astern both. Soon after the orders to move astern were given, at 2351 hrs, the starboard side at the bow of M/V “YUE DIAN 2” collided with the bow of M/V “HANG JUN 11”, with the collision angle at about 90°. The two vessels immediately separated from each other after collision, and the bow of M/V “HANG JUN 11” turned to starboard and went astern to the port side of the entering channel. At about 2354 hrs, M/V “HANG JUN 11” collided with an approaching vessel, M/V “SUMIRE”, in the middle between the red buoy No.26 and No.28., to the edge of the channel. The bow of M/V “SUMIRE” clashed into the part slightly before the midship at the starboard side of M/V “HANG JUN 11”. The heading of M/V “HANG JUN 11” at the time of collision was about 40°, and the vessel was moving astern at the speed of about 7knots. At 1245 hrs on 11 March 2007, M/V “SUMIRE”, laden with the container No.822TEU (7,282.7tons of cargos), departed from KOBE, Japan, and proceeded to Xinnansha Port in Guangzhou. At 2210 hrs in 14 March, M/V “SUMIRE” arrived at Guishan Anchorage in Guangzhou for the pilot to embark the vessel. The pilot, Zhao Bingxun, embarked the vessel. After acquiring information on the engines and rudders from the Master, the pilot discussed with the Master and then decided to instruct the vessel to enter into the port by making the main engine stand by with the speed of rotation at 100RPM, and the speed of 15knots. The Master told the pilot that the maximum draft of the vessel was 6.8m. The pilot thought the channel was comparatively clean, and hence started to pilot the vessel to enter into Nansha Port, while the Master, the Third Office and one A/B in charge of rudder operation were all at the bridge. The pilot, Zhao Bingxun, gave instructions on the operation of the engine bell and the rudder to pilot the sailing, and the Third Officer was in charge of engine bell operation and assisted with look-out, while the A/B was in charge of rudder operation. Two sets of radar, GPS, AIS had been turned on. The pilot used the ARPA radar to observe the situation by alternating the range between 1.5nm and 3nm. The speed of the vessel was maintained at about 15knots. At 2240 hrs, the Master left the bridge. At about 2340 hrs, M/V “SUMIRE” was near Buoy No.21 and No.22, with the speed of about 14knots and the course at 351°. The pilot saw a vessel in front near Buoy No.25 and No.26, placing three lights with the color of red, white and red in a vertical line. The pilot got the information through AIS that the name of the vessel in front was M/V “HANG JUN 11”. The course of M/V “HANG JUN 11” was 340°, and the speed was very slow, while M/V “HANG JUN 11” was about 3.2nm away from M/V “SUMIRE”. The pilot also detected through radar M/V “YUE DIAN 2” near the position between Buoy No.31 and No.33, sailing towards the exit and alongside the red buoy at the main channel and with the distance of about 6.5nm away from M/V “SUMIRE”. At about 2342 hrs, M/V “SUMIRE” passed Buoy No.21 and No.22, with the course at 352° and the speed of 15.1knots. The pilot visually saw that there was no obvious change in the sailing movement of both M/V “HANG JUN 11” and M/V “YUE DIAN 2”. At 2344 hrs, the pilot ordered M/V “SUMIRE” to lower the speed. The monitoring material of VTS Guangzhou showed that the speed of the vessel was about 14knots. The Master immediately went to the bridge after he felt that the speed of the vessel had changed. At 2347 hrs, M/V “SUMIRE” was sailing near Buoy No.23, and the course was changed into 343°, and at this time the speed was about 14knots, while M/V “SUMIRE” was about 1.7nm away from M/V “HANG JUN 11”. The pilot considered to come across first with M/V “YUE DIAN 2”, which was sailing toward the exit, and then passed M/V “HANG JUN 11” from her port side. At about 2349 hrs, M/V “SUMIRE” informed M/V “HANG JUN 11” through VHF of her overtaking intention, and requested M/V “HANG JUN 11” to maintain her course. M/V “HANG JUN 11” replied and expressed her agreement. Soon after the VHF communication, the pilot saw the bow of M/V “YUE DIAN 2” obviously turn to port, and the pilot found that there was a collision risk between M/V “YUE DIAN 2” and M/V “HANG JUN 11”. At the same time, the pilot heard through VHF that M/V “YUE DIAN 2” kept changing her order between hard to port and hard to starboard. The pilot felt that M/V “YUE DIAN 2” was quite nervous. At that time, the distance between M/V “SUMIRE” and M/V “HANG JUN 11” was about 1.2nm. VTS Guangzhou had reminded M/V “SUMIRE” to slow the engine for 4 times within one minute, and to pay attention to the vessel sailing towards the exit and the dredger in front. At about 2351 hrs, M/V “YUE DIAN 2” collided with M/V “HANG JUN 11”, while M/V “YUE DIAN 2” clashed out of the channel. At such time, the course of M/V “SUMIRE” was 343°, with the speed of 15.3knots, and M/V “SUMIRE” had already approached Buoy No.26, about 0.8nm away from the position where the aforesaid two vessels collided, while M/V “HANG JUN 11” did not stop moving astern, and M/V “SUMIRE” intended to overtake M/V “HANG JUN 11” from the stern of M/V “HANG JUN 11”. At about 2352 hrs, when finding M/V “HANG JUN 11” moving astern sideling at a high speed towards the port side of the entering channel, the pilot immediately called M/V “HANG JUN 11” through VHF, telling her not to move astern, and the pilot also ordered M/V “SUMIRE” to make port 10°. When M/V “SUMIRE” turned her course to 320°, the pilot found M/V “HANG JUN 11” still moving astern, and then he ordered M/V “SUMIRE” to make hard to port, later immediately changed the order to make hard to starboard, and to stop the main engine. At about 2353 hrs, the distance between M/V “SUMIRE” and M/V “HANG JUN 11” was already less than 0.2nm. At about 2354 hrs, the bow of M/V “SUMIRE” clashed into the part slightly before the starboard midship of M/V “HANG JUN 11”, with the collision angle of about 70°. The heading of M/V “SUMIRE” at the time of collision was about 330°, and the speed was about 10.2knots. According to the monitoring record of VTS Guangzhou, the position where the two vessels collided was 22°31′N, 113°44′.4E. After collision, the two vessels did not separate from each other immediately and M/V “SUMIRE” dispatched two cables to M/V “HANG JUN 11” to fasten the two vessels. At about 0040 hrs in 15 March, water came into the fore hold and the engine room of M/V “HANG JUN 11”. At about 0108 hrs, M/V “SUMIRE” grounded. At 0410 hrs, M/V “SUMIRE” separated from M/V “HANG JUN 11”. At 0535 hrs, M/V “HANG JUN 11” grounded at the western side of Buoy No.24 under the assistance of two tugs, with the grounding position at 22°28′.5N, 113°43′.5E. At about 0730 hrs, M/V “SUMIRE” got refloated. At the time of the occurrence of the accident: overcast, visibility 4 to 5nm, easterly wind with the force of 4, ebb tide, and current speed about 1.5knots. After occurrence of the accident, Guangdong MAS carried out investigations thereto in accordance with the law, and issued the Investigation Report on the Collision Accident among M/V “YUE DIAN 2”, M/V “HANG JUN 11” and M/V “SUMIRE”, which presented the following opinions: this was an accident involving three vessels respectively with two collisions under a special circumstance; for the first collision between M/V “YUE DIAN 2” and M/V “HANG JUN 11”, M/V “YUE DIAN 2” shall bear the major liability, while M/V “HANG JUN 11” shall bear the minor liability; for the second collision between M/V “HANG JUN 11” and M/V “”SUMIRE, M/V “”SUMIRE shall bear the major liability, while M/V “HANG JUN 11” shall bear the minor liability; III. Losses claimed by the Plaintiff After the collision, the Plaintiff concluded the Contract of Salvage with Guangzhou Salvage Bureau on 27 March 2007 entrusting Guangzhou Salvage Bureau to salvage M/V “HANG JUN 11”. The vessel was refloated on 1 April. The Plaintiff concluded the Contract of Repair of M/V “Hang Jun 11” on 2 April. The vessel was delivered to CSSC for repair on 4 April and was repaired and left the factory on 4 January 2008. With regard to all the losses claimed by the Plaintiff, the collegial panel decides as follows: (I) Repair cost of M/V “HANG JUN 11” The Plaintiff provided the Inspection Report issued by CCSI, the Contract of Repair of M/V “Hang Jun 11” concluded by and between the Plaintiff and CSSC, Quotation of M/V “HANG JUN 11” and the Instructions hereof, Work-Done List, Statement of Repair Cost, Payment Voucher of Repair Cost, Statement of the Period of Repair and Correspondence in Respect of the Repair. The price for settlement as agreed by the Plaintiff and CSSC in the Settlement Agreement was in amount of RMB 44, 319, 385. According to the ascertainment specified in the Inspection Report issued by CCSI, the losses which were directly caused to M/V “HANG JUN 11” include: 1. Salvage fee in sum of RMB 8, 030, 000; 2. Repair cost in sum of RMB 38, 577, 903. (Note: 1, The aforesaid amount of losses do not include the costs of spare parts for sea damage; 2. The Plaintiff provided at its own discretion a dredge pump pneumatic-tyre clutch which is not included in the repair costs; The price of the clutch claimed by the Plaintiff is RMB 317,722.54 which is reasonable and the clutch must be changed after the accident; 3, Consumption of the 30 tons of oils for trial voyage after repair is not included in the repair cost. 4. M/V “HANG JUN 11” arrived CSSC on 4 April 2007 and left the factory on 4 January 2008. The period of repair is 274 days which is the reasonable period of repair.) The Defendants Hiro and Yuma claim that the repair cost alleged by the Plaintiff is unreasonable, and the period of repair which lasted 274 days as alleged by the Plaintiff are too long. They provided the Inspection Report issued by China Marine Services Company Ltd. (hereinafter referred to as CMS) which ascertains that the reasonable amount of the repair cost for damage arising out of the accident should be about RMB 30, 000, 000. Defendant 1 Yudean claims that the repair cost alleged by the Plaintiff is unreasonable and provided the Inspection Report issued by Guang Dong Marine Engineering Co., Ltd. specifying that the total costs of permanent repair of M/V “HANG JUN 11” due to damage arising out of the sinking hereof should be no more than RMB 29,486,780 and that the losses caused by the aforesaid two collisions should be calculated separately as follows: with regard to the first collision, the period of repair was 20 days only so that the repair cost hereof should be RMB 271, 497; with regard to the second collision, the period of repair was 170 days so that the repair cost hereof should be RMB 29,215,283. The collegial panel holds that although the Defendants Yudean, Hiro and Yuma challenged the repair costs alleged by the Plaintiff. However, the aforesaid Defendants have no objection about the items to be repaired due to damage arising out of the accident. Instead, they are challenging the costs of such repair. In view that M/V “HANG JUN 11” actually suffered the damage due to the accident and paid for relevant repair. The payment amount hereof was ascertained as true and authentic and in amount of RMB 38,577,903 according to the Inspection Report issued by CCSI. (II) Charges for emergency measures taken by MSA The Plaintiff submitted the Settlement Agreement concluded by and between three Defendants and the Plaintiff, and Guangzhou MSA, Payment Voucher and Invoice as evidence to prove the payment for costs of clean-up and pollution prevention, salvage, emergency handling, tugboat are totally in sum of RMB 337,126. Three Defendants have no objection about such payment, and confirmed that such costs incurred by the accident is in amount of RMB 1, 011, 378 in total for which each party paid a average proportion in sum of RMB 337, 126 respectively. The collegial panel holds that the payment stipulated in Settlement Agreement concluded by and between three Defendants and the Plaintiff, and Guangzhou MSA was made before the apportionment of liability was determined. Therefore, such payment was not the confirmation of the proportion of liability for the collisions, and shall not affect the right to claim compensations from each other as per the determined proportion of liability. In view of that such costs were incurred by the emergency measures taken after the grounding of M/V “HANG JUN 11”, such as costs of salvage, clean-up, pollution prevention and guarding, and the grounding of M/V “HANG JUN 11” was due to the collision with M/V “SUMIRE”, such costs shall be borne by the parties involved in the collision between M/V “HANG JUN 11” and M/V “SUMIRE” as per their corresponding proportion of liability. (III) Salvage fee The Plaintiff provided evidence such as the Contract of Salvage, Payment Voucher and Invoice of salvage fee as evidence to prove the payment for salvage of M/V “HANG JUN 11” is in sum of RMB 8,030,000. The Defendants Yudean, Hiro and Yuma have no objection about the authenticity of the aforesaid evidence, but they claimed that the amount is too high. Hiro and Yuma submitted the Appraisal Report of the Plan and Budget for Salvage of M/V “Hang Jun 11” claiming that the salvage fee should be no more than 5, 000,000. The collegial panel holds that the salvage fee as claimed by the plaintiff shall be ascertained as it is the actual payment made by the plaintiff for the salvage of M/V “HANG JUN 11”. (IV) Losses of materials and components With regard to the losses of materials and components, the Plaintiff submitted some evidence including the Inspection Report issued by CCSI, List of the Damaged Materials in the Warehouse of M/V “HANG JUN 11”, Table of the Stocks before and after the Accident. According to the appendices to the Inspection Report, losses of materials and components are calculated as RMB 1,503,725. The inspector, Wang Jie, stated in the course of review that the number specified in the aforesaid List is not obtained via inspection at the scene. However, the number is determined as per the list provided by the entrusting party and relevant photos, and the losses are estimated according to the new purchase price of the materials and components. Three Defendants raised objections to such losses. The collegial panel holds that as per the statement of the inspector, Wang Jie, he did not check the losses of materials and components. Instead, he estimated the losses sustained by the Plaintiff only as per the list provided by the Plaintiff and the new purchase price, which lack objectivity. In the course of hearing, this Court has already requested the Plaintiff to re-estimate the losses of materials and components. Nevertheless, the Plaintiff failed to submit relevant evidence for supplements. Therefore, such estimation of losses of materials and components shall not be adopted and the aforesaid amount hereof shall not be ascertained. (V) Cost of purchasing clutch With regard to the cost of purchasing clutch, the Plaintiff submitted some evidence such as Memorandum, Telegraphic Transfer Voucher and Invoices hereof as evidence to prove the cost is in amount of RMB 317, 722.54. The Memorandum issued by CSSC on 5 December 2007 specified that the pneumatic-tyre clutch of the dredge pump of M/V “HANG JUN 11” corroded and such corrosion was beyond repair due to the accident, and thus a new clutch was required to be provided by the Plaintiff. The two telegraphic transfer vouchers indicate that the Plaintiff paid RMB 317, 722.54 to Tianjin Aiquxi Marine Technology Co., Ltd. (hereinafter referred to as Aiquxi) by two installments made on 8 July 2004 and 15 August 2005 respectively. Aiquxi issued the invoice on 4 April 2005 specifying the price of clutch in sum of RMB 317, 342.54, and another invoice on 27 April 2005 specifying the cost of transportation of the components in sum of RMB 380. Three Defendants raised an objection to the time of purchasing the clutch, and the Plaintiff explained that the clutch was a spare clutch. The collegial panel holds that as per the statement in the Memorandum issued by CCSI, the Plaintiff is obliged to purchase another clutch. Although the Plaintiff did not purchase another clutch but use the spare clutch instead, the Plaintiff actually suffered such loss which thus shall be ascertained. (VI) Cost of oil consumed by trial voyage With regard to the cost of oil consumed by trial voyage, the Plaintiff submitted Memorandum, Accounting Voucher, Telegraphic Transfer Voucher, Application Form for Advance Payment for purchase of goods and materials, and Contract of Oil Supply as evidence to prove that the cost is in amount of RMB 225, 900. The Memorandum issued by CSSC on 26 November 2007 specified that the 0# oil supplied by the shipyard was exhausted in the course of engine test, and the Plaintiff was required to supply 30 tons of oil for mooring trial and navigation test, and that if such oil is supplied by the shipyard, the cost of oil in sum of RMB 8,000/ton as well as 30% of management fee should be borne by the Plaintiff. The Plaintiff concluded with Guangzhou Guanghang Logistics Co., Ltd.(hereinafter referred to as Guanghang) the Contract of Oil Supply on 30 November 2007 stipulating that Guanghang supplies 30 tons of 0# diesel oil to the Plaintiff at the price of RMB 7,530/ton and the oil should be supplied to M/V “HANG JUN 11” at CSSC shipyard. The Telegraphic Transfer Voucher shows that the Plaintiff paid RMB 225,900 to Guanghang for the purchase of diesel oil. Three Defendants raised an objection to the actual amount of oil consumed by the vessel in the course of trial voyage. The collegial panel holds that the oil required for mooring trial and navigation test is necessary for the repair, and it is reasonable for the Plaintiff to purchase diesel oil at a relevantly low price at its own discretion as per the statements in the Memorandum. Therefore, the cost of oil consumed by trial voyage shall be ascertained. (VII) Losses of personal belongings of seamen With regard to the losses of personal belongings of seamen, the Plaintiff provided the Breakdown of Losses of Personal Belongings Onboard M/V “HANG JUN 11” as evidence to prove the losses are in amount of RMB 63,780. The collegial panel holds that in accordance with the provisions of Item 7 of Article 9 of the Provisions of the Supreme People’s Court on Compensations for Property Damage in the Trial of Cases of Ship Collision or Contact, losses of personal belongings of seamen shall be compensated according to the actual situation. However, M/V “HANG JUN 11” grounded in this accident but not sunk, which would not necessarily cause the losses of personal belongings of seamen. Furthermore, the Plaintiff can not provide any evidence proving the losses of personal belongings sustained by seamen, or any evidence proving the compensation made by the Plaintiff against seamen involved. Therefore, such cost shall not be ascertained. (VIII) Post wages of seamen in the course of repair With regard to the post wages of seamen in the course of repair, the Plaintiff provided Wage List of Seamen as evidence to prove that the post wages are totally in amount of RMB 826,074.17. Three Defendants denied such amount by reason that the Plaintiff failed to provide relevant payment voucher. The collegial panel holds that the Plaintiff shall not request for compensation for post wages of seamen by reason that it has already claimed compensation for loss of hire in which the post wages of seamen are included. Therefore, the loss of post wages of seamen shall not be ascertained. (IX) Merit pay of seamen in the course of repair The Plaintiff alleged that the merit pay of seamen in the course of repair is in amount of RMB 337,464. The collegial panel holds that the vessel was not under any operation in the course of repair so that there should not be any merit pay. Furthermore, the Plaintiff has already claimed compensation for loss of hire, it shall not request for compensation for merit pay or boarding expenses. Therefore, the merit pay of seamen claimed by the repair in the course of repair shall not be ascertained. (X) Accommodation fee of seamen in the course of repair The Plaintiff alleged that the accommodation fee of seamen in the course of repair is in amount of RMB 285,975 and provided Jindan Hotel’s Statement of Account and Invoice hereof issued by the Guangzhou Xindan Service Co., Ltd. as relevant evidence. Three Defendants raised an objection to such expense. They claimed that the List of Seamen Accommodated does not comply with the Crew List, and the Plaintiff failed to provide any payment certificate. The collegial panel holds that the accommodation fee incurred in the course of repair is reasonable by reason that there were still some seamen stayed onboard the damaged vessel. Additionally, the Plaintiff provided the Hotel’s Statement of Account and Invoice hereof. Therefore, such expense shall be ascertained. Nevertheless, the accommodation fee of Huang Hailong was computed repeatedly which should be deducted by RMB 1,560. Such amount is calculated according to 12 days of accommodation which was repeatedly computed and the unit price of accommodation in sum of RMB 130/day. The accommodation fee of seamen in the course of repair is ascertained as RMB 284,415. (XI) Loss of hire The Plaintiff provided Charter Party, Off-hire Notice dated 11 February 2007, On-hire Notice dated 12 March 2007, Off-hire Notice dated 16 March 2007, Statement of Account; 9, Daily Reports of Dredging Operation, Accounting Voucher, Telegraphic Transfer Voucher, Specific Audition Report issued by Guangdong Golden Bridge Certified Public Accountants Co., Ltd. (hereinafter referred to as Golden Bridge) as evidence to prove that the operating loss is in amount of RMB 17, 912,748.11. On 1 November 2006, the Plaintiff concluded as the charterer with Nanjing Channel Engineering Bureau of Changjiang River (hereinafter referred to as Changjiang Channel Engineering Bureau) the Charter Party stipulating that Changjiang Channel Engineering Bureau hires M/V “HANG JUN 11” from the Plaintiff, and the term of hire is tentatively fixed at 14 months computing from the day when M/V “HANG JUN 11” arrives the operation site of DE section of the third stage of testing dredging operation in the outbound channel of Guangzhou Port to the 31st day of December in the year of 2007; that the monthly hire hereof shall be RMB 1,900,000; and that the fixed operation hours shall be 500 hours/month, and where the actual operation hours is less or more than the fixed operation hours, the monthly hire shall be decreased or increased as per the price of RMB 3,800/hour for every hour less or more than the fixed operation hours. On 11 February, Changjiang Channel Engineering Bureau issued an Off-Hire Notice for the purpose of suspending relevant hire due to equipment failure of M/V “HANG JUN 11” which required long period of repair, and advised that the time of renewal of the hire shall be the date indicated in the On-Hire Notice after repair. On 12 March 2007, Changjiang Channel Engineering Bureau issued the On-Hire Notice notifying the renewal of the hire of M/V “HANG JUN 11” on the same day, and agreed to perform the Charter Party as per the original agreements hereof. On 16 March 2007, Changjiang Channel Engineering Bureau issued an Off-Hire Notice specifying that it would not make any payment for the hire from the same day by reason that M/V “HANG JUN 11” was damaged due to collision which required a long period of repair, and that the time of renewal of the hire shall be the date indicated in the On-Hire Notice after repair. According to the Statement of Account dated 17 December 2006, the time of hire was computed from the 15th day of November to the 14th day of December in 2006, namely, 604.63 hours of operation in total. Thus the hire hereof is in amount of RMB 2,297,594 calculated with the unit price of RMB 3,800/day which is originally stipulated in the Charter Party; According to the Statement of Account dated 18 January 2007, the time of hire was computed from the 15th day of December to the 14th day of January in 2006, namely, 624 hours of operation in total. Thus the hire hereof is in amount of RMB 2,371,200 calculated with the unit price of RMB 3,800/day; According to the Statement of Account dated 12 February 2007, the time of hire was computed from the 15th day of January to the 10th day of February in 2007, namely, 535.75 hours of operation in total. Thus the hire hereof is in amount of RMB 2,035,850 calculated with the unit price of RMB 3,800/day; According to the Statement of Account dated 17 March 2007, the time of hire was computed from the 13th day to the 14th day of March in 2007, and the hire hereof is in amount of RMB 155,800. As per the Telegraphic Transfer Voucher, Changjiang Channel Engineering Bureau had paid to the Plaintiff the hire of M/V “HANG JUN 11” as well as the dispatching fee hereof totally in sum of RMB 7,010,444 of which RMB 150,000 is the dispatching fee. According to the aforesaid evidence, the Plaintiff holds that M/V “HANG JUN 11” has actually operated for 91 days before the accident for which the hire is in amount of RMB 6,860,444. Therefore, the hire of M/V “HANG JUN 11” is in amount of RMB 75, 389.49/day. Pursuant to the Specific Audition Report issued by Guangdong Golden Bridge, the accumulated expenses relating to M/V “HANG JUN 11” from 4 November 2006 to 14 March 2007 amount to RMB 3,937,636.17, namely, RMB 904,868.20 for each month and RMB 30,058.29 for each day. Accordingly, within the suspension of operation of M/V “HANG JUN 11”, RMB 445, 281.95 was saved for each month and RMB 14, 791.56 was save for each day. According to the Statement of the Period of Repair of M/V “HANG JUN 11” issued by CSSC, M/V “HANG JUN 11” entered into the shipyard on 4 April 2007 for repair. The repair project was settled with CSSC on 12 December 2007, and the project debugging, acceptance inspection and trial voyage were accomplished on 2 January 2008. The damaged vessel was repaired and left the shipyard. The alleged operating loss sustained by the Plaintiff is calculated as per the following formula: Days off Hire × (Hire/Day – Savable Expenses/Day). The off hire period of M/V “HANG JUN 11” is computed from 00:03 on 15 March 2007 to 13:45 on 4 January 2008. Accordingly, the operating loss is calculated as follows: 295.6 days × (RMB 75,389.49 – 14,791.56) = RMB 17,912.748.11 Three Defendants raised an objection to the aforesaid Specific Audition Report issued by Guangdong Golden Bridge and also claimed that such audition report involves many special issues so that the examination of professional organization is required. However, three Defendants did not apply for such examination thereafter. The collegial panel holds that the accident happened during the time charter period of M/V “HANG JUN 11”, it is reasonable for the Plaintiff to calculate the loss of hire by deducting the savable expenses on the basis of the actual average hire. Considering that the hire stipulated in the Charter Party relating to M/V “HANG JUN 11” is not the fixed amount, the hire should be calculated as per the actual operation hours. Three Defendants raised an objection to the Specific Audition Report, but they failed to provide corresponding rebuttal evidence. Thus their objection was overruled. The loss of hire can be ascertained according to the losses sustained by M/V “HANG JUN 11” during the repair appraised in the Specific Audition Report. The accident happened at 2351 hrs on 14 March 2007. M/V “HANG JUN 11” was repaired on 4 January 2008, engine standby at 0900 hrs, across Humen Bridge and applied for dropping anchor at 1249 hrs, and anchor touched the seabed and anchor ball was hoisted at 1345 hrs. Accordingly, it is reasonable for the Plaintiff to calculate the off-hire period as 295.6 days, and the loss of hire as per the formula, 295.6 days × (RMB 75,389.49 – RMB14,791.56). The loss of hire sustained by the Plaintiff is ascertained as RMB 17,912.748.11. (XII) Inspection fee The Plaintiff alleged that the inspection fee is in amount of RMB 150,000. However, it failed to provide any relevant evidence. The collegial panel overruls the claim for such expenses. (XIII) Costs of accounting and auditing The Plaintiff provided the invoiced issued by Golden Bridge as evidence to prove that the costs of accounting and auditing are in amount of RMB 50,000. Three Defendants had no objection hereabout. The collegial panel ascertains such costs. (XIV) Costs of handling the accident The Plaintiff provided the Statistical Table of the Costs of M/V “HANG JUN 11” for handling the accident and relevant documents as evidence to prove that the costs of handling the accident are in amount of RMB 213,328.40. The costs include traveling expense, board expenses, cost of purchasing food, telephone rate, charges for mobile phone, charges for using vehicles, cost of mineral water, hospitality expenses, cost of cigarettes brought for hospitality, accommodation fee, etc. Three Defendants raised objection to the aforesaid expenses. The collegial panel holds that the aforesaid expenses claimed by the Plaintiff are not the reasonable and necessary costs for handling the accident. The claim for such costs shall be overruled. (XV) Other maintenance costs in the course of repair The Plaintiff provided the Statistical Table of the maintenance costs and relevant documents as evidence to prove that the other maintenance costs in the course of repair are in amount of RMB 31,635.90. Such costs include 26 items, such as gas fee, cost of ink box, cost of cigarettes brought for hospitality, telephone rate, working and living expenses onboard, travelling allowance, postage, cost of copies, cost of labor protection appliance, cost of computers and allowances for repairs and maintenance hereof, etc. The collegial panel holds that all the expenses claimed by the Plaintiff are not the reasonable and necessary costs for handling the accident. Therefore the claim for such costs shall be overruled. (XVI) Unexpired insurance premium The Plaintiff provided Insurance Policy, Receipt of Premium, and Vouchers of Payment for Premium as evidence to prove that the unexpired insurance premium is in amount of RMB 55, 616.20. As per the aforesaid evidence, the Plaintiff had insured against all risks for M/V “HANG JUN 11” with the insurance period computed from 12 May 2006 to 0000 hrs on 11 May 2007, and paid the insurance premium in sum of RMB 350, 000. The collegial panel holds that the insurance premium is the operation cost which should be borne by the Plaintiff even though the accident did not happen, and that the Plaintiff was not required to reinsure for M/V “HANG JUN 11” when the vessel was under repair after the accident. Therefore, the Plaintiff did not suffer any loss relating to the unexpired insurance premium, and thus the claim for such cost shall be overruled. In conclusion, the losses sustained by the Plaintiff due to the collision accident include repair cost in sum of RMB 38, 577, 903, salvage fee in sum of RMB 8,030,00, loss of clutch in sum of RMB 317,722.54, cost of oil consumed in the course of trial voyage in sum of RMB 225, 900, accommodation fee in sum of RMB 284,415, loss of hire in sum of RMB 17,912,748.11, costs of accounting and auditing in sum of RMB 50,000, which totals RMB 65,398,688.65 (excluding the charges for emergency measures taken by MSA). Among the aforesaid costs, salvage fee, loss of clutch, cost of oil consumed in the course of trial voyage were directly incurred by the second collision and shall be apportioned by the parties involved in the second collision as per their proportion of liability, the same as the inspection fees; repair cost, operating loss, and accommodation fee incurred by the two collisions shall be apportioned by the parties involved as per their proportion of liability in each collision respectively. After the trial, this Court ordered the parties involved to attend the court and examined whether each party was willing to calculate and separate the losses caused by the two collisions. The Plaintiff and the Defendants, Hiro and Yuma, did not agree to recalculate the losses. The Plaintiff did not calculate losses by separating the two collisions; the Inspection Report provided by the Defendants, Hiro and Yuma, does not separate the repair cost and period of repair for the two collisions; Defendant 1 Yudean provided the Inspection Report issued by Guang Dong Marine Engineering Co., Ltd. specifying that the period of repair required by the damage due to the first collision is 20 days and thus the repair cost hereof amounts to RMB 271, 497, and that the period of repair required by the damage due to the second collision is 170 days and thus the repair cost hereof amounts to RMB 29,215,283, which are in amount of RMB 29,486,780 in total. According to relevant evidence and principle of justice, the collegial panel holds that the respective losses caused by the two collisions shall be ascertained on the basis of the losses sustained by the Plaintiff ascertained and also according to the corresponding proportion of liability specified in the Inspection Report issued by Guang Dong Marine Engineering Co., Ltd. The details are as follows: 1. Repair Cost. On the basis of the Plaintiff’s claim for repair costs and by referring to the respective proportion of repair costs incurred due to the two collisions specified in the Inspection Report issued by Guang Dong Marine Engineering Co., Ltd., the repair cost incurred by the first collision shall be ascertained as RMB 355,202.74 (RMB 271, 497 ÷ RMB 29,486,780 × RMB 38,577,903), and the repair cost incurred by the second collision shall be ascertained as RMB 38,222,700.26 (RMB 29,215,283 ÷ RMB 29,486,780 × RMB 38,577,903); 2. Loss of Hire. On the basis of the actual days of lay-up which was ascertained as 295.6 days and according to respective period of repair due to the two collisions specified in the Inspection Report issued by Guang Dong Marine Engineering Co., Ltd., the days of lay-up due to the first collision shall be 31.12 days (20 days ÷ 190 days × 295.6 days), and the days of lay-up due to the second collision shall be 264.48 days (170 days ÷ 190 days × 295.6 days). Accordingly, the loss of hire caused by the first collision shall be RMB 1,885,807.58,[(RMB 75,389.49 – RMB 14,791.56) × 31.12 days], and the loss of hire caused by the second collision shall be RMB 16, 026, 940. 53 [(RMB 75,389.49 – RMB 14,791.56) × 264.48 days]; 3. Accommodation Fee. The accommodation fee shall also be apportioned according to the respective period of lay-up due to the two collisions. The accommodation fee incurred by the first collision shall be RMB 29,942.47 (31.12 days ÷ 295.6 days × RMB 284,415), and that incurred by the second collision shall be RMB 254,472.53 (264.48 days ÷ 295.6 days × RMB 284,415). In conclusion, the losses sustained by the Plaintiff due to the first collision shall be RMB 2, 270, 952.79, and that due to the second collision shall be RMB 63, 127,735.86. On 17 March 2007, with regard to the Application for Property Preservation Prior to the Litigation filed by the Plaintiff, this Court issued the Civil Ruling (2007) Guang Hai Fa Bao No. 29 -2 to arrest M/V “SUMIRE” which was berthing at Guangzhou Port. The Plaintiff had paid to this Court the application fee in sum of RMB 5, 000 and execution fee in sum of RMB 30, 000. After the Defendants Hiro and Yuma provided to this Court the Guarantee of RMB 60, 000, 000 issued by China Reinsurance (Group) Co., this Court released the arrested M/V “SUMIRE”. On 23 March 2007, with regard to the Application for Property Preservation Prior to the Litigation filed by the Plaintiff, this Court issued the Civil Ruling (2007) Guang Hai Fa Bao No. 32-2 to arrest M/V “YUE DIAN 2” which was berthing at Guangzhou Port. The Plaintiff had paid to this Court the application fee in sum of RMB 5, 000 and execution fee in sum of RMB 30, 000. On 30 March, this Court released the arrested M/V “YUE DIAN 2” upon the application of the Plaintiff. On 23 March 2007, with regard to the Application for Maritime Evidence Preservation Prior to the Litigation filed by the Plaintiff, this Court issued the Civil Ruling (2007) Guang Hai Fa Bao No. 34-2 to preserve the ship’s certificates, Logbook and Engine Logbook of M/V “YUE DIAN 2”. The Plaintiff had paid to this Court the application fee in sum of RMB 5, 000 and execution fee in sum of RMB 30, 000. On 7 June 2007, the Defendants Hiro and Yuma applied to this Court for constitution of the limitation fund for maritime claims. However, the Plaintiff raised the following objections to such application: the Defendants Hiro and Yuma have no evidence proving that the losses claimed by the Plaintiff fall to limited creditor’s right and thus they do not have the right to establish the limitation fund for maritime claims; the collision was due to act or omission done by M/V “SUMIRE” with the intent to cause such loss or recklessly and with knowledge that such loss would probably result, the Defendants Hiro and Yuma shall not be entitled to limit their liability. The Defendants Hiro and Yuma made the following defense hereof: they, as the applicant for constitution of the limitation fund for maritime claims, are responsible to produce evidence proving whether the creditor’s right of the party involved in this accident falls to limited creditor’s right; The Plaintiff failed to provide any evidence support its claim that the collision was due to act or omission done by M/V “SUMIRE” with the intent to cause such loss or recklessly and with knowledge that such loss would probably result. On the contrary, the accident was due to M/V “HANG JUN 11”’s deliberate blocking in the channel even though she was aware of the heavy traffic, which constitute act or omission with the intent to cause the loss or recklessly and with knowledge that the loss would probably result. Accordingly, the Defendants Hiro and Yuma shall have the right to limit their liability for maritime claims. After examination, this Court issued on 3 September the Civil Ruling (2007) Guang Hai Fa Bao No. 258 to overrule the objections raised by the Plaintiff and grant the Defendants Hiro and Yuma 2,436,363 special drawing right of the limitation fund for maritime claims established in this Court (which amounts to RMB 28,133,228.86) as well as the interest computed from the day when the accident happened to the day of establishment of the limitation fund and calculated on basis of the loan interest of circulating fund for the same period as published by People’s Bank of China. On 25 September, the Defendants Hiro and Yuma submitted the Guarantee for the aforesaid limitation fund for maritime claims issued by China Reinsurance (Group) Co. On 31 October, with regard to the application filed by the Defendants Hiro and Yuma, this Court issued the Civil Ruling (2007) Guang Hai Fa Bao No. 184 to return the Guarantee of RMB 60, 000, 000 issued by China Reinsurance (Group) Co. All members of the collegial panel believe that this case is a dispute over damage compensation arising from ship collision. Due to that the collision happened in China, according to 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 be applied to deal with the substantive dispute. During the trial, parties to the case also agreed that laws of the People’s Republic of China shall be applied to deal with the dispute. M/V “YUE DIAN 2” was sailing outward alongside the channel in ballast condition while M/V “HANG JUN 11” was conducting dredging operation as sailing inward alongside the channel at low speed, and the vessels were sailing in opposite directions along their respective starboard side, in a head on situation. With three all-round lights being hanged vertically, M/V “HANG JUN 11” was a ship with limit maneuvering capacity. M/V “SUMIRE” laden with 7,282.7 tons of cargos was sailing inward along the channel after M/V “HANG JUN 11”, and when the pilot discovered M/V “HANG JUN 11” after M/V “SUMIRE” entered the irradiation scope of the taillight of M/V “HANG JUN 11”, she still sailed at the speed of 14 to 15 knots, and the circumstance of overtaking had been formed between the two ships, under which M/V “SUMIRE” was the overtaking ship and M/V “HANG JUN 11” was the overtaken ship. When sailing outward along the channel, M/V “YUE DIAN 2” should have used sight, hearing and all other effective means suitable for the environment and situation of the time to maintain proper lookout so as to make sufficient assessment on the situation and the risk of collision. However, the said ship failed to maintain the proper lookout, and when she sailed between the 33# and the 34# buoy, the master discovered M/V “HANG JUN 11” which was sailing ahead of her by radar but mistook her as a dredger sailing in the same direction and required to “overtake” her, and thereby caused the collision. Such should be the main reason for the collision. Since M/V “YUE DIAN 2” was sailing within the channel, where the density of ships was large and the environment was complicated, she should have sailed at safe speed so as to adopt proper and effective actions for preventing the collision so that she could stop the main engine within the distance suitable for the environment and situation at that time. However, the ship did not use safe speed but still sailed at the high speed of 17 knots after she discovered M/V “HANG JUN 11” and when the distance between the two ships was shortened, with the result that, after the close-quarter situation having been formed, she failed to stop the main engine within safe distance. After the head-on situation being formed between her and M/V “HANG JUN 11”, M/V “YUE DIAN 2” should have exercised good seamanship and actively and timely adopted proper measures to prevent collision so that both the ships might sail within safe distance. However, due to M/V “YUE DIAN 2”’s neglect of lookout and misjudgment and her wrongful alteration of course to port side by hard-a-port for overtaking M/V “HANG JUN 11” as she was sailing at high speed, close-quarter situation was formed between the two ships, which finally led to the collision accident. The above-mentioned acts of M/V “YUE DIAN 2” is in violation of Articles 5, 6, 8 and 14 of International Regulations for Preventing Collision at Sea, 1992 (hereinafter referred to as “Regulations for Preventing Collision”). Since M/V “HANG JUN 11” was conducting dredging operation along the channel where ships were crowded, her operation ability was limited, therefore, she shall take full advantage of all effective means to strengthen her lookout, watch the movement of entering and departing ships and keep communication and contact with them to understand their real intentions. Especially for those vessels sailing in her vicinity, she should take necessary precautions to avoid any collision with them. However, M/V “SUMIRE” did not maintain normal lookout, and without finding out the specific position of M/V “YUE DIAN 2” which was communicating with her on VHF, she recklessly mistook M/V “YUE DIAN 2” as a ship sailing inward after her and agreed the ship to “overtake” her on her port side, thus misleading M/V “YUE DIAN 2” to further believe that both ships were in the situation of “overtaking”. When the close-quarter situation arose as M/V “YUE DIAN 2” turned to port to “overtake” the ship, M/V “HANG JUN 11” failed to use good seamanship, and actively and timely adopted correct preventing measures to prevent collision, but just stopped engine and then reversed engine only when the two vessels were extremely close to each other and it was too late to prevent the collision. The above-mentioned acts of M/V “HANG JUN 11” is in violation of Articles 5 and 8 of Regulations for Preventing Collision. As a overtaking ship, M/V “SUMIRE” shall perform the obligation of giving way, and shall take full advantage of all effective means to maintain proper lookout and keep a close eye on the movement of the overtaken ship and the changing of ship positions so as to make sufficient assessment on the situation and the danger of collision. During the overtaking, she shall sail at safe speed, especially when she overtook other ships at narrow channel and shall take into good consideration of the situations of crowded ships and complicate circumstances, and have the overtaking speed under control so as to adopt proper and effective collision preventing actions when danger of collision emerged and to stop the main engine within appropriate distance at the time. However, M/V “SUMIRE” failed to maintain proper lookout or safe speed, and at about 2349 hrs, soon after she communicated with M/V “HANG JUN 11” on VHF about the overtaking, the pilot had discovered that M/V “YUE DIAN 2” was turning to port and that there was danger of colliding with M/V “HANG JUN 11”, and VTS Guangzhou had warned her to slow down the engine and to pay attention to the ship and the dredger sailed outward before her for four times, however, M/V “SUMIRE” did not pay enough attention thereto and failed to make full assessment of the danger of collision that may exist but still believed that it was able to overtake the ship and the dredger sailed before her and kept sailing at the speed of 15knots to overtake M/V “HANG JUN 11”, thereby she failed to take the measures such as stopping engine or slowing down in ample time to reduce the speed, and finally led to the collision between her and M/V “HANG JUN 11” . This should be the main reason for the accident. When M/V “YUE DIAN 2” collided with M/V “HANG JUN 11”, M/V “SUMIRE” was 0.8 nm away from the position of collision. According to the environment at the time of the collision, if M/V “SUMIRE” had adopted the collision-prevention measures such as stopping engine or moving astern in a prompt way, she would have prevented the collision between her and M/V “HANG JUN 11” or have brought the loss of collision to the least. However, M/V “SUMIRE” was so confident that she believed she might overtake M/V “HANG JUN 11” on the port side, so she still sailed at high speed when she was obstructed by M/V “HANG JUN 11” as the latter ship moved to port after by adopting measures of moving astern for the purpose of avoiding M/V “YUE DIAN 2”, and adopted measures of turning to port for the purpose of overtaking M/V “HANG JUN 11” on her port side. When she was in immediate danger, her adoption of collision-prevention measures such as hard starboard and stopping engine was useless for preventing the collision, so she finally collided with M/V “HANG JUN 11” and brought serious damage to M/V “HANG JUN 11”. The above-mentioned acts of M/V “SUMIRE” are in violation of Article 5, 6, 8 and 13 of Regulations for Preventing Collision. In order to prevent her collision with M/V “YUE DIAN 2”, M/V “HANG JUN 11” adopted measures such as stopping engine and moving astern, which is instinctive behavior for preventing collision and gives little cause for criticism. However, after M/V “YUE DIAN 2” overtook her stern subsequent to the collision between them, M/V “HANG JUN 11” shall be aware of the danger of collision with M/V “SUMIRE” which was overtaking her from her port side as she continued to retire, so at that time, she shall adopt effective measures such as stopping engine and moving ahead to stop the main engine so as to prevent her further moving astern, and she shall pay special attention to the avoidance of her moving astern to the left back of the channel which may obstruct the overtaking route of M/V “SUMIRE”. As M/V “HANG JUN 11” paid all attention to how to keep clear of M/V “YUE DIAN 2” without giving due consideration to the serious consequence that may emerge as she adopted the measure of moving astern, she failed to take actions in favor of preventing collision such as stopping engine and moving ahead so as to maintain her position, which results in the moving astern of the ship to the left back of the outward channel and finally leads to her collision with M/V “SUMIRE”. The above-mentioned acts of M/V “HANG JUN 11” are in violation of Articles 8 and 17 of Regulations for Preventing Collision. The two collisions among the three ships are two independent but related accidents. In the second collision accident, though M/V “YUE DIAN 2” did not directly collided with M/V “HANG JUN 11” and M/V “SUMIRE”, she did lead to the close-quarter situation between her and M/V “HANG JUN 11” due to her default in adopting the measure of turning to port to overtake M/V “HANG JUN 11”. To prevent her collision with M/V “YUE DIAN 2”, M/V “HANG JUN 11” adopted prevention actions such as stopping and moving astern to retire to the left back of the outward channel, thereby caused her collision with M/V “SUMIRE”. Therefore, there is indirect relationship between the two collision accidents, that is, the first collision is one reason of the second collision and M/V “YUE DIAN 2” shall also bear the minor responsibility for the second collision. When M/V “SUMIRE” was overtaking M/V “HANG JUN 11” along the entry of the channel as M/V “YUE DIAN 2” turned to port by adopting hard aport, the close-quarter situation between M/V “SUMIRE” and M/V “YUE DIAN 2” had not yet formed, and M/V “YUE DIAN 2” just turned left for the purpose of overtaking M/V “HANG JUN 11” but not for avoiding M/V “SUMIRE”. Therefore, the overtaking action of M/V “SUMIRE” has no consequence on the first collision accident and M/V “SUMIRE” did not have to bear responsibility for the first collision. The Investigation Report on the Collision Accident among M/V “YUE DIAN 2”, M/V “HANG JUN 11” and M/V “SUMIRE” issued by Guangdong MSA confirms that M/V “YUE DIAN 2” shall shoulder the major responsibility for the first collision, and M/V “HANG JUN 11” shall shoulder the minor responsibility for the first and the second collisions, and M/V “SUMIRE” shall shoulder the major responsibility for the second collision. Though both the Plaintiff and the Defendants Hiro and Yuma challenged the above-mentioned liability apportionment, they failed to present evidence to overturn the above-mentioned verdict. Taking into consideration the degree of fault of each ship in operating and collision preventing, the Collegial Panel ascertains that, M/V “YUE DIAN 2” shall shoulder 80% responsibility for the first collision and 5% percent responsibility for the second collision, and M/V “HANG JUN 11” shall shoulder 20% responsibility for the first collision and 10% percent responsibility for the second collision, while M/V “SUMIRE” shall shoulder 85% responsibility for the second collision. In accordance with provisions of Article 4 of the Provisions of the Supreme People’s Court on Some Issues about the Trial of the Cases of Ship Collision Disputes, 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 charter period and the bareboat charter is registered according to law. Defendant 1 Yudean is the registered owner of M/V “YUE DIAN 2”, and Defendant 2 Hiro is the registered owner of M/V “SUMIRE”. Therefore, the two Defendants shall be liable for damages and losses sustained by the Plaintiff arising out of the accident. Defendant 3 Yuma is the bareboat charterer of M/V “SUMIRE”, but the relevant Bareboat Charter Party was not registered. With regard to this issue, Defendant 2 Hiro claimed that no registration is required for bareboat chartering as per the law of Panama which is the flag state of M/V “SUMIRE” i.e. such bareboat chartering shall have the same legal effect as that registered as required by the other countries. Therefore, Hiro shall not be liable for the damages and losses arising out of the accident. However, Defendant 2 Hiro failed to provide evidence proving the aforesaid defense that unregistered bareboat charter shall have the same legal effect as the bareboat charter registered as required by the other countries as per the law of Panama. Accordingly, such defense fails and cannot exempt Hiro from corresponding compensation liability. Although Defendant 3 Yuma is exempted from the liability of a bareboat charterer by reason that the bareboat charter was not registered, the parties have no objection to the fact that M/V “SUMIRE” was bareboat chartered in by Yuma. Defendant 3 Yuma time chartered the vessel to Nippon Yusen Kaisha, and then with the consent of Nippon Yusen Kaisha assigned the charter party to Tokyo Senpaku Kaisha on 1 October 2002. Therefore, Defendant 3 Yuma is the disponent owner under the Time Charter Party relating to M/V “SUMIRE” and the actual operator and manager of the vessel, hence Yuma shall be liable for the collision with M/V “HANG JUN 11” in terms of operation and management. Therefore, Defendant 3 Yuma and Defendant 2 Hiro shall bear joint and several liability for the collision according to law. This Court issued the Civil Ruling (2007) Guang Hai Fa Bao No. 258 to grant the Defendants Hiro and Yuma to establish limitation fund for maritime claims in this Court. The Plaintiff had raised objections to the application and the right to enjoy the liability limitation of the Defendants Hiro and Yuma, but it failed to provide any corresponding counterevidence. Except for costs of handling the emergency, such as costs of clean-up and pollution prevention, salvage, emergency operation and tugboat, the damage to and losses of M/V “HANG JUN 11” due to the collision as claimed by the Plaintiff which are in direct connection with the operation of the vessel and fall into the scope of limitable creditor’s right as stipulated in Paragraph 1 of Article 7 of the Maritime Code of the People’s Republic of China. Defendant No. 2 Hiro and Defendant No. 3 Yuma as the persons liable for the collision shall be entitled to limit their liability for the related claim. In accordance with provisions of Article 209 of the Maritime Code of the People’s Republic of China, a person liable shall not be entitled to limit his liability, if the loss resulted from his act or omission done with the intent to cause such loss or recklessly and with knowledge that such loss would probably result. In this case, there is neither evidence proving that the losses were caused by the Defendants Hiro and Yuma deliberately, nor evidence proving that the losses were resulted from their act or omission done with the intent to cause such loss or recklessly and with knowledge that such loss would probably result. Therefore, the Defendants Hiro and Yuma shall have the right to limit their liability. Although the seamen and pilot of M/V “SUMIRE” were employed by Defendant 3 Yuma, the defaults or faults committed by the seamen and pilot during the navigation shall not deprive the Defendants Hiro and Yuma of the right to enjoy the limitation of liability for maritime claims. Pursuant to provisions of Article 9 of the Provisions of the Supreme People’s Court on Some Issues about the Trial of the Cases of Ship Collision Disputes, with respect to the compensation claim for the expenses arising from floating, removal and demolition of the submerged, damaged, stranded or abandoned ship and cargo on board resulted from ship collision or from making them harmless, the party liable shall not enjoy the limitation of liability for maritime claims according to Chapter XI of the Maritime Law. In accordance with the above provisions, in this case, the salvage fee and emergency handling fee as claimed by the plaintiff are not limitable creditor’s right, and the Defendants Hiro and Yuma shall not enjoy the right to limit their liability for these claims. The losses sustained by the Plaintiff due to the first collision are in sum of RMB 2,270,952.79, and those due to the second collision are in sum of RMB 63,127,735.86. As per the aforesaid proportion of liability due to the two collisions, Defendant 1 Yudean shall compensate the Plaintiff for losses in sum of RMB 1,816,762.23 and the interests hereof due to the first collision, and for the losses in sum of RMB 3, 156, 386.79 as well as interests hereof due to the second collision, which amount to RMB 4, 973, 149.02 in total as well as the interests hereof (computed from the next day of the accident, namely, the 15th day of March in 2007 to the day of payment stipulated in this Civil Judgment, on basis of the loan interest of circulating fund for the same period as published by the People’s Bank of China). Among the losses in sum of RMB 63,127,735.86, RMB 55,097,735.86 is limitable creditor’s right and the rest RMB 8,030,000 (salvage fee) is unlimitable creditor’s right. As per the proportion of liability of the aforesaid second collision, the Defendants Hiro and Yuma shall jointly compensate the Plaintiff for limitable losses in sum of RMB 46,833,075.48 and the interests hereof (computed from the 15th day of March in 2007 to the day of payment stipulated in this Civil Judgment, on basis of the loan interest of circulating fund for the same period as published by the People’s Bank of China), and for unlimitable losses in sum of RMB 6,825,500 and the interests hereof (computed from the next day of the accident, namely, the 15th day of March in 2007 to the day of payment stipulated in this Civil Judgment, on basis of the loan interest of circulating fund for the same period as published by the People’s Bank of China). With regard to the costs of emergency handling in sum of RMB 1,011,378, as per the proportion of liability due to collision between M/V “HANG JUN 11” and M/V “SUMIRE”, RMB 101,137.80 shall be borne by the Plaintiff, RMB 50,568.90 shall be borne by Defendant 1 Yudean, RMB 859,671.30 shall be borne by Defendant 2 Hiro and Defendant 3 Yuma. Each party has paid the emergency handling fee in sum of RMB337,126. Therefore, the Defendants Hiro and Yuma shall pay to the Plaintiff RMB 235,988.20 as well as the interest hereof (computed from the next day of the accident, namely, the 15th day of March in 2007 to the day of payment stipulated in this Civil Judgment, on basis of the loan interest of circulating fund for the same period as published by the People’s Bank of China). The limitation of liability for maritime claims enjoyed by the Defendants Hiro and Yuma refers to the limitation of actual compensation liability borne by the Defendants Hiro and Yuma for losses arising from the collision. This Court issued the Civil Judgment (2007) Guang Hai Fa Bao No. 259 to rule that the Plaintiff shall compensate Defendant 2 Hiro for losses in sum of USD 33,517.80 and interests hereof, and compensate Defendant 3 Yuma for losses in sum of USD 16,489.09 and interests hereof, which amount to USD 50,006.89. The Defendants Hiro and Yuma shall enjoy limitation of liability for claims deducted by the aforesaid compensation liability borne by the Plaintiff. In respect of different currencies, the Plaintiff shall compensate the Defendants Hiro and Yuma losses in sum of USD 50,006.89 which shall be converted into RMB in a Dollar/Renminbi rate of 1: 7.742 on the next day of the accident, namely, the 15th day of March in 2007. In accordance with provisions of Article 169 of the Maritime Code of the People’s Republic of China, with regard to ship collision, the ships in fault shall be liable for the damage to the ship, the goods and other property on board in the proportions to the extent of its faults. The Plaintiff’s claim that the Defendants Yudean, Hiro and Yuma shall bear joint and several liabilities does not comply with the law and shall be overruled. In conclusion, in accordance with provisions of Paragraph 1 and 2 of Article 169, Article 170 and Article 207 of the Maritime Code of the People’s Republic of China, it is hereby judged as follows: I. Defendant 1, Guangdong Yudean Shipping Co., Ltd., shall compensate the Plaintiff, Nanjing Channel Engineering Bureau of Changjiang River for losses in sum of RMB 4,973,149.02 as well as interests hereof (computed from the 15th day of March in 2007 to the day of payment stipulated in this Civil Judgment, on basis of the loan interest of circulating fund for the same period as published by the People’s Bank of China) II. Defendant 2 and Defendant 3, Hiro Shipping Co. Ltd. / Hiro Shipping INC. and Yuma Maritime S.A. shall jointly compensate the Plaintiff, Nanjing Channel Engineering Bureau of Changjiang River for losses in sum of RMB 46,833,075.48 and interests hereof (computed from the 15th day of March in 2007 to the day of distribution of the limitation fund, on basis of the loan interest of circulating fund for the same period as published by the People’s Bank of China). Such amount shall be compensated from the limitation fund constituted by the defendants Hiro and Yuma according to law after deduction of the amount payable by the plaintiff to Hiro and Yuma as determined in the Civil Judgment (2007) Guang Hai Fa Bao No. 259. III. Defendant 2 and Defendant 3, Hiro Shipping Co. Ltd. / Hiro Shipping INC. and Yuma Maritime S.A. shall jointly compensate the Plaintiff, Nanjing Channel Engineering Bureau of Changjiang River for losses of salvage fee in sum of RMB 6,825,500 and interests hereof, and reimburse the costs of emergency handling paid by the Plaintiff in sum of RMB 235, 988.20 and interests hereof (computed from the 15th day of March in 2007 to the day of payment stipulated in this Civil Judgment, on basis of the loan interest of circulating fund for the same period as published by the People’s Bank of China). Defendant 2 and Defendant 3, Hiro Shipping Co. Ltd. / Hiro Shipping INC. and Yuma Maritime S.A. shall make the aforesaid compensation to the Plaintiff, Nanjing Channel Engineering Bureau of Changjiang River, without drawing the limitation fund for maritime claims. IV. The other claims filed by the Plaintiff, Nanjing Channel Engineering Bureau of Changjiang River, shall be overruled. The litigation fee in sum of RMB 341.800 shall be apportioned by the parties, RMB 6, 450.27 of which shall be borne by the Plaintiff, RMB 28,330.37 of which shall be borne by Defendant 1Yudean, RMB 307,019.36 of which shall be borne by Defendant 2 and Defendant 3, Hiro and Yuma. RMB 335, 349.73 shall be returned to the Plaintiff on the basis of litigation fee prepaid by the same. The Defendants Yudean, Hiro and Yuma shall pay to this Court the litigation fee as per the aforesaid proportion. Application fee and enforcement fee for property and evidence preservation prior to litigation arising from arrest of M/V “SUMIRE” in sum of RMB 35, 000 shall be borne by Hiro and Yuma; application fee and enforcement fee for property preservation prior to litigation arising from arrest of M/V “YUE DIAN 2” in sum of RMB 25, 000 shall be borne by Defendant 1 Yudean. The application fee and enforcement fee for property and evidence preservation in sum of RMB 10,000 shall be borne by the Plaintiff. The three Defendants shall directly pay to the Plaintiff the application fee and enforcement fee for property preservation prior to litigation as per the aforesaid proportion; no more such charges will be settled and returned by this Court. The aforesaid charges shall be paid within ten (10) days upon the effectiveness of this Civil Judgment. If any party fails to fulfill such obligation of payment within the period specified herein, the charges of interest for delayed payment shall be doubled in accordance with Article 229 of the Civil Procedural Law of the People’s Republic of China. In case of any dissatisfaction with this Judgment, the Plaintiff and Defendant, Nanjing Channel Engineering Bureau, may, within 15 days upon the service of this Judgment, while the Defendants, Hiro and Yuma, may within 30 days, submit a Statement of Appeal to this Court, and submit the copies according to the numbers of the relevant parties to the case filing an appeal to the Higher People’s Court of Guangdong Province. Presiding Judge : Zhan Simin Judge : Xiong Shaohui Judge : Zhang Kexiong 11 June 2009 Assistant Judge : Gu Enzhen Clerk : Liang Xiaolei The translation is provided by Wang Jing & CO.

GUANGZHOU MARITIME COURT OF THE PEOPLE’S REPUBLIC OF CHINA Civil Judgment (2007)Guang Hai Fa Chu Zi No.127 Plaintiff ： Guangdong Yudean Shipping Co., Ltd. Address : Room 1388, 13/F, Labor Building, Hong Hua Yuan, Nanshan District, Shenzhen, Guangdong, P.R.C. Legal Rep. : Liang Jian, Chairman of the Company Agent ad litem : Yang Yunfu, attorney-at-law from Yang & Lin Co. Law Firm Agent ad litem : Zhu Weikang, attorney-at-law from Yang & Lin Co. Law Firm Defendant 1 : Nanjing Channel Engineering Bureau of Changjiang River Address : No.9, Jiangbian Road, Xiaguan District, Nanjing, Jiangsu, P.R.C. Legal Rep. : Yuan Yakang, Director of the Bureau Agent ad lite m : Chen Longjie, attorney-at-law from Shenzhen Office of Greenleaf Law Firm Agent ad lite m : Zhao Jinsong, attorney-at-law from Shenzhen Office of Beijing Guantao Law Firm Defendant 2 : Hiro Shipping Inc. Address : 80 Broad Street, Monrovia, the Republic of Liberia Legal Rep. : Yusuke Hashiguchi, Director and CEO of the Company Agent ad litem : Chen Xiangyong, attorney-at-law from Wang Jing & Co. Law Firm Agent ad litem : Cao Yanghui, attorney-at-law from Wang Jing & Co. Law Firm Defendant 3 : Yuma Maritime S.A. Address : 53rd Street, Urbanizacion Obarrio, Torre Swiss Bank 16th Floor, Panama, the Republic of Panama Legal Rep. : Masaki Hara, Director and Vice CEO of the Company Agent ad litem : Chen Xiangyong, attorney-at-law from Wang Jing & Co. Law Firm Agent ad litem : Cao Yanghui, attorney-at-law from Wang Jing & Co. Law Firm With respect to the case of dispute over damage compensation arising from ship collision filed by the Plaintiff, Guangdong Yudean Shipping Co., Ltd., against the Defendant, Nanjing Channel Engineering Bureau of Changjiang River (hereinafter referred to as “Nanjing Channel Engineering Bureau”), and the Defendant, Hiro Shipping Inc. (hereinafter referred to as “Hiro”), and the Defendant, Yuma Maritime S.A. (hereinafter referred to as “Yuma”), this Court, after accepting this case, formed a collegial panel in accordance with law, and called upon the parties hereto to carry out pre-trial evidence exchange respectively on 22 January 2008, 19 March 2008 and 23 April 2008. This Court convened a pre-trial conference respectively in 3 June and 4 June, and conducted an open trial on the present case respectively in 6 August, 7 August, 8 August and 12 August. The following persons have carried out pre-trial evidence exchange and attended the pretrial conferences, and have appeared before this Court to participate in the court trial: Yang Yunfu and Zhu Weikang, agent ad litem of the Plaintiff; Chen Longjie and Zhao Jinsong, agent ad litem of the Defendant Nanjing Channel Engineering Bureau; Chen Xiangyong and Cao Yanghui, agent ad litem jointly entrusted by the Defendant Hiro and the Defendant Yuma. The following persons have appeared before this Court to accept the examination: Tang Qiujin, the accountant applied by the Plaintiff; Lu Daonan, Huang Guangming and Xu Jiangping, the accountants applied by the Defendant, Nanjing Channel Engineering Bureau; Zhang Jin, the accountant applied by the Defendant, Hiro, and the Defendant, Yuna S.A.. The trial of this case is hereby closed. The Plaintiff alleged that: on 14 March 2007, collision occurred at Lingding Channel of Zhujiang River among M/V “HANG JUN 11” owned by Nanjing Channel Engineering Bureau, M/V “SUMIRE” owned by Hiro and bareboat chartered by Yuma, and M/V “YUE DIAN 2” owned by the Plaintiff, which caused serious damage to M/V “YUE DIAN 2”. Serious violation of rules and wrongful operations by M/V “SUMIRE” and M/V “HANG JUN 11” had given rise to such collision accident, and therefore in accordance with law the three defendants shall bear the responsibility over 90% for this collision accident. The Plaintiff requested this Court to order the three defendants to compensate the Plaintiff: 1. repair fees for M/V “YUE DIAN 2” in an amount of RMB1, 508,942; 2. painting fee for repairing M/V “YUE DIAN 2” in an amount of RMB25, 371.00; 3. survey costs for M/V “YUE DIAN 2” in an amount of RMB34, 906; 4. incidental fee, costs of on-site monitoring, costs of pollution prevention and cleanup in a total amount of RMB337,126; 5. loss of hire for M/V “YUE DIAN 2” in an amount of RMB1,267,318.73; 6. cost of appraisal on loss of hire for M/V “YUE DIAN 2” in an amount of RMB27,000; 7. during the repair period for M/V “YUE DIAN 2”, the maintenance fee in an amount of RMB88,501.21, the fixed cost in an amount of RMB890,348.77, and management fee in an amount of RMB117,090.27; 8. survey and salvage fee paid for M/V “HANG JUN 11” in an amount of RMB16,000, survey fee on damage in an amount of RMB59,000, supervision fee on repairs in an amount of RMB172,250, and examination and consultation fee on the bills in an amount of RMB102,850; 9. survey fee paid for M/V “SUMIRE” in an amount of RMB12,200; 10. travelling fees, lawyer fee and telecommunication fee etc. incurred due to the handling of accident by the Plaintiff in an amount of RMB100,000. The total amount of the aforesaid fees was RMB4, 758,904.20. The three defendants also shall pay to the Plaintiff the interest on the aforesaid loss (the interest shall be calculated at the annual interest rate of 6.12% from 15 March 2007 to the date when the compensation is completed paid off). The litigation fee, fees on application for maritime preservation and application for enforcement shall be borne by the three defendants. The Plaintiff has provided the following evidence within the period for adducing evidence: 1. Business License; 2. Certificate of Nationality, Certificate of Ownership, Interim Classification Certificate, Cargo Ship Safety Construction Certificate, Cargo Ship Safety Equipment Certificate, International Tonnage Certificate, International Load Line Certificate, Cargo Ship Safety Radio Certificate, International Oil Pollution Prevention Certificate, Interim International Ship Security Certificate, Certificate of Compliance, Certificate of Exemption, and Minimum Safe Manning Certificate of M/V “YUE DIAN 2”; 3. Crew List of M/V “YUE DIAN 2”, Certificates of Competency of Crew onboard M/V “YUE DIAN 2”, Seaman’s Record Books of Crew onboard M/V “YUE DIAN 2”; 4. Marine Accident Report; 5. Deck Logbook, Engine Logbook, Deck Bell Book, Engine Bell Book of M/V “YUE DIAN 2”; 6. Repair Contract, Repair Price List, Repair Work Confirmation, Invoice and Payment Voucher of the repair fees; 7. Invoice and Payment Voucher of painting; 8. Survey Report and its Chinese translation version, Invoice and Payment Vouchers on the survey costs; 9. Settlement Agreement; 10. Invoice and Payment Vouchers on Incidental Fee, Cost of On-Site Monitoring, Costs of Pollution Prevention and Cleanup; 11. Survey Report of M/V “YUE DIAN 2”; 12. Verification Report of M/V “YUE DIAN 2”, Special Audit Report of M/V “YUE DIAN 2”, Invoice and Payment Vouchers on Appraisal costs; 13. Certificate to prove the repair time of M/V “YUE DIAN 2”; 14. Letter of Authorization; 15. Service Charge and Invoice hereto of M/V “YUE DIAN 2”, Service Charge and Invoice hereto of M/V “SUMIRE”, and Service Charge and Invoice hereto of M/V “HANG JUN 11” (4 groups). The Defendant, Nanjing Channel Engineering Bureau, alleged that: 1. the pileup collision accident occurred among M/V “YUE DIAN 2”, M/V “HANG JUN 11” and M/V “SUMIRE” was not two independent accidents but an accident involving several ships; 2. the occurrence of this ship collision accident was due to the fault of M/V “YUE DIAN 2” owned by the Plaintiff and that of M/V “SUMIRE” which is owned by Hiro and bareboat chartered by Yuma, and Nanjing Channel Engineering Bureau shall not bear any responsibility for this collision accident; 3. the loss claimed by the Plaintiff was not reasonable. The Plaintiff did not provide any effective evidence to prove the reasonableness of the alleged loss, such as the repair fee, loss of hire etc. In addition, the amount of the loss alleged by the Plaintiff was obviously exaggerated. In summary, the Defendant, Nanjing Channel Engineering Bureau, requested this Court to reject the litigation claims raised by the Plaintiff against the Defendant, Nanjing Channel Engineering Bureau. The litigation fees for this case shall be borne by the Plaintiff. The Defendant, Nanjing Channel Engineering Bureau, has provided the following evidence within the period for adducing evidence: 1. Certificate of Nationality, Classification Certificate for Hull, Certificate of Vessel’s Inspection, Certificate of Load Line, Certificate of Oil Pollution Prevention, Certificate of Tonnage, Certificate of Seaworthiness of M/V “HANG JUN 11”; 2. Certificate of Competency of Master Chen Wu, Certificate of Competency of Master Chen Xiping, Certificate of Competency as 2nd Officer of Yu Gang, Certificate of Competency as Duty Officer of Chen Chunhai, Certificate of Competency as Chief Engineer of Qian Ming, Certificate of Competency as Second Engineer of Dai Yongqing; 3. Permits for operation above and under water, Notice to Mariners; 4. Log Books; 5. Accident Report, Table of Investigations on Marine Accidents, Sea Chart; The Defendant, Hiro, and the Defendant, Yuma jointly alleged that: I. Hiro was not the competent defendant of this case. With regard to this collision accident, it was the bareboat charterer who should bear the collision liability. Hiro was the registered owner of M/V “SUMIRE” and Yuma was the bareboat charterer of this vessel. The flag state of M/V “SUMIRE” is Panama. Therefore, according to law of Panama, no registration is required for bareboat chartering, i.e. such bareboat chartering shall have the same legal effect as that with registration as required by the other countries. Accordingly, Hiro should not bear any collision liability; II. The liabilities borne by each vessel were as follows: 1. There were two collisions involved in this case. Prior to the occurrence of the first collision, M/V “HANG JUN 11” was operating along the inward channel so that her maneuvering and giving way capability was limited. However, M/V “YUE DIAN 2” misestimated M/V “HANG JUN 11” as an outbound vessel and mistakenly and abruptly altered her course to port substantially when she was very close to M/V “HANG JUN 11”, which led to a close quarters situation and made the first collision unavoidable. As a result, M/V “HANG JUN 11” quickly moved astern and stood across the channel blocking the channel completely. When M/V “SUMIRE” was aware of the occurrence of the first collision, she was already very close to M/V “HANG JUN 11” so that M/V “HANG JUN 11”’s crossing of the channel directly caused the another close quarter situation which made the second collision unavoidable. The conducts of M/V “YUE DIAN 2” is the primary cause of the aforesaid two collisions. Accordingly, M/V “YUE DIAN 2” should bear major liability hereof; 2. M/V “SUMIRE” and M/V “HANG JUN 11” expressly agreed that M/V “SUMIRE” overtook from the port side of M/V “HANG JUN 11”. M/V “HANG JUN 11” as the overtaken vessel should have kept steady course. Even though she moved astern for the purpose of avoiding collision, she failed to stop engine in time and blocked the channel violating the agreement and navigation rules. The fault of M/V “HANG JUN 11” was the primary cause of the second collision. Therefore, M/V “HANG JUN 11” should bear major liability for the second collision and bear secondary liability for the whole accident; 3. M/V “HANG JUN 11”’s abrupt crossing of the channel directly led to the close quarters situation with M/V “SUMIRE”. However, M/V “SUMIRE” complied with the agreement and navigation rules and avoided collision with her best endeavor, even though she was still unable to avoid the second collision. M/V “SUMIRE” was free of any fault and should not bear any liability for the whole accident. Even though she should bear part of liabilities, such liability should be no more than the proportion of 10%. III. Each vessel involved in the collision shall be liable in proportion to the extent of her fault. It was legally groundless for the Plaintiff to claim for joint and several liabilities against the three defendants. IV. The losses claimed by the Plaintiff were unreasonable. As per the appraisal of the Respondent, the reasonable repair costs should amount to RMB 30, 000, 000; 2. The operation loss calculated by the Plaintiff is not reasonable. It should be calculated on the basis of the complete hire period including the time of repair and maintenance; 3. The salvage fee in sum of RMB 8, 030, 000 as claimed by the Plaintiff was obviously far more than an reasonable amount which should be no more than RMB 5, 000, 000; 4. The charges for dealing with the case, survey fee and accounting and auditing fee should be apportioned equally; 5. There was no effective evidence proving the losses of other materials and components. Therefore, it was impossible that all the materials and components were lost or damaged due to the sinking of M/V “HANG JUN 11”; 6. There is no effective evidence proving the rationality and necessity of purchasing clutch and oil for trial voyage. In conclusion, the Defendant, Hiro, and the Defendant, Yuma, requested this court to order the Plaintiff to bear the major liability, and the Plaintiff should bear corresponding liability as per the extent of fault, to overrule the claims filed by the Plaintiff against Hiro and Yuma. The litigation fees shall be borne by the Plaintiff. The Defendant, Hiro, and the Defendant, Yuma, have provided the following evidence within the period for adducing evidence: 1. Certificate of Registry, International Tonnage Certificate, International Load Line Certificate, International Oil Pollution Prevention Certificate, Cargo Ship Safety Radio Certificate, Cargo Ship Safety Equipment Certificate, Cargo Ship Safety Construction Certificate, Certificate of Minimum Manning, Safety Management Certificate, and Statutory License for Radio of M/V “SUMIRE”; 2. Bareboat Charter Party, Time Charter Party; 3. Deck Logbook, Engine Logbook, Bell Book and Pilot Card of M/V “SUMIRE”; 4. Crew List of M/V “SUMIRE”; 5. Table of Investigations on Maritime Accident; 6. Damage Survey Report of M/V “YUE DIAN 2”; 7. Legal Opinion presented by Panamanian lawyer. This Court has obtained the following evidential materials from Guangzhou MSA: 1. Collision Accident Investigation Report issued by Guangdong MSA; 2. Maritime Traffic Accident Report (two pieces) and Maritime Accident Report of M/V “YUE DIAN 2”; 3. Deck Logbook, Engine Logbook, Deck Bell Book, and Engine Bell Book of M/V “YUE DIAN 2”; 4. Interview records taken by Guangzhou MSA of some crews of “Yue Dian 2”, including interview records of Master Jiang Feng, of second officer Cao Junlong, of third officer Qiu Weizhong, of chief engineer Chen Wenqiang, of first engineer Xu Weihe, of third engineer Li Huaxu (two pieces), of A/B Huang Jingqing, of A/B He Jianming; 5. Logbook, Engine Logbook and Maritime Traffic Accident Report of M/V “HANG JUN 11”; 6. On-the-spot Accident Investigation Records on M/V “HANG JUN 11” produced by Guangzhou MSA; 7. Interview records taken by Guangzhou of some crews of M/V “HANG JUN 11”, including interview records of chief officer Chen Xiping (two pieces), of second officer Chen Jiesong, of second officer Yu Gang, of chief engineer Qian Ming, of first engineer Dai Yongqing, of A/B Chen Haichun, of A/B Xielei, of machinist on duty Wang Daohai, of machinist Qi Fei; 8. Interview records taken by Guangzhou MSA of Song Gentong, the project manager of Guangzhou Seaward Passage Project of Nanjing Channel Engineering Bureau; 9. Certificate of Register, Safety Manning Certificate, and Certificate of Competency of crews of M/V “SUMIRE”; 10. Marine Accident Report of M/V “SUMIRE”; 11. Ship Manoeuvring Parameter List and Side View of Bow Structure of M/V “SUMIRE”; 12. Average Survey Report of M/V “SUMIRE” produced by Classification society; 13. Interview records taken by Guangzhou MSA on pilot Zhao Bingxun (two pieces); and 14. Interview records taken by Guangzhou MSA of the Master (two pieces), of the third officer, of the chief engineer, and of the A/B of M/V “SUMIRE”. Based on the joint application filed by the Plaintiffs and Defendants, this Court organized parties to this case to watch VTS video at Guangzhou MSA, and to copy the sound recordings of conversations, and the written records thereof were submitted by the parties to this case. : At the pre-trail conference, both the Plaintiffs and the Defendant Nanjing Channel Engineering Bureau believed that the written record of the sound recording of conversations in VTS submitted by the defendant Yudean Co. is comparatively accurate and confirmed the authenticity of the said written record. Upon hearing and cross-examination, and in combination of the evidences and opinions on cross-examination submitted by parties to the case and statement of accounts, the Collegial Panel ascertains the following facts through investigation: I. Particulars of Ships involved in the Accident M/V “HANG JUN 11”: Gross Tonnage 2,691 tons, Net Tonnage 807 tons, Deadweight Capacity Indication 2,457 tons, Length overall 84.75M, Breadth 15M, Depth 5.5M, Full Load Draft 4.5M; Kind of Vessel: Dredger; Material of Shell: Steel; Navigating Area: Offshore; Number of Watertight Transverse Bulkhead: Six; Port of Registry: Nanjing; Signal Letters: BTYS; Number of Registry: 060102000138; Classification society: CCS; Kind of Main Engine: Diesel Engine/6L28/32; Horse Power of Main Engine: 1,320KW×2; main engine manoeuvring being controlled by the navigation bridge. Where and when built: Hudong Zhonghua Shipbuilding Co.,Ltd, completed on October 26, 1998. M/V “YUE DIAN 2”: Gross Tonnage 36,559 tons, Net Tonnage 23,279 tons, Deadweight Tonnage 70,182 tons, Length overall 225M, Breadth 32.26M, Depth 18.3M, Speed of Vessel 14 Knots. King of Vessel: Bulk Carrier; Material of Vessel: Steel; Port of Registry: Shenzhen; Signal Letters: BRWL; IMO No.: 9077240; Classification society: CCS; Kind of Main Engine: Internal-combustion Engine/SULZER 6RTA62; Horse Power of Main Engine: 8,826KW; main engine manoeuvring being controlled by the engine room; Where and when built: Japan, SUMITOMO HEAVY INDUSTRIES, LTD., completed on July 14, 1994. The Defendant Yudean Co. is the registered ship owner and operator of the ship. M/V “SUMIRE”: Gross Tonnage 14,089 tons, Net Tonnage 7,023 tons, Deadweight Tonnage 17,732 tons, Length overall 163.6M, Breadth 26M, Depth 13.4M; Departure Draft: fore 5.78M, aft 6.82M; Kind of Vessel: Container Ship; Material of Hull: Steel; Speed of Vessel: 18.5 Knots; Port of Registry: Panama; Signal Letters: 3FTA7; IMO No.: 9153070; Kind of Main Engine: Internal-combustion Engine/SULZER 6RTA62; Horse Power of Main Engine: 8,826KW; main engine manoeuvring being controlled by engine room; Classification society: NK (Nippon Kaiji Kyokai); Where and When built: Japan, IMABARI SHIPBUILDING CO. LTD., completed on October, 1997. The Plaintiff Hiro is the registered owner of this ship. The Plaintiff Hiro and Yuma concluded a Bareboat Charter and a Purchase Contract on March 24, 1997, therein it was agreed that the Plaintiff Yuma hired M/V “SUMIRE” in the way of bareboat charter, however, no registration of bareboat charter of M/V “SUMIRE” had been conducted. II. Details of the Accident At 1910 hrs on 14 March 2007, M/V “YUE DIAN 2” departed Guangzhou port in ballast condition, bound for Huang Ye Port. The draft at departure was: fore 3.4m, after 6.3m. Master, Jiang Feng, was in charge of commanding the vessel, the Third Officer was in charge of the engine bell operation and assisted in look-out, while two A/B took turn to operate the rudder and assisted in look-out. At 2228 hrs, M/V “YUE DIAN 2” reported to VTS Guangzhou through VHF that she had passed Humen Bridge, and later this vessel entered into Lingding Channel and sailed full ahead. At 2335 hrs, M/V “YUE DIAN 2” passed Buoy No.36. When passing between Buoy No.33 and No.34, the Master, by observing the radar, detected a vessel (namely M/V “HANG JUN 11”) sailing before M/V “YUE DIAN 2” along the channel. At that time M/V “HANG JUN 11” was 4nm away from M/V “YUE DIAN 2” with the speed of about 3knots. The Master judged that M/V “HANG JUN 11” was an outbound dredger. The monitoring materials of VTS Guangzhou indicated that at 2340 hrs, M/V “YUE DIAN 2” had already passed Buoy No.34, with the course at 162°, the speed of 16.5knots, and the position at the middle of the channel alongside the red buoy. The Master, by observing the radar, detected another ship (namely M/V “SUMIRE”) sailing at the middle of the channel, with the distance of about 6.5nm away from M/V “YUE DIAN 2” and the speed of about 15knots. At 2344 hrs, M/V “YUE DIAN 2” just passed Buoy No.32, with the course at 163° and the speed of 17knots, sailing alongside the red buoy. At 2345 hrs, the A/B took the shift, one person in charge of rudder operation and the other assisting in look-out. At about 2347 hrs, M/V “YUE DIAN 2” just passed Buoy No.30, and the course and the speed of the vessel did not change. At 2348 hrs, M/V “YUE DIAN 2” contacted M/V “HANG JUN 11” through VIF for three times to communicate on the overtaking. M/V “HANG JUN 11” made a reply to M/V “YUE DIAN 2” and agreed M/V “YUE DIAN 2” to overtake her from the port side. At about 2349 hrs, the Master of M/V “YUE DIAN 2” order the vessel to make hard to port, and reported through VHF that she was turning to port. At 2350 hrs, M/V “YUE DIAN 2” passed Buoy No.28 with the speed of 17knots. At about 2351 hrs, M/V “YUE DIAN 2”, on the position of the back side of the starboard draft marks at the bow, collided with the bow of M/V “HANG JUN 11” almost at a right angle. The GPS position of M/V “YUE DIAN 2” at the time of collision was: 22°31′N, 113°44′.5E, heading about 136°, and speed at about 10knots. After collision, M/V “YUE DIAN 2” clashed out of the channel, and grounded at the eastern side of the channel at about 0003 hrs in 15 March. The GPS position of M/V “YUE DIAN 2” at the time of grounding was: 22°30′.7N, 113°45′.E. At about 0600 hrs, M/V “YUE DIAN 2” was relieved from grounding by taking the chance of tide and under the assistance of two tugs. At 2320 hrs on 14 March 2007, M/V “HANG JUN 11” was carrying out dredging operation at Lingding Channel, the Second Officer, Yu Gang and the A/B went to the bridge for taking the duty. At 2325 hrs, the Second Officer ordered the A/B in charge of harrow operations to lift up the harrow, and sailed the vessel out of the eastern side of the channel, checked and cleaned the harrow tools for shift taking. After completion of shift turning outside the channel, the Second Officer, Yu Gang, who took the duty, was in charge of the manoeuvring of the vessel and the dredging operation. One A/B was in charge of rudder operation, and the other A/B was in charge of harrow operations. Two sets of ARPA radars at the bridge platform had been turned on, with the presentation of comparative movement, and the heading upward, and with the measurement distance separately set up at 1.5nm and 3nm. One set of depth sounder, AIS, GPS, and one set of DGPS, and 4 sets of VHF had been turned on. 2 sets of VHF were set up at Channel 9, while the other 2 sets of VHF were set up at Channel 16. The sailing lights had been turned on, displaying the sidelights on the starboard side and the port side, and the fore and after masthead lights, and stern lights, and vertically displacing three all-round lights of red, white and red colors. The two illuminative lights at deck had been turned on. At 2339 hrs, the Second Officer instructed M/V “HANG JUN 11” to sail into the channel, and carried out operations along the channel at the place between the Green Buoy No.25 and No.27. Soon after the vessel carried out operation within the channel, the Second Officer first saw a coming vessel sailing near Buoy No.36 alongside the red buoy, displaying red and green side lights, and fore and after masthead lights. In accordance with the monitoring record of VTS Guangzhou, at about 2343 hrs, the course of M/V “HANG JUN 11” was about 321° with the speed of about 1.5knots. At 2346 hrs, the course of M/V “HANG JUN 11” was about 341° with the speed of about 2knots. At 2348 hrs, the course of M/V “HANG JUN 11” was about 342° with the speed of about 2knots. At this time M/V “HANG JUN 11” receive the calling from M/V “YUE DIAN 2” through VHF, and later the Second officer made a reply to M/V “YUE DIAN 2”, agreeing M/V “YUE DIAN 2” to overtake her from the port side. M/V “HANG JUN 11” immediately lifted up the harrow, and stop the main engine to observe the movement of the coming vessel. At about 2349 hrs, the course of M/V “HANG JUN 11” was about 342° with the speed unchanged, and at this time, M/V “YUE DIAN 2” called M/V “HANG JUN 11” through VHF to inform that she was turning to port. The Second Officer on duty, Yu Gang, after knowing the coming vessel had already taken the action to turn to port, immediately ordered to move slow astern both then full astern both. Soon after the orders to move astern were given, at 2351 hrs, the starboard side at the bow of M/V “YUE DIAN 2” collided with the bow of M/V “HANG JUN 11”, with the collision angle at about 90°. The two vessels immediately separated from each other after collision, and the bow of M/V “HANG JUN 11” turned to starboard and went astern to the port side of the entering channel. At about 2354 hrs, M/V “HANG JUN 11” collided with an approaching vessel, M/V “SUMIRE”, in the middle between the red buoy No.26 and No.28., to the edge of the channel. The bow of M/V “SUMIRE” clashed into the part slightly before the midship at the starboard side of M/V “HANG JUN 11”. The heading of M/V “HANG JUN 11” at the time of collision was about 40°, and the vessel was moving astern at the speed of about 7knots. At 1245 hrs on 11 March 2007, M/V “SUMIRE”, laden with the container No.822TEU (7,282.7tons of cargos), departed from KOBE, Japan, and proceeded to Xinnansha Port in Guangzhou. At 2210 hrs in 14 March, M/V “SUMIRE” arrived at Guishan Anchorage in Guangzhou for the pilot to embark the vessel. The pilot, Zhao Bingxun, embarked the vessel. After acquiring information on the engines and rudders from the Master, the pilot discussed with the Master and then decided to instruct the vessel to enter into the port by making the main engine stand by with the speed of rotation at 100RPM, and the speed of 15knots. The Master told the pilot that the maximum draft of the vessel was 6.8m. The pilot thought the channel was comparatively clean, and hence started to pilot the vessel to enter into Nansha Port, while the Master, the Third Office and one A/B in charge of rudder operation were all at the bridge. The pilot, Zhao Bingxun, gave instructions on the operation of the engine bell and the rudder to pilot the sailing, and the Third Officer was in charge of engine bell operation and assisted with look-out, while the A/B was in charge of rudder operation. Two sets of radar, GPS, AIS had been turned on. The pilot used the ARPA radar to observe the situation by alternating the range between 1.5nm and 3nm. The speed of the vessel was maintained at about 15knots. At 2240 hrs, the Master left the bridge. At about 2340 hrs, M/V “SUMIRE” was near Buoy No.21 and No.22, with the speed of about 14knots and the course at 351°. The pilot saw a vessel in front near Buoy No.25 and No.26, placing three lights with the color of red, white and red in a vertical line. The pilot got the information through AIS that the name of the vessel in front was M/V “HANG JUN 11”. The course of M/V “HANG JUN 11” was 340°, and the speed was very slow, while M/V “HANG JUN 11” was about 3.2nm away from M/V “SUMIRE”. The pilot also detected through radar M/V “YUE DIAN 2” near the position between Buoy No.31 and No.33, sailing towards the exit and alongside the red buoy at the main channel and with the distance of about 6.5nm away from M/V “SUMIRE”. At about 2342 hrs, M/V “SUMIRE” passed Buoy No.21 and No.22, with the course at 352° and the speed of 15.1knots. The pilot visually saw that there was no obvious change in the sailing movement of both M/V “HANG JUN 11” and M/V “YUE DIAN 2”. At 2344 hrs, the pilot ordered M/V “SUMIRE” to lower the speed. The monitoring material of VTS Guangzhou showed that the speed of the vessel was about 14knots. The Master immediately went to the bridge after he felt that the speed of the vessel had changed. At 2347 hrs, M/V “SUMIRE” was sailing near Buoy No.23, and the course was changed into 343°, and at this time the speed was about 14knots, while M/V “SUMIRE” was about 1.7nm away from M/V “HANG JUN 11”. The pilot considered to come across first with M/V “YUE DIAN 2”, which was sailing toward the exit, and then passed M/V “HANG JUN 11” from her port side. At about 2349 hrs, M/V “SUMIRE” informed M/V “HANG JUN 11” through VHF of her overtaking intention, and requested M/V “HANG JUN 11” to maintain her course. M/V “HANG JUN 11” replied and expressed her agreement. Soon after the VHF communication, the pilot saw the bow of M/V “YUE DIAN 2” obviously turn to port, and the pilot found that there was a collision risk between M/V “YUE DIAN 2” and M/V “HANG JUN 11”. At the same time, the pilot heard through VHF that M/V “YUE DIAN 2” kept changing her order between hard to port and hard to starboard. The pilot felt that M/V “YUE DIAN 2” was quite nervous. At that time, the distance between M/V “SUMIRE” and M/V “HANG JUN 11” was about 1.2nm. VTS Guangzhou had reminded M/V “SUMIRE” to slow the engine for 4 times within one minute, and to pay attention to the vessel sailing towards the exit and the dredger in front. At about 2351 hrs, M/V “YUE DIAN 2” collided with M/V “HANG JUN 11”, while M/V “YUE DIAN 2” clashed out of the channel. At such time, the course of M/V “SUMIRE” was 343°, with the speed of 15.3knots, and M/V “SUMIRE” had already approached Buoy No.26, about 0.8nm away from the position where the aforesaid two vessels collided, while M/V “HANG JUN 11” did not stop moving astern, and M/V “SUMIRE” intended to overtake M/V “HANG JUN 11” from the stern of M/V “HANG JUN 11”. At about 2352 hrs, when finding M/V “HANG JUN 11” moving astern sideling at a high speed towards the port side of the entering channel, the pilot immediately called M/V “HANG JUN 11” through VHF, telling her not to move astern, and the pilot also ordered M/V “SUMIRE” to make port 10°. When M/V “SUMIRE” turned her course to 320°, the pilot found M/V “HANG JUN 11” still moving astern, and then he ordered M/V “SUMIRE” to make hard to port, later immediately changed the order to make hard to starboard, and to stop the main engine. At about 2353 hrs, the distance between M/V “SUMIRE” and M/V “HANG JUN 11” was already less than 0.2nm. At about 2354 hrs, the bow of M/V “SUMIRE” clashed into the part slightly before the starboard midship of M/V “HANG JUN 11”, with the collision angle of about 70°. The heading of M/V “SUMIRE” at the time of collision was about 330°, and the speed was about 10.2knots. According to the monitoring record of VTS Guangzhou, the position where the two vessels collided was 22°31′N, 113°44′.4E. After collision, the two vessels did not separate from each other immediately and M/V “SUMIRE” dispatched two cables to M/V “HANG JUN 11” to fasten the two vessels. At about 0040 hrs in 15 March, water came into the fore hold and the engine room of M/V “HANG JUN 11”. At about 0108 hrs, M/V “SUMIRE” grounded. At 0410 hrs, M/V “SUMIRE” separated from M/V “HANG JUN 11”. At 0535 hrs, M/V “HANG JUN 11” grounded at the western side of Buoy No.24 under the assistance of two tugs, with the grounding position at 22°28′.5N, 113°43′.5E. At about 0730 hrs, M/V “SUMIRE” got refloated. At the time of the occurrence of the accident: overcast, visibility 4 to 5nm, easterly wind with the force of 4, ebb tide, and current speed about 1.5knots. After occurrence of the accident, Guangdong MAS carried out investigations thereto in accordance with the law, and issued the Investigation Report on the Collision Accident among M/V “YUE DIAN 2”, M/V “HANG JUN 11” and M/V “SUMIRE”, which presented the following opinions: this was an accident involving three vessels respectively with two collisions under a special circumstance; for the first collision between M/V “YUE DIAN 2” and M/V “HANG JUN 11”, M/V “YUE DIAN 2” shall bear the major liability, while M/V “HANG JUN 11” shall bear the minor liability; for the second collision between M/V “HANG JUN 11” and M/V “”SUMIRE, M/V “”SUMIRE shall bear the major liability, while M/V “HANG JUN 11” shall bear the minor liability; III. Losses alleged by the Plaintiff After occurrence of accident, at 1600hrs on 17 March 2007, M/V “YUE DIAN 2” berthed at Guangzhou CSSC-OCEAN-GWS Marine Engineering Co., Ltd. (hereinafter referred to as “Wenchong Shipyard”) for damage repair. On 26 March 2007 the damage repair was completed, and M/V “YUE DIAN 2” departed from the shipyard. With respect to the losses claimed by the Plaintiff regarding the collision accident under the present case, the collegial panel ascertains as follows: 1. Repair fees of M/V “YUE DIAN 2” The Plaintiff had submitted the Damage Survey Report on M/V “YUE DIAN 2” issued by Guangdong Marine Engineering Consulting and Survey Company, Repair Contract, Repair Price List, Repair Work Confirmation, Invoice and Payment Voucher of the repair fees etc. as evidence. The repair fees listed on the Repair Price List and the Invoice of the repair fees was in an amount of RMB1, 508,942. The reasonable repair fees suggested by the Damage Survey Report on M/V “YUE DIAN 2” were in an amount of RMB1, 502,710.00. The Defendants, Hiro and Yuma, considered that the repair fees alleged by the Plaintiff was not reasonable, and they provided the survey report issued by China Marine Service Company Ltd. (hereinafter referred to as “CMS”), claiming that the reasonable repair fees should be in an amount of RMB810.000. The Defendant, Nanjing Channel Engineering Bureau agreed with the challenge put forward by the Defendants, Hiro and Yuma. The collegial panel holds that: M/V “YUE DIAN 2” visited Wenchong Shipyard for repair after occurrence of the accident involved in this case, and the Repair Price List and the Invoice of Repair fees issued by Wenchong Shipyard can prove that the Plaintiff has already effected the payment of the repair fees in an amount of RMB1, 508,942. Guangdong Marine Engineering Consulting and Survey Company is qualified to carry out appraisal, and according to the appraisal done by this Company, the fee in an amount of RMB1, 502,710.66 was relevant to the accident involved in the present case. The Survey Report issued by CMS suggested that the reasonable amount of the repair fees should be in an amount of RMB810, 000. However, this survey report did not deny the items needed to be repaired under the accident. This report only raised questions on the reasonableness of charges on these items, and pointed out that RMB2, 556 had been double charged. Considering that the Plaintiff had already paid the repair fees to Wenchong Shipyard, it shall be ascertained that the repair fees arising out of the damage sustained by M/V “YUE DIAN 2” caused by the accident involved in this case should be in an amount of RMB1, 502,710.66, and after deducting the fee which had been double charged, the repair fees should be in an amount of RMB1, 500,154.66. 2. Painting fee for M/V “YUE DIAN 2” The Plaintiff had submitted the invoice, the duplicate of the invoice, the receipt of delivery, and the electronic transfer voucher etc. as evidence to prove the painting fee for M/V “YUE DIAN 2” in an amount of RMB25, 371.22. The amount of the painting fee listed in the invoice and the electronic transfer voucher was RMB25, 371.22. The Defendant, Nanjing Channel Engineering Bureau, did not recognize such fee, and alleged that the ship repair was repair on the damaged steel plate, while the painting work was only collateral, and therefore the painting fee shall not be borne by the owner. The collegial panel holds that: Article 7 of supply of materials under the Repair Contract concluded between the Plaintiff and Wenchong Shipyard provides that in principle, Party B (namely Wenchong Shipyard) shall be responsible for dealing with the materials needed for the repair; the material which is in lack shall be dealt with by both parties through negotiation. Considering that the Plaintiff did not provide relevant evidence to prove that a new agreement on the supply of paint and the payment of the painting fee had been concluded between the Plaintiff and Wenchong Shipyard, therefore such fee is not admitted by this collegial panel. 3. Survey fee for M/V “YUE DIAN 2” The survey fee as claimed by the Plaintiff was in an amount of RMB34, 906. The Defendants, Nanjing Channel Engineering Bureau, Hiro and Yuma do not have any dissension to this fee, and this survey fee is admitted by this collegial panel. 4. Emergency handling fees on emergencies, monitoring, pollution prevention and cleanup etc. The Plaintiff had submitted the following evidence to prove that the Plaintiff had paid the fees on cleanup and pollution prevention and the tug fees for salvage in a total amount of RMB337, 126: Settlement Agreement concluded by the three defendants with Guangzhou MSA, invoices respectively issued by Guangzhou Port Pearl River Pollution Prevention Co., Ltd., Huangpu Huixing Co., Ltd., and Guangzhou Port Group Co., Ltd. The three defendants do not have any dissension to the aforesaid fees, and proved that the total amount of such fees arising out of the accident involved in this case was RMB1, 011,378. Each party had paid the average amount of RMB337, 126. The collegial panel holds that: the Settlement Agreement concluded among the Plaintiff, the three defendants and Guangzhou MSA specified that such fees were prepaid under the circumstance that the liability proportion borne by each party had not been ascertained. Therefore, such fees shall not be deemed as ascertainment on the proportion of the collision liability, and the aforesaid payment would not affect each party hereto to claim compensation against each other according to the proportion of the collision liability finally ascertained. Considering that such fees was incurred from the actions taken to deal with the emergencies such as salvage, cleanup, pollution prevention, and monitoring etc., while the grounding of M/V “HANG JUN 11” was caused by the collision between M/V “HANG JUN 11” and M/V “SUMIRE”, therefore, such fees shall be borne by each party according to their respective liability proportion under the collision accident between M/V “HANG JUN 11” and M/V “SUMIRE”. 5. Loss of hire for M/V “YUE DIAN 2” The Plaintiff had submitted the appraisal report issued by Guangdong Huashen Accounting Firm as evidence to prove the loss of hire in an amount of RMB1, 267,318.73. Tang Qiujin, a C.P.A., appeared in court to accept the examination. The appraisal report had carried out examination and review according to the Voyage No.1 to No.4 operated by M/V “YUE DIAN 2” after her departure from the shipyard upon completion of repairs, and this report ascertained that the daily average net profit for M/V “YUE DIAN 2” was RMB105, 904.96; According to the Certificate proving the repair time of M/V “YUE DIAN 2” issued by Wenchong Shipyard and the Deck Logbook, this appraisal report ascertained the time for calculation on the loss of hire sustained by M/V “YUE DIAN 2” was 11.9625 days. The collegial panel holds that: Article 10 of the Provisions of the Supreme People’s Court regarding Damage Compensation on Property involving in the Trial of the Cases of Ship Collision and Ship Touch, in case of partial damage to the vessel, the repair period shall be limited to the reasonable period necessary for the actual repairs, including the reasonable time necessary for contact, docking and survey; the loss of hire is generally calculated as the average net profit of four voyages, two before the collision and two after; if no two voyages before and after the ship collision can be taken as reference, the loss of hire shall be calculated as the average net profit of other corresponding voyages. Since M/V “YUE DIAN 2” was a newly-purchased vessel, the collision accident occurred during the first voyage and no two voyages before and after the collision can be taken as reference, therefore it was in compliance with the aforesaid provision for the accounting firm to carry out the audit according to the first four voyages operated by M/V “YUE DIAN 2” after her departure from the shipyard upon completion of repairs. Tang Qiujin, the C.P.A., appeared in court to accept the examination, and had gave reasonable answers to the questions respectively raised by each party. The accounting firm and the auditors issuing this appraisal report were qualified, the evidence and bases on which this appraisal report was based were sufficient, and the procedures were in compliance with law. Therefore this appraisal report is admitted by this collegial panel, ascertaining that the daily average net profit of M/V “YUE DIAN 2” was RMB105, 940.96, the claimable period for loss of hire was 11.9625days, thus the loss of hire caused by the ship collision was RMB1, 267,318.73. 6. Appraisal fee on loss of hire of M/V “YUE DIAN 2” In order to prove that it has paid the appraisal fee on loss of hire in an amount of RMB27, 000, the plainitff submits the invoices and the electronic transfer voucher issued by Guangdong Huashen Accounting Firm. Such fee is admitted by the collegial panel. 7. Maintenance fee, fixed cost, and management fee during the repair period for M/V “YUE DIAN 2” The Plaintiff had submitted the invoices and the electronic transfer voucher issued by Guangdong Huashen Accounting Firm as evidence to prove the maintenance fee in an amount of RMB88, 501.21, the fixed cost in an amount of RMB890, 348.77, management fee in an amount of RMB117,090.27 during the repair period for M/V “YUE DIAN 2”. The collegial panel holds that: in accordance with Article 3 of the Provisions of the Supreme People’s Court regarding Damage Compensation on Property involving in the Trial of the Cases of Ship Collision and Ship Touch, compensation on partial damage to the ship includes the assistant fees and the maintenance fees etc. It was legally well-founded for the Plaintiff to request for the fixed cost, management fee and the maintenance fee, in addition to the net profit. According to the appraisal report which has been admitted, the maintenance fee for M/V “YUE DIAN 2” during the period of suspension of navigation caused by the accident involved in the present case was RMB88, 501.21. The appraisal report ascertained that after completion of repairs on M/V “YUE DIAN 2”, the time for the voyages No.1 to No.4 was 72.51days; the amount of the fixed cost was RMB5, 396,797.44, and the amount of the maintenance fee was RMB709, 735.86. M/V “YUE DIAN 2” was a newly-purchased vessel, and it is reasonable for the appraisal report to examine and review the fixed cost and the maintenance fee in accordance with the operation of the voyages No.1 to No.4 after accident. Therefore, it is ascertained by the collegial panel that: the daily fixed cost of M/V “YUE DIAN 2” was RMB74, 428.32, and the daily management fee was RMB9, 788.11; the total amount of the fixed costs was RMB890, 348.77, and the total amount of the management fees was 117,090.27 during the repair period. 8. Survey and salvage fee, survey fee on damage, supervision fee on repairs, examination and consultation fee on the bills paid for M/V “HANG JUN 11” The Plaintiff had submitted the Service Charge and Invoice hereto issued by Guangdong Marine Engineering Consultation Survey Co., and the Letter of Authorization issued by the Plaintiff to PICC Property and Casualty Company Limited, Guangzhou Branch, Huangpu Sub-branch (hereinafter referred to as “PICC Huangpu Sub-branch”) as evidence, to prove the survey and salvage fee in an amount of RMB16,000, the survey fee on damage in an amount of RMB59,000, the supervision fee on repairs in an amount of RMB172,250, and the examination and consultation fee on the bills in an amount of RMB102,850 paid for M/V “HANG JUN 11”. The total amount of the aforesaid four items of fees listed in the Service Charge and Invoice hereto was RMB350, 100. The Letter of Authorization issued by the Plaintiff dated 16 March 2007 stated that the Plaintiff entrusted PICC Huangpu Sub-branch to handle every matter regarding the damage survey on the three vessels involved in the present case, any and all fees incurred therefrom would be prepaid by PICC Huangpu Sub-branch, and then settled when carrying out the insurance indemnity. The Defendant, Nanjing Channel Engineering Bureau, raised dissension, alleging that the Plaintiff was not entitled to claim such compensation, because the entrusted person was an insurance company, and such fees shall be the operating fee of the insurer. The collegial panel holds that: according to the invoices provided by the Plaintiff, and based on the fact that the Plaintiff did have provided in other case a survey report on M/V “HANG JUN 11” under the accident, although the fees claimed by the Plaintiff did have actually arise, the Plaintiff failed to prove these fees had been actually borne and paid by the Plaintiff. Such fees were not the expenses necessary to be paid by the Plaintiff for the dispute under the present case, and therefore such fees are not admitted by the collegial panel. 9. Survey fee paid for M/V “SUMIRE” The Plaintiff had submitted the Service Charge and Invoice hereto issued by Guangdong Marine Engineering Consultation Survey Co., as evidence to prove the survey fee paid for M/V “SUMIRE” in an amount of RMB12, 200. The collegial panel holds that: according to the invoices provided by the Plaintiff, and based on the fact that the Plaintiff did have provided in other case a survey report on M/V “HANG JUN 11” under the accident, although the fees claimed by the Plaintiff did have actually arise, Such fees were not the expenses necessary to be paid by the Plaintiff for the dispute under the present case, and therefore such fees are not admitted by the collegial panel. 10. With respect to the travelling fees, lawyer fee and telecommunication fee etc. incurred due to the handling of accident by the Plaintiff in an amount of RMB100, 000, the Plaintiff failed to provide relevant evidence. Therefore, such fees are not admitted by the collegial panel. In summary, the losses sustained by the Plaintiff include the repair fees in an amount of RMB1, 500,154.66, survey fee in an amount of RMB34, 906, loss of hire in an amount of RMB1, 267,318.73, appraisal fee in an amount of RMB27, 000, the maintenance fee in an amount of RMB88, 501.21, the fixed cost in an amount of RMB890, 348.77, the management fee in an amount of RMB117, 090.27 during the repair period. The total amount of the aforesaid fees was RMB3, 925,319.64 (excluding the emergency handling fees). On 20 March 2007, this Court rendered a civil ruling ((2007)GHFBZ No.30-2) in accordance with the application filed by the Plaintiff for pre-trail preservation, to arrest M/V “SUMIRE” berthed at Guangzhou port. The Plaintiff paid to this Court the application fee in an amount of RMB5, 000 and the enforcement fee in an amount of RMB10, 000. After the defendants, Hiro and Yuma, provided the guarantee in an amount of RMB8,000,000 issued by China Reinsurance (Group) Co., this Court rendered a ruling to release M/V “SUMIRE”. On 3 September 2007, against the application of the defendants Hiro and Yuma, this Court rendered a civil ruling ((2007)GHFCZ No.258) to permit them to constitute the limitation fund for maritime claim, which is in the amount of 2,436,363 special drawing right (equal to RMB28,133,228.86), plus the interest calculated as per the loan interest rate of the flow capital at the corresponding period issued by the People’s Bank of China from the date of the occurrence of the accident to the date of establishment of the fund. In 25 September, the defendants, Hiro and Yuma, provided to this Court, the guarantee issued by China Reinsurance (Group) Co. on the aforesaid limitation of liability fund for maritime claims. On 31 October, this Court rendered a civil ruling ((2007)GHFCZ No.127) according to the application filed by the defendants, Hiro and Yuma, to refund the guarantee in an amount of RMB8,000,000 issued by China Reinsurance (Group) Co.. All members of the collegial panel believe that this case is a dispute over damage compensation arising from ship collision. Due to that the collision happened in China, according to 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 be applied to deal with the substantive dispute. During the trial, parties to the case also agreed that laws of the People’s Republic of China shall be applied to deal with the dispute. M/V “YUE DIAN 2” was sailing outward alongside the channel in ballast condition while M/V “HANG JUN 11” was conducting dredging operation as sailing inward alongside the channel at low speed, and the vessels were sailing in opposite directions along their respective starboard side, in a head on situation. With three all-round lights being hanged vertically, M/V “HANG JUN 11” was a ship with limit maneuvering capacity. M/V “SUMIRE” laden with 7,282.7 tons of cargos was sailing inward along the channel after M/V “HANG JUN 11”, and when the pilot discovered M/V “HANG JUN 11” after M/V “SUMIRE” entered the irradiation scope of the taillight of M/V “HANG JUN 11”, she still sailed at the speed of 14 to 15 knots, and the circumstance of overtaking had been formed between the two ships, under which M/V “SUMIRE” was the overtaking ship and M/V “HANG JUN 11” was the overtaken ship. When sailing outward along the channel, M/V “YUE DIAN 2” should have used sight, hearing and all other effective means suitable for the environment and situation of the time to maintain proper lookout so as to make sufficient assessment on the situation and the risk of collision. However, the said ship failed to maintain the proper lookout, and when she sailed between the 33# and the 34# buoy, the master discovered M/V “HANG JUN 11” which was sailing ahead of her by radar but mistook her as a dredger sailing in the same direction and required to “overtake” her, and thereby caused the collision. Such should be the main reason for the collision. Since M/V “YUE DIAN 2” was sailing within the channel, where the density of ships was large and the environment was complicated, she should have sailed at safe speed so as to adopt proper and effective actions for preventing the collision so that she could stop the main engine within the distance suitable for the environment and situation at that time. However, the ship did not use safe speed but still sailed at the high speed of 17 knots after she discovered M/V “HANG JUN 11” and when the distance between the two ships was shortened, with the result that, after the close-quarter situation having been formed, she failed to stop the main engine within safe distance. After the head-on situation being formed between her and M/V “HANG JUN 11”, M/V “YUE DIAN 2” should have exercised good seamanship and actively and timely adopted proper measures to prevent collision so that both the ships might sail within safe distance. However, due to M/V “YUE DIAN 2”’s neglect of lookout and misjudgment and her wrongful alteration of course to port side by hard-a-port for overtaking M/V “HANG JUN 11” as she was sailing at high speed, close-quarter situation was formed between the two ships, which finally led to the collision accident. The above-mentioned acts of M/V “YUE DIAN 2” is in violation of Articles 5, 6, 8 and 14 of International Regulations for Preventing Collision at Sea, 1992 (hereinafter referred to as “Regulations for Preventing Collision”). Since M/V “HANG JUN 11” was conducting dredging operation along the channel where ships were crowded, her operation ability was limited, therefore, she shall take full advantage of all effective means to strengthen her lookout, watch the movement of entering and departing ships and keep communication and contact with them to understand their real intentions. Especially for those vessels sailing in her vicinity, she should take necessary precautions to avoid any collision with them. However, M/V “SUMIRE” did not maintain normal lookout, and without finding out the specific position of M/V “YUE DIAN 2” which was communicating with her on VHF, she recklessly mistook M/V “YUE DIAN 2” as a ship sailing inward after her and agreed the ship to “overtake” her on her port side, thus misleading M/V “YUE DIAN 2” to further believe that both ships were in the situation of “overtaking”. When the close-quarter situation arose as M/V “YUE DIAN 2” turned to port to “overtake” the ship, M/V “HANG JUN 11” failed to use good seamanship, and actively and timely adopted correct preventing measures to prevent collision, but just stopped engine and then reversed engine only when the two vessels were extremely close to each other and it was too late to prevent the collision. The above-mentioned acts of M/V “HANG JUN 11” is in violation of Articles 5 and 8 of Regulations for Preventing Collision. As a overtaking ship, M/V “SUMIRE” shall perform the obligation of giving way, and shall take full advantage of all effective means to maintain proper lookout and keep a close eye on the movement of the overtaken ship and the changing of ship positions so as to make sufficient assessment on the situation and the danger of collision. During the overtaking, she shall sail at safe speed, especially when she overtook other ships at narrow channel and shall take into good consideration of the situations of crowded ships and complicate circumstances, and have the overtaking speed under control so as to adopt proper and effective collision preventing actions when danger of collision emerged and to stop the main engine within appropriate distance at the time. However, M/V “SUMIRE” failed to maintain proper lookout or safe speed, and at about 2349 hrs, soon after she communicated with M/V “HANG JUN 11” on VHF coordinating the overtaking, the pilot had discovered that M/V “YUE DIAN 2” was turning to port and that there was danger of colliding with M/V “HANG JUN 11”, and VTS Guangzhou had warned her to slow down the engine and to pay attention to the ship and the dredger sailed outward before her for four times, however, M/V “SUMIRE” did not pay enough attention thereto and failed to make full assessment of the danger of collision that may exist but still believed that it was able to overtake the ship and the dredger sailed before her and kept sailing at the speed of 15knots to overtake M/V “HANG JUN 11”, thereby she failed to take the measures such as stopping engine or slowing down in ample time to reduce the speed, and finally led to the collision between her and M/V “HANG JUN 11” . This should be the main reason for the accident. When M/V “YUE DIAN 2” collided with M/V “HANG JUN 11”, M/V “SUMIRE” was 0.8 nm away from the position of collision. According to the environment at the time of the collision, if M/V “SUMIRE” had adopted the collision-prevention measures such as stopping engine or moving astern in a prompt way, she would have prevented the collision between her and M/V “HANG JUN 11” or have brought the loss of collision to the least. However, M/V “SUMIRE” was so confident that she believed she might overtake M/V “HANG JUN 11” on the port side, so she still sailed at high speed when she was obstructed by M/V “HANG JUN 11” as the latter ship moved to port after by adopting measures of moving astern for the purpose of avoiding M/V “YUE DIAN 2”, and adopted measures of turning to port for the purpose of overtaking M/V “HANG JUN 11” on her port side. When she was in immediate danger, her adoption of collision-prevention measures such as hard starboard and stopping engine was useless for preventing the collision, so she finally collided with M/V “HANG JUN 11” and brought serious damage to M/V “HANG JUN 11”. The above-mentioned acts of M/V “SUMIRE” are in violation of Article 5, 6, 8 and 13 of Regulations for Preventing Collision. In order to prevent her collision with M/V “YUE DIAN 2”, M/V “HANG JUN 11” adopted measures such as stopping engine and moving astern, which is instinctive behavior for preventing collision and gives little cause for criticism. However, after M/V “YUE DIAN 2” overtook her stern subsequent to the collision between them, M/V “HANG JUN 11” shall be aware of the danger of collision with M/V “SUMIRE” which was overtaking her from her port side as she continued to retire, so at that time, she shall adopt effective measures such as stopping engine and moving ahead to stop the main engine so as to prevent her further moving astern, and she shall pay special attention to the avoidance of her moving astern to the left back of the channel which may obstruct the overtaking route of M/V “SUMIRE”. As M/V “HANG JUN 11” paid all attention to how to keep clear of M/V “YUE DIAN 2” without giving due consideration to the serious consequence that may emerge as she adopted the measure of moving astern, she failed to take actions in favor of preventing collision such as stopping engine and moving ahead so as to maintain her position, which results in the moving astern of the ship to the left back of the outward channel and finally leads to her collision with M/V “SUMIRE”. The above-mentioned acts of M/V “HANG JUN 11” are in violation of Articles 8 and 17 of Regulations for Preventing Collision. The two collisions among the three ships are two independent but related accidents. In the second collision accident, though M/V “YUE DIAN 2” did not directly collided with M/V “HANG JUN 11” and M/V “SUMIRE”, she did lead to the close-quarter situation between her and M/V “HANG JUN 11” due to her default in adopting the measure of turning to port to overtake M/V “HANG JUN 11”. To prevent her collision with M/V “YUE DIAN 2”, M/V “HANG JUN 11” adopted prevention actions such as stopping and moving astern to retire to the left back of the outward channel, thereby caused her collision with M/V “SUMIRE”. Therefore, there is indirect relationship between the two collision accidents, that is, the first collision is one reason of the second collision and M/V “YUE DIAN 2” shall also bear the minor responsibility for the second collision. When M/V “SUMIRE” was overtaking M/V “HANG JUN 11” along the entry of the channel as M/V “YUE DIAN 2” turned to port by adopting hard aport, the close-quarter situation between M/V “SUMIRE” and M/V “YUE DIAN 2” had not yet formed, and M/V “YUE DIAN 2” just turned left for the purpose of overtaking M/V “HANG JUN 11” but not for avoiding M/V “SUMIRE”. Therefore, the overtaking action of M/V “SUMIRE” has no consequence on the first collision accident and M/V “SUMIRE” did not have to bear responsibility for the first collision. The Investigation Report on the Collision Accident among M/V “YUE DIAN 2”, M/V “HANG JUN 11” and M/V “SUMIRE” issued by Guangdong MSA confirms that M/V “YUE DIAN 2” shall shoulder the major responsibility for the first collision, and M/V “HANG JUN 11” shall shoulder the minor responsibility for the first and the second collisions, and M/V “SUMIRE” shall shoulder the major responsibility for the second collision. Though both the Plaintiff and the Defendants Hiro and Yuma challenged the above-mentioned liability apportionment, they failed to present evidence to overturn the above-mentioned verdict. Taking into consideration the degree of fault of each ship in operating and collision preventing, the Collegial Panel ascertains that, M/V “YUE DIAN 2” shall shoulder 80% responsibility for the first collision and 5% percent responsibility for the second collision, and M/V “HANG JUN 11” shall shoulder 20% responsibility for the first collision and 10% percent responsibility for the second collision, while M/V “SUMIRE” shall shoulder 85% responsibility for the second collision. In accordance with Article 4 of the Provisions of the Supreme People’s Court on Some Issues regarding the Trial on Cases of Dispute over Ship Collision, the compensation liability arising out of the ship collision shall be borne by the owner of the ship. The Defendant, Nanjing Channel Engineering Bureau, is the registered owner of M/V “HANG JUN 11”, and therefore shall bear the collision liability given rise by M/V “HANG JUN 11” to compensate the Plaintiff for the losses incurred therefrom. The total amount of the losses sustained by the Plaintiff due to the collision accident was RMB3,925,319.64, and according to the aforesaid liability proportion respectively borne by M/V “YUE DIAN 2” and M/V “HANG JUN 11”, the Defendant, Nanjing Channel Engineering Bureau, shall compensate the Plaintiff for the losses in an amount of RMB785,063.93 and the interest thereof, and the interest shall be calculated as per the loan interest rate of the enterprise flow capital at the corresponding period issued by the People’s Bank of China from the next day of the date when the accident occurred, namely from 15 March 2007, to the payment date decided by this Judgment. With respect to the handling fees on emergency, monitoring, pollution prevention and cleanup etc. in a total amount of RMB1,011,378, according to the liability proportion borne by each party under the collision accident between M/V “HANG JUN 11” and M/V “SUMIRE”, the Plaintiff shall be responsible for the amount of RMB50,568.90, the Defendant, Nanjing Channel Engineering Bureau, shall be responsible for the amount of RMB101,137.80, while the defendants, Hiro and Yuma, shall be responsible for the amount of RMB859,671.30. Since each party hereto had already paid RMB337, 126, therefore the defendants, Hiro and Yuma, shall pay to the Plaintiff the amount of RMB286, 557.10 and the interest thereof (the interest shall be calculated as per the loan interest rate of the enterprise flow capital at the corresponding period issued by the People’s Bank of China from the next day of the date when the accident occurred, namely from15 March 2007, to the payment date specified herein). With respect to the aforesaid emergency handling fees in an amount of RMB286,557.10 and the interest thereof which shall be paid by the defendants, Hiro and Yuma, to the Plaintiff, since this Court had rendered a civil judgment ((2007)GHFCZ No.259), ordering that the Plaintiff under the present case shall compensate the Defendant, Hiro, for the loss in an amount of USD16,758.90 and the interest thereof, and the loss in an amount of USD8,244.54 and the interest thereof for the Defendant, Yuma, the total amount of which was USD25,003.44 and the interest thereof. The aforesaid debts borne by the parties to each other shall be setoff. Considering that the currencies for the two kinds of debts were different, the amount of USD25,003.44 payable by the plaintiff to Hiro and Yuma shall be converted into RMB according to the exchange rate between RMB and USD of 1:7.742 on the next day of the occurrence of the accident, namely 15 March 2007. Article 9 of the Provisions of the Supreme People’s Court on Some Issues regarding the Trial on Cases of Dispute over Ship Collision provides that with respect to the compensation claim for the expenses arising from floating, removal and demolition of the submerged, damaged, stranded or abandoned ship and cargo on board resulted from ship collision or from making them harmless, the party liable shall not enjoy the limitation of liability for maritime claims according to Chapter XI of the Maritime Law. In accordance with the aforesaid provision, the emergency handling fees claimed by the Plaintiff did not fall into the category of limitable creditor’s right, and therefore the defendants, Hiro and Yuma, are not entitled to limit their liability for the plaintiff’s such claim. In summary, in accordance with Article 169(1) and (2), and Article 170 of the Maritime Code of the People’s Republic of China, the judgment is rendered as follows: 1. The Defendant, Nanjing Channel Engineering Bureau, shall compensate the Plaintiff, Guangdong Yudean Shipping Co., Ltd., the amount of RMB785,063.93 and the interest thereof (the interest shall be calculated as per the loan interest rate of the enterprise flow capital at the corresponding period as published by the People’s Bank of China from 15 March 2007, to the payment date decided by this Judgment); 2. The defendants, Hiro and Yuma, shall jointly repay the Plaintiff, Guangdong Yudean Shipping Co., Ltd., the accident emergency handling fees in an amount of RMB286,557.10 and the interest thereof (the interest shall be calculated as per the loan interest rate of the enterprise flow capital at the corresponding period as published by the People’s Bank of China from 5 March 2007, to the payment date decided by this Judgment). After offset between the aforesaid repayment and the debt owed by the Plaintiff, Guangdong Yudean Shipping Co., Ltd., to the defendants, Hiro and Yuma, under the civil judgment ((2007)GHFCZ No.259), the remaining debt owed by the defendants, Hiro and Yuma to the Plainitff, Guangdong Yudean Shipping Co., Ltd., shall be compensated without using the limitation fund constituted by Hiro and Yuma before this court; 3. Other litigation claims put forward by the Plaintiff, Guangdong Yudean Shipping Co., Ltd., are overruled. The litigation fee is RMB44,271, of which, the amount of RMB34,301.95 shall be borne by the Plaintiff, the amount of RMB7,303.27 by the Defendant, Nanjing Channel Engineering Bureau, while the amount of RMB2,665.78 by the defendants, Hiro and Yuma. The amount of RMB9, 969.05 shall be refunded to the Plaintiff from the litigation fee it prepaid. The defendants, Nanjing Channel Engineering Bureau, Hiro and Yuma, shall pay the litigation fee respectively due to them to this Court. The application fee for pre-litigation preservation and the enforcement fee in a total amount of RMB15, 000 shall be borne by the defendants, Hiro and Yuma. The defendants, Hiro and Yuma, shall directly pay the application fee for pre-litigation preservation and the enforcement fee to the Plaintiff, and this Court will not refund such fees to the Plaintiff. The aforesaid obligation on money payment shall be fulfilled within 10 days upon the effectiveness of this Judgment. In case of failure of payment within the period specified in this Judgment, the failing party shall double pay the interest for the delayed period in accordance with Article 229 of the Civil Procedural Law of the People’s Republic of China. In event of dissatisfaction with this Judgment, the Plaintiff and the Defendant, Nanjing Channel Engineering Bureau, may within 15 days, while the defendants, Hiro and Yuma, may, within 30 days upon the service of this Judgment, submit a Statement of Appeal to this Court with copies according to the numbers of the relevant parties to the case, appealing to the Higher People’s Court of Guangdong Province. Presiding Judge Zhan Simin Judge Xiong Shaohui Judge Zhang Kexiong (Official Chop of Guanghzou Maritime Court Affixed) 11 June 2009 Certified to be true to the original Assistant Judge Gu Enzhen Clerk Liang Xiaolei The translation is provided by Wang Jing & CO.

Civil Judgment (2006) Guang Hai Fa Chu Zi No. 270 Plaintiff No. 1: Shenzhen Shipping Company Domicile: No. 301-303, 305-309, Block B, Hang Tian Building, No. 4019, Shennan Avenue, Futian District, Shenzhen, Guangdong Province Legal representative: Jiang Haisheng, Director Agent ad litem: Yang Yunfu, lawyer with Yang & Lin Co., Law Firm Agent ad litem: Ren Yanbing, lawyer with Yang & Lin Co., Law Firm Plaintiff No. 2: Shenzhen Shenyue Shipping Company Domicile: Fl. 3, Block B, Hang Tian Building, No. 4019, Shennan Avenue, Futian District, Shenzhen, Guangdong Province Legal representative: Wu Jinlai, General Manger Agent ad litem: Yang Yunfu, lawyer with Yang & Lin Co., Law Firm Agent ad litem: Ren Yanbing, lawyer with Yang & Lin Co., Law Firm Plaintiff No. 3: Taiping Insurance Shenzhen Branch Domicile: Fl. 6, main building of Gong Jiao Building, No. 1001, Lian Hua Zhi Lu, Futian District, Shenzhen, Guangdong Province PIC: Li Ziliang, General Manger Agent ad litem: Yang Yunfu, lawyer with Yang & Lin Co., Law Firm Agent ad litem: Ren Yanbing, lawyer with Yang & Lin Co., Law Firm Defendant No. 1: National Australia Finance (Vessel Leasing No.2) Limited Domicile: 88 Wood Street, London, EC2V 7QQ, England Legal representative: Brian Birch, Director Agent ad litem: Chen Xiangyong, lawyer with Wang Jing & Co., Law Firm Agent ad litem: Cao Yanghui, lawyer with Wang Jing & Co., Law Firm Defendant No. 2: Orient Overseas Container Line (U.K.) Limited Domicile: OOCL House, Levington Park, Bridge Road, Levington, Ipswich, Suffolk IP 10 0NE, United Kingdom Legal representative: Henry Kong Tsun Wong, Director Agent ad litem: Chen Xiangyong, lawyer with Wang Jing & Co., Law Firm Agent ad litem: Cao Yanghui, lawyer with Wang Jing & Co., Law Firm Plaintiff No.1, Shenzhen Shipping Company (hereinafter referred to as “Shenzhen Shipping”), and Plaintiff No.2, Shenzhen Shenyue Shipping Company (hereinafter referred to as “Shenyue Shipping”) filed a law suit on 18th August 2006 against Defendant No.1, National Australia Finance (Vessel Leasing No.2) Limited (hereinafter referred to as “Australia Finance”), and Defendant No.2, Orient Overseas Container Line (U.K.) Limited (hereinafter referred to as “OOCL”) with regard to the dispute over collision damage. This Court accepted this case on 23rd August and formed a collegial panel for hearing. The facts of this case shall be ascertained based on the results of trials of the case of dispute over cargo damage under contract of carriage of goods by waterway filed by PICC Property and Casualty Company Limited, Shenzhen Branch (hereinafter referred to as “PICC Shenzhen”) against Shenzhen Shipping under the case reference of (2005) GHFCZ No.373 and the case of dispute over ship insurance contract filed by Shenyue Shipping against Taiping Insurance Shenzhen Branch (hereinafter referred to as “Taiping Insurance”) under the reference of (2005) GHFCZ No.181. However, the hearings of the aforesaid two cases have not been concluded. Therefore, this court ruled on the 11th day of October, 2006 a suspension of the subject litigation. On 31st August, 2007, Shenzhen Shipping changed its name as Shenzhen Shipping Group Co., Ltd. On 26th September 2007, this court decided to resume the litigant procedure as the cause of suspension was removed. On 8th December 2007, Taiping Insurance applied to participate in the litigation as co-plaintiff on the ground that it has made compensation in an amount of RMB7,700,000 to Plaintiff No.2, Shenyue Shipping, as the hull underwriter of M/V Peng Yang. This Court found the application filed by Taiping Insurance comply with the provisions of law through examination and approved Taiping Insurance to participate in the litigation as a co-plaintiff by a civil ruling issued on 10th December 2007 according to law. On 11th December 2007 and 14th May 2008, this court organized the evidence exchange for parties concerned. In the first public hearing on 14th and 15th May 2008, Yang Yunfu and Ren Yanbing, the agents ad litem of Plaintiff No.1 Shenzhen Shipping and Plaintiff No.3 Taiping Insurance, Zhu Weikang and Hu Wei, the agents ad litem of Plaintiff No.2 Shenyue Shipping, and Chen Xiangyong and Cao Yanghui, the agents ad litem of Defendant No.1 Australia Finance and Defendant No.2 OOCL participated in the proceeding. In the second public hearing on 7th and 8th December 2009, Yang Yunfu and Ren Yanbing, the agents ad litem of Plaintiff No.1 Shenzhen Shipping and Plaintiff No.3 Taiping Insurance, and Chen Xiangyong and Cao Yanghui, the agents ad litem of Defendant No.1 Australia Finance and Defendant No.2 OOCL participated in the proceeding. This case has now been concluded. Plaintiff No.1 Shenzhen Shipping and Plaintiff No.2 Shenyue Shipping claimed that: In August 2004, M/V Peng Yang (hereinafter referred to as Peng Yang) owned by Shenzhen Shipping and bareboat chartered by Shenyue shipping was bound for Shenzhen Mawan Power Plant upon loading of coal at Qinhuangdao, Hebei Province. At about 1200 hrs on 23rd August, she arrived at waters of Yinzhou in Hong Kong where the Hong Kong pilot embarked and instructing the vessel pass through Ma Wan Fairway to Shenzhen Mawan Power Plant. Before Peng Yang entered into Ma Wan Fairway, another vessel, M/V OOCL Hamburg (hereinafter referred to as OOCL Hamburg), was passing through the same channel from the opposite direction (from west to east). After entry into Ma Wan Fairway, Peng Yang ran on the rocky shoal and grounded in order to avoid OOCL Hamburg. Shenzhen Shipping and Shenyue Shipping had suffered losses in an amount of RMB37, 000, 000 (Note: any amount referred to herein shall be in RMB currency unless otherwise stated.) due to such accident. The accident was completely caused by OOCL Hamburg so that Defendants Nos.1 and 2 should at least bear 90% of liabilities therefor. Australia Finance as the owner of and OOCL as the bareboat charterer of OOCL Hamburg should be liable to make compensation in the aforesaid proportion for losses sustained by Shenzhen Shipping and Shenyue Shipping. Shenzhen Shipping and Shenyue Shipping requested this court: 1. To order the Defendants to jointly and severally make compensation for losses and expenses in an amount of RMB33, 000, 000 sustained by Shenzhen Shipping and Shenyue Shipping as well as the interest thereof due to the running on the rocky shoal and grounding of Peng Yang for the purpose of avoiding OOCL Hamburg which should assume at least 90% of the liabilities therefor. The interest shall be computed from 24th August 2004 based on the current fund loan interest rate published by People’s Bank of China in the corresponding period until the day when all the payments are made in full by the Defendants; 2. To order the Defendants to jointly and severally assume the relevant legal costs, including but not limited to cost of application for evidence preservation and property preservation, execution fees, litigation fees, and the relevant expenses paid by Shenzhen Shipping and Shenyue Company for handling the subject case, such as travelling expenses, telecommunication charges, translation fee, counsel fee, and etc. The Plaintiffs Shenzhen Shipping and Shenyue Shipping provided this court with the following evidence: I. The documents of the identification of Shenzhen Shipping and Shenyue Shipping 1. Business License of Shenzhen Shipping; 2. Altered Particulars regarding the change of the company name from Shenzhen Shipping into Shenzhen Shipping Group; 3. Business License of Shenzhen Shipping ; 4. Business License of Shenyue Shipping; 5. Registration particulars of Shenyue Shipping; 6. Certificate of Registration of Ownership of Peng Yang; 7. Certificate of Nationality of Peng Yang; 8. Bareboat Charter Party of Peng Yang; 9. Certificate of Ship’s Operation and Certificate of Annual Examination of Peng Yang; 10. documents issued by Shenzhen Shipping for entrusting Shenyue Company as the operator of Peng Yang which is under the custody of Shenyue Company. II. The document in support of the identification of Australia Finance and OOCL Certificate of Registry of OOCL Hamburg. III. Evidence in support of the course of the subject accident 1. The initial Investigation Report and its attachments issued by Hong Kong Maritime Department (hereinafter referred to as “HK MARDEP”) on 9th November 2004; 2. Investigation Report and its attachments issued by HK MARDEP on 26th November 2004; 3. Book of Ship Inspection Certificates; 4. Certificate of Seaworthiness of Peng Yang; 5. Certificate of Tonnage of Peng Yang; 6. Oil Pollution Prevention Certificate of Peng Yang; 7. Certificate of Load Line of Peng Yang; 8. Certificate of Minimum Safe Manning of Peng Yang; 9. Document of Compliance with the Safety Management System by Shenyue Shipping; 10. Safety Management Certificate of Peng Yang; 11. Ship Inspection Report of Peng Yang; 12. Seafarers’ Certificates of Competence of Peng Yang; 13. Deck Log Book of Peng Yang; 14. Engine Log Book of Peng Yang; 15. Bell Book of Peng Yang; 16. Loading Chart; 17. Regulations on the Administration of Old Commercial Vessels. IV. Evidence in support that the salvage fee in the amount of RMB16, 300, 000 has been paid by Shenzhen Shipping and Shenyue Shipping. 1. Salvage Contract; 2. Insurance Policy for coastal and inland water shipping; 3. Invoice of Premium issued by Taiping Insurance to Shenyue Shipping; 4. List of salvage cost incurred by Peng Yang; 5. Letters of correspondence between The Guangzhou Salvage Bureau and Shenyue Shipping; 6. Payment Entrustment issued by Shenyue Shipping to Shenzhen Shipping; 7. Vouchers of payment for salvage by Shenzhen Shipping; 8. Invoices issued The Guangzhou Salvage Bureau to Shenyue Shipping. V. Evidence in support of the salvage consultant charges paid by Shenzhen Shipping and Shenyue Shipping in the amount of RMB24, 434.4. 1. Documents of Retainment; 2. Agreement of Retaining Technical Consultants; 3. Reimbursement Record of consultancy charge; 4. Air tickets and bills of accommodation fee incurred by salvage consultants; 5. Bills of accommodation and communication and etc. VI. Evidence in support of the emergency handling fee of HKD1, 550,000 paid by Shenyue Shipping to Yiu Lian Dockyards Limited (hereinafter referred to as “Yiu Lian Dockyards”). 1. Agreement of emergency tug fees for Peng Yang; 2. Records of tug services; 3. Certificate issued by Shenyue Shipping; 4. Records of Draft Survey by Shenyue Shipping; 5. Contract of purchase of ship spare parts between Shenyue Shipping and Marine Resources Engineering Co., Ltd.; 6. Receipt and invoices of tug fees issued by Yiu Lian Dockyards to China Merchants Shipping and Enterprises Co., Ltd. (hereinafter referred to as “Merchants Shipping”); 7. Receipt and invoices of tug fees issued by Merchants Shipping to Shenyue Shipping; 8. Statement of expenses of emergency discharging and shipment; 9. Invoice of charges for waiting by salvage vessels issued by Yiu Lian Dockyards to Merchants Shipping; 10. Counterfoils and payment instructions of emergency handling fee issued by Shenyue Shipping to Merchants Shipping; 11. Letter dated 18th May 2005 sent to Xinde Cargo Transportation Group Co., Ltd. (hereinafter referred to as “Xinde Group”) by Shenyue Shipping; 12. Letter dated 17th May 2005 sent to Nanyang International Shipping Co., Ltd.; 13. Bank slips indicating Xinde Group and Nanyang International Shipping Co., Ltd. have remitted the hire to the account of Merchants Shipping. VII. Evidence in support of the emergency handling fee of HKD1, 070,765 paid by Shenyue Shipping to Ying Wei Stevedore Limited (hereinafter referred to as “Ying Wei”). 1. Cargo discharging and shipping agreement; 2. Invoices of unloading and lighterage charges issued by Merchants Shipping to Shenyue Shipping and Shenzhen Southern Ocean Shipping Company (hereinafter referred to as “Southern Ocean Shipping”); 3. Invoices of unloading and lighterage charges issued by Ying Wei to Merchants Shipping; 4. Tally Certificate issued by Ying Wei; 5. Records of shipping and landing weight of the cargo issued by Ying Wei; 6. Discharging Report issued by Ying Wei; 7. Counterfoils and payment instructions of emergency handling fee issued by Shenyue Shipping to Merchants Shipping; 8. Letter dated 18th January 2005 sent to Xinde Group by Shenyue Shipping; 9. Bank slips indicating Xinde Grouphave remitted the hire to the account of Merchants Shipping on 7th March 2005; 10. Letter dated 7th March 2005 sent to Xinde Group by Shenyue Shipping; 11. Bank slips dated 18th April 2005 indicating Xinde Group have remitted the hire to the account of Merchants Shipping. VIII. Evidence in support of the emergency handling fee of RMB82, 616.4 paid by Shenyue Shipping to Guangzhou South Youlian Shipping Company (hereinafter referred to as “South Youlian”). 1. Quotation letter issued by South Youlian; 2. Draft Record of cargo discharged; 3. Entrustment Letter for receiving the freight issued by South Youlian to Shenyue Shipping; 4. Counterfoils and payment instructions of freight issued by Shenyue Shipping to Guangzhou Hai Hong Shipping Company (hereinafter referred to as “Hai Hong Shipping”); 5. Invoice of freight issued by Hai Hong Shipping. IX. Evidence in support of the lightering and discharging fee of RMB38, 000 paid by Shenyue Shipping to Shenzhen Xin Tong Yang Ship Agency (hereinafter referred to as “Xin Tong Yang”). 1. Charter Party; 2. Draft Record; 3. Remittance Notice; 4. Receipt of Payment issued by Xin Tong Yang to Shenyue Shipping. X. Evidence in support of the port charges of HKD266, 214.8 incurred in Hong Kong by Peng Yang paid by Shenyue Shipping to Merchants Shipping. 1. Invoice and receipt of port charges issued by Merchant Shipping to Shenyue Shipping; 2. Invoice issued by Merchant Shipping to Southern Ocean Shipping; 3. Payment confirmation of Merchant Shipping; 4. Payment vouchers issued by Merchant Shipping to Southern Ocean Shipping on 29th August 2004; 5. Receipt issued by 3togo; 6. Payment vouchers issued by Merchant Shipping to Southern Ocean Shipping on 26th August 2004; 7. Receipt issued by Kexun Engineering Co., Ltd.; 8. Payment vouchers issued by Merchant Shipping to Southern Ocean Shipping on 23rd August 2004; 9. Invoice and receipt issued by Merchant Shipping to Southern Ocean Shipping on 25th August 2004; 10. Final statement issued by Merchant Shipping to Southern Ocean Shipping on 5th October 2004; 11. Comprehensive license issued by HK MARDEP to Peng Yang on 25th August 2004; 12. Invoice issued by Huahu Petroleum Co., Ltd. (hereinafter referred to as “Huahu”) to Merchant Shipping on 15th September 2004; 13.certificates proving collection of certificates provided by Huahu to Peng Yang on 15 September 2004; 14. Invoice issued by Ming Lee Motor Boat Co. to Merchant Shipping; 16. Invoice issued by Hoi Tong Marine Machinery Suppliers Limited to Merchant Shipping; 17. Receipt of Cargo issued by Hoi Tong Marine Machinery Suppliers Limited to Merchant Shipping; 18. Letter sent by Shenyue Shipping to Hong Kong Shenzhen Shipping Co., Ltd. on 17th September 2004; 19. Remittance Notice of the freight; 20. Counterfoils and payment instructions of payment made by Shenyue Shipping. XI. Evidence in support of the bonus of RMB80, 000 paid by Shenyue Shipping to the crew for their dealing with the emergency. 1. Inventory of the bonus to be released to the crew onboard Peng Yang; 2. Vouchers XII. Evidence in support of the marine survey cost of RMB38, 857 paid by Shenyue Shipping. 1. Investigation report issued by China Classification Society Industrial Corporation, Shenzhen Branch (hereinafter referred to as “CCS Shenzhen”) on 13 November 2004; 2. The bill issued by CCS Shenzhen to Shenyue Shipping on 23rd December 2004; 3. Counterfoils and payment instructions issued by Shenyue Shipping to CCS Shenzhen on 29th December 2004; 4. Invoice issued by CCIS Shenzhen on 23rd December 2004; 5. Investigation reports issued by CCIS respectively on 16th and 17th November 2004; 6. Debit Note issued by CCS Shenzhen to Shenyue Shipping on 10th December 2004; 7. Counterfoils and payment instructions issued by Shenyue Shipping to CCIS Shenzhen on 29th December 2004; 8. Ship Constant Measurement Certificate issued by CCIS Shenzhen on 17th November 2004; 9. The bill issued by CCIS Shenzhen to Shenyue Shipping on 23rd November 2004; 10. Counterfoils and payment instructions issued by Shenyue Shipping to CCIS Shenzhen on 1st December 2004; 11. Invoice issued by CCIS Shenzhen on 23rd November 2004. XIII. Evidence in support of the repair cost of RMB4,280,000 paid by Shenyue Shipping to Yiu Lian Dockyards (Shekou) Limited (hereinafter referred to as “Yiu Lian Shekou”). 1. Repair Contract; 2. Work-done List for repair items of Peng Yang; 3. Annual Repair Charges Aggregate incurred by Peng Yang; 4. Counterfoils and remittance slip issued by Shenyue Shipping to Yiu Lian Shekou on 22nd November 2004; 5. Invoice of repair cost issued by Yiu Lian Shekou to Shenyue Shipping. XIV. Evidence in support of the repair cost of RMB1,650,000 paid by Shenyue Shipping to Shenzhen Bofu Ship Repair Co., Ltd. (hereinafter referred to as “Bofu Shenzhen”). 1. Repair Contract; 2. Bill; 3. Annual Repair Charges Aggregate incurred by Peng Yang; 4. Counterfoils and payment instructions issued by Shenyue Shipping to Bofu Shenzhen; 5. Invoice of repair cost issued by Bofu Shenzhen to Shenyue Shipping. XV. Evidence in support of the repair cost of HK20, 000 paid by Shenyue Shipping to Bofu (HK) Co., Ltd. (hereinafter referred to as “Bofu Hong Kong”). 1. Invoice issued by Bofu Hong Kong to Shenyue Shipping; 2. Reimbursement Examination & Approval Sheets of Shenyue Shipping. XVI. Evidence in support of the repair cost of RMB53, 532 paid by Shenyue Shipping to Shenzhen Hai An Ship Engineering Company (hereinafter referred to as “Hai An”). 1. Work-done List; 2. Work-done Invoice; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice of repair cost issued by Hai An. XVII. Evidence in support of the repair cost of RMB180,000 paid by Shenyue Shipping to Hai Cheng Machinery Engineering Company (hereinafter referred to as “Hai Cheng”). 1. Repair Contract; 2. Work-done List; 3. Work-done Invoice; 4. Bank Slips and payment instructions issued by Shenyue Shipping; 5. Invoice of repair cost issued by Hai Cheng. XVIII. Evidence in support of the repair cost of RMB55, 270 paid by Shenyue Shipping to Guangzhou Feng Hai Ship Repairing Company (hereinafter referred to as “Feng Hai”). 1. Quotation Letter; 2. Work-done List; 3. Price List; 4. Counterfoils and payment Instructions issued by Shenyue Shipping; 5. Invoice of repair cost issued by Feng Hai. XIX. Evidence in support of the derusting cost of RMB38,889 paid by Shenyue Shipping to Lin Zhi Long. 1. Repair Contract; 2. Reimbursement Record of the derusting and cleaning cost; 3. Invoice of materials cost issued by Shenzhen Guan Mei Entity Company. XX. Evidence in support of the inspection and repair cost of RMB2,468.5 paid by Shenyue Shipping to Shenzhen Marine Safety Technology Service Co., Ltd. (hereinafter referred to as “Shenzhen MST”). 1. Work-done List; 2. Bills of the inspection and repairing of the life rafts; 3. Counterfoils and Remittance Slips of Shenyue Shipping; 4. Invoice issued by Shenzhen MST. XXI. Evidence in support of the repair cost of RMB187,275 paid by Shenyue Shipping to Shenzhen Xing Chan Hao Industrial Equipment Co., Ltd. (hereinafter referred to as “Shenzhen Xing Chan Hao”). 1. Work-done List; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice of repair cost issued by Shenzhen Xing Chan Hao. XXII. Evidence in support of the repair cost of RMB115,600 paid by Shenyue Shipping to Shenzhen Hai Rong Metal Surface Engineering Co., Ltd. (hereinafter referred to as “Shenzhen Hai Rong”). 1. Quotation Letter; 2. Receipt of Goods (substitute for final work acceptance list); 3. Counterfoils and Remittance Slips of Shenyue Shipping; 4. Invoice of the repair cost issued by Shenzhen Hai Rong. XXIII. Evidence in support of the self-repairing bonus of RMB10,000 paid by Shenyue Shipping to the crew onboard Peng Yang. Application for the special self-repairing bonus filed by the deck department of Peng Yang XXIV. Evidence in support of the cost of the paint used for the repair in the amount of RMB148,079 paid by Shenyue Shipping to Shenzhen Hao Da Er Industrial Co., Ltd. Huizhou Branch (hereinafter referred to as “Hao Da Er Huizhou”). 1. Cargo Sale Inventory; 2. Delivery Order; 3. Bank Slips; 4. Invoice. XXV. Evidence in support of the cost of the materials used for the repair in the amount of RMB52, 827.1 paid by Shenyue Shipping to Hua Kan Hardware Store and the crew on board Peng Yang (hereinafter referred to as “Hua Kan Hardware”). 1. Delivery Order and Inventory; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice. XXVI. Evidence in support of the cost of the steel used for the repair in the amount of RMB930,760 paid by Shenyue Shipping to Guangzhou Jin Kai Li Trade Co., Ltd. (hereinafter referred to as “Guangzhou Jin Kai Li”). 1. Contract; 2. Delivery Order; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice. XXVII. Evidence in support of the cost of the steel used for the repair in the amount of RMB63, 280 paid by Shenyue Shipping to Shenzhen Wei Chuang Xin Entity Co., Ltd. 1. Counterfoils and payment instructions issued by Shenyue Shipping; 2. Invoice XXVIII. Evidence in support of the cost of depth sounder in the amount of RMB56,000 paid by Shenyue Shipping to Hai Xin Shipping Apparatus Supplying Station in Hai Zhu District, Guangzhou (hereinafter referred to as “Hai Xin Supplying Station”). 1. Counterfoils and payment instructions issued by Shenyue Shipping; 2. Invoice XXIX. Evidence in support of the cost of the triple connecting links and anti-corrosion Zinc blocks in the amount of RMB17,500 paid by Shenyue Shipping to Xin Sheng Fa (Fushang) Shipping Rig Co., Ltd (hereinafter referred to as “Xin Sheng Fa”). 1. Delivery Order; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice. XXX. Evidence in support of the cost of the sealing materials in the amount of RMB1,284 paid by Shenyue Shipping to Tang Zhen Tai Hydraulic Electromechanical Equipment Store in Tianhe Dong Road, Guangzhou (hereinafter referred to as “Tang Zhen Tai”). 1. Cargo Sale Inventory; 2. Counterfoils and payment issued by Shenyue Shipping; 3. Invoice and Mail Slips. XXXI. Evidence in support of the cost of oil in the amount of RMB238, 010 paid by Shenyue Shipping to Shenzhen Wang You Fu Lubricant Oil Co., Ltd. (hereinafter referred to as “Wang You Fu”). 1. Delivery Order; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice and Mail Slips. XXXII. Evidence in support of the tail shaft repair cost in the amount of RMB256, 519 paid by Shenyue Shipping to Ocean Resource Engineering Co., Ltd. (hereinafter referred to as “ORE”). 1. Invoice issued by ORE; 2. Receipt issued by ORE; 3. Remittance Notice and payment instructions issued by Shenyue Shipping. XXXIII. Evidence in support of the tank cleaning cost in the amount of RMB63,000 paid by Shenyue Shipping to Shenzhen Longshan Environmental Protection Science & Technology Industrial Co., Ltd. (hereinafter referred to as “Longshan”). 1. Quotation Letter; 2. Task Finishing Report; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice. XXXIV. Evidence in support of the tug fee in the amount of RMB47,700 paid by Shenyue Shipping to Shenzhen Lianda Tug Co., Ltd. (hereinafter referred to as “Lianda”). 1. Tug’s Working Sheet of the Shenzhen Port; 2. Expenses Account List; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice XXXV. Evidence in support of the tug fee in the amount of RMB18,270 paid by Shenyue Shipping to Yiu Lian Shekou. 1. Tug’s Bill of the Shenzhen Port; 2. Expenses Account List; 3. Counterfoils and payment instructions issued by Shenyue Shipping; 4. Invoice XXXVI. Evidence in support of the payment to the crew onboard of Peng Yang for their efforts in berthing and departure in the amount of RMB3,000 made by Shenyue Shipping. Application of payment for laboring fee XXXVII. Evidence in support of berthing charge for the period of temporary repair of Peng Yang in the amount of RMB110, 000 paid by Shenyue Shipping to Ma Wan Wharf. 1. Vouchers and Reimbursement Records; 2. Invoice XXXVIII. Evidence in support of charges for appraisal of the cargo loss in the amount of RMB30,000 paid by Shenyue Shipping to China Certification & Inspection Group Shenzhen Co., Ltd. (hereinafter referred to as “CCIC”). 1. Quotation Letter; 2. Appraisal Report; 3. Counterfoils, payment instructions and Reimbursement Record; 4. Invoice. XXXIX. Evidence in support of the indemnity for the cargo loss in the amount of RMB1, 542, 636.06 paid by Shenyue Shipping to PICC Shenzhen Branch. 1. Water Waybill; 2. Domestic Coastal Transportation Agreement; 3. Insurance Policy; 4. Civil Judgment (2005) Guang Hai Fa Chu Zi No. 373; 5. (2006) Yue Gao Fa Ming Si Zhong Zi No. 62 Civil Judgment; 6. Letter issued by Lin Yi Hua & Co. Law Firm for notifying the payment of cargo loss indemnity; 7. Counterfoils, payment instruction and vouchers of Shenzhen Shipping; 8. Receipt XL. Evidence in support of the lawyer fees in the amount of RMB138,280, USD45,863.75 and HKD112,195 paid by Shenzhen Shipping and Shenyue Shipping to Guantao Law Firm Shenzhen Branch (Guantao Shenzhen) 1. Lawyer fee bills issued by Guantao Shenzhen; 2. Counterfoils and payment instructions issued by Shenyue Shipping; 3. Invoice of lawyer fees issued by Guantao Shenzhen; 4. Entrustment Agreement between Shenzhen Shipping and Zhong Lun Law Firm, Shenzhen Branch (hereinafter referred to as “Zhong Lun Shenzhen”); 5. Counterfoils and payment instructions of Shenzhen Shipping; 6. Invoice of lawyer fees issued by Zhong Lun Shenzhen; 7. Payment instruction, invoice and payment voucher of lawyer fees paid by Shenzhen Shipping and Shenyue Shipping to Holman Fenwick & Willan; 8. Letter of Payment Instruction; 9. Bank Slips; 10. Vouchers, Transfer Notice and Receipt of Payment of Shenzhen Shipping. XLI. Evidence in support of the cost of notarization and authentication in the amount of HKD17, 240 paid by Shenzhen Shipping and Shenyue Shipping. 1. Invoice of the cost of notarization and authentication in the amount of HKD8, 860; 2. Invoice of the cost of notarization and authentication in the amount of HKD8, 380. XLII. Evidence in support of the cost of assessment on Peng Yang’s loss of earnings in the amount of RMB8, 000 paid by Shenyue Shipping to Shenzhen Xingyue Partnership Certified Public Accountants (hereinafter referred to as “Xingyue Accountants”). 1. Audit Agreement; 2. Invoice. XLIII. Evidence in support of costs incurred by Shenzhen Shipping and Shenyue Shipping for handling the case in the amount of RMB71,808.83. 1. Vouchers, records of reimbursements, invoices, receipts, bus/ship tickets of expenses incurred by Shenzhen Shipping and Shenyue Shipping for handling the case in the amount of RMB51,457.83; 2. Records of reimbursements and invoice of the accommodation/entertainment fees incurred in amount of RMB20,351 in the course of repair of Peng Yang. XLIV. The audio CD recording the communication between the pilots onboard Peng Yang and OOCL Hamburg. XLV. The Appraisal Report assessing the Peng Yang’s loss of earnings and cost of maintenance due to the subject accident issued by Xingyue Accountants, and the Business License and the Professional Certificate in Accounting of Xingyue Accountants. XLVI. The opinions issued by Profs. Wu Zhaolin, Wang Fengchen, and Zhao Yuelin with regard to the relevance between Peng Yang’s grounding and OOCL Hamburg’s maneuvering and the accident liabilities. On 16 October 2006, Shenyue Shipping applied to this court for investigating and collecting evidence regarding the handling of the subject accident by HK MARDEP from the same. This Court disapproved such application by reason of absence of legislative arrangement for collecting evidence between mainland and Hong Kong SAR for civil cases. On 3rd December 2007, Shenzhen Shipping and Shenyue Shipping applied to this court for investigating and collecting evidence, such as the ship’s certificates, inspection certificates of Peng Yang and certificate of seafarers which were held available by Peng Yang at the time of accident from Shenzhen MSA, Domestic Ship Investigation Center of CCS, or CCS. The aforesaid Plaintiffs had submitted the aforesaid evidence during the trial so that this court did not deal with their above application for investigation and collection. Plaintiff No.3 Taiping Insurance claimed that: On 31st March 2004, the bareboat charterer of Peng Yang Shenyue Shipping insured with Taiping Insurance with the period of insurance computed from 4th April 2004 to 3rd April 2005. On 23 August 2004, Peng Yang ran on the rocky shoal and grounded while avoiding OOCL Hamburg. On 28th April 2005, Shenyue Shipping filed a lawsuit against Taiping Insurance at Guangzhou Maritime Court claiming for compensation of salvage fees and tug fees in the amount of RMB18,000,000. The parties concerned reached a settlement agreement through negotiation on 29th August 2007. It is stipulated that Taiping Insurance shall indemnify Shenyue Shipping RMB7,700,000 as a final, thorough and complete settlement of the dispute under the aforesaid insurance contract. On 3rd September 2007, Taiping Insurance paid Shenyue Shipping RMB7,700,000 as indemnity. In accordance with the provisions of Article 256 of the Maritime Code of the People’s Republic of China and Article 95 of the Special Maritime Procedure Law of the People’s Republic of China, Taiping Insurance shall be entitled to exercise the right of subrogation claiming compensation against Australia Finance and OOCL. The Plaintiff request this court: 1. To order the Defendants to jointly and severally make compensation for losses and expenses in an amount of RMB7,700,000 sustained by Taiping Insurance as well as the interest thereof due to the running on the rocky shoal and grounding of Peng Yang for the purpose of avoiding OOCL Hamburg which should assume at least 90% of the liabilities therefor. The interest shall be computed from 3rd September 2007 based on the current fund loan interest rate published by People’s Bank of China in the corresponding period until the day when all the payments are made in full by the Defendants; 2. To order the Defendants to jointly and severally assume the legal costs of this case and the relevant expenses, such as telecommunication fee and travelling fees, paid by Taiping Insurance. Plaintiff No.3 Taiping Insurance submitted to this court the following evidences: 1. Fixed term insurance policy for vessels in coastal and inland waters; 2. Insurance clause for vessels in coastal and inland waters; 3. Statement of Claims, Application for Modification of Claims, Civil Ruling (on withdrawal of the lawsuit) in respect of the dispute over insurance contract filed by Plaintiff No.1 Shenyue Shipping against Taiping Insurance; 4. The settlement agreement reached between Shenyue Shipping and Taiping Insurance; 5. The remittance note indicating the indemnity paid by Taiping Insurance; 6. The receipt of the indemnity issued by Shenyue Shipping; 7. Letter of subrogation issued by Shenyue Shipping; 8. The remittance note indicating the insurance premiums paid by Shenyue Shipping. The Defendants Australia Finance and OOCL argued that: I. Shenyue Shipping is not the proper plaintiff of this case. The bareboat charter party concluded by and between Shenyue Shipping and Shenzhen Shipping was not registered which should only be effective between the aforesaid parties and have no effect against any third party including the Defendants. II. Taiping Insurance joined the litigation as the hull underwriter. Its claim items should include all of items covered by hull insurance, and the claimable amount should be limited to indemnity it actually paid. III. Australia Finance as the registered owner of OOCL Hamburg let the vessel to OOCL through bareboat chartering which was registered according to law. Therefore, Australia Finance is not the proper Defendant of this case and should not be held liable. IV. OOCL Hamburg was seaworthy at the material time as she was in good condition, properly manned, and carrying complete and valid ship certificates. V. OOCL Hamburg did not impede Peng Yang’s navigation. 1. OOCL passed through Ma Wan Service Area by complying with the navigation rules and using good seamanship. 2. Before Peng Yang passed Ma Wan Fairway, OOCL Hamburg was navigating as per their agreement. 3. After Peng Yang passed Ma Wan Fairway, she and the MW/MTCS did not raise any rejection to OOCL Hamburg’s entering the Ma Wan Service Area. 4. Peng Yang and OOCL Hamburg were not encountering any danger or close-quarter situation. VI. The grounding of Peng Yang was caused by her own faults and was not causatively connected with the presence and/or navigation of OOCL Hamburg. 1. Peng Yang neglected the risk of the rocky shoal. 2. Peng Yang failed to slow down and give way to OOCL Hamburg. 3. Peng Yang made small alterations of her course and the courses were made steady from time to time. 4. The pilot onboard Peng Yang changed shift at inappropriate time. 5. The Master and deck officer of Peng Yang completely relied on the pilot and failed to fulfill their duties. 6. Peng Yang was in a shabby condition and overloaded which indirectly contributed to her grounding. 7. The Plaintiffs also admitted in another case that Peng Yang ran on the rocky shoal and grounded due to the fault of their servants (including Hong Kong pilot) in the course of the navigation. Therefore, OOCL Hamburg and Peng Yang did not collide with each other and were free of the risk of collision. There is no causation between the grounding of Peng Yang and OOCL Hamburg’s navigation. VII. The amount of losses claimed by the Plaintiffs Shenzhen Shipping and Shenyue Shipping has been compensated or unreasonable. 1. Peng Yang was under shabby condition and overloaded. The double bottom tank of Peng Yang was of no protective function after the grounding and breaking of the ship’s hull plate, thus large amount of sea water flooded into the cargo tanks, which forced the vessel to ground and caused damage to the cargoes, enlarging the losses which could have been avoided. The Plaintiffs should assume by themselves all the liabilities. 2. Most of the expenses claimed by Shenzhen Shipping and Shenyue Shipping in the Statement of Claim had been indemnified by Taiping Insurance and should not be claimed against the Defendants. 3. The repairing items of Peng Yang are far more exceeding the reasonable scope of repair of damage caused by running on the rocky shoal. 4. With regard to the loss of earnings, the Appraisal Report provided by Shenzhen Shipping and Shenyue Shipping was issued based on the financial information and certification of Shenyue Shipping which only indicates the conclusion related to Shenyue Shipping. It fails to prove the connection between Peng Yang’s grounding and the loss of profits sustained by Shenzhen Shipping . Even based on the evidence provided by Shenzhen Shipping, the annual hire of bareboat chartering of Peng Yang is RMB5,000,000, which means the loss of hire within 85.08 days amounts to RMB1,165,479.45 instead of the alleged RMB3,403,720. Therefore, the Defendants request this court: 1. To dismiss the claim requests filed by the Plaintiffs; 2. To order the Plaintiffs to bear all the legal costs incurred by this case. The Defendants Australia Finance and OOCL submitted to this court the following evidences: 1. Certificate of Registry of OOCL Hamburg; 2. The ship’s certificates and crew list of OOCL Hamburg; 3. Logbook and Engine Logbook of OOCL Hamburg; 4. Course record of OOCL Hamburg; 5. Telegraph Record Book, Automatic Prints of Telegraph Record of OOCL Hamburg; 6. Statement of the Master of OOCL Hamburg; 7. Certificate of Nationality of Peng Yang; 8. Plan for Sealing Holds and Pumping of the Guangzhou Salvage; 9. Inspection Report issued by China Classification Society Industrial Corp on 13th November 2004 and the Inspection Report issued by Ship Inspection Center of China Classification Society on 16th November 2004; 10. Certificate of Seaworthiness of Peng Yang in 2004 and 2005; 11. Draft Survey Record of Peng Yang; 12. Record of positions of Peng Yang; 13. Statement of Defense made by Shenzhen Shipping in the case under the reference of (2005) GHFCZ No.37; 14. Diving Report issued by the Guangzhou Salvage for Peng Yang; 15. Letter sent by HK MARDEP to INCE & CO on 3rd August 2007; 16. Letter sent by HK MARDEP to INCE & CO on 15th February 2008; 17. VTS record and plotting of the ship’s positions from HK MARDEP; 18. Manual of Operating Practices for MW-MTCS (excerpt); 19. The Expert Report on the Relationship between Navigation of OOCL Hamburg and the Beaching/Grounding of Peng Yang issued by Guangdong Huanan Maritime Judicial Appraisal Centre(hereinafter referred to as the “GHMJAC”); 20. Expert Report of the Repair Cost of Peng Yang due to her Grounding issued by the GHMJAC; 21. The GHMJAC Supplements to the Expert Report of the Repair Cost of Peng Yang due to her Grounding. On 22nd October 2007, Australia Finance and OOCL applied to this court for investigating and collecting the evidence, including the evidential materials of cases relating to this case that have been concluded by this court under the reference of (2005) GHFCZ No.181, (2005) GHFCZ No.373 and (2006) GHFB No.50. This court found such application in compliance with the law and issued approval after examination. On 31st October 2007, Australia Finance and OOCL applied to this court for investigating and collecting the evidential materials of the case relating to this case that has been concluded by this court under the reference of (2004) GHFB No.48. This court found such application in compliance with the law and issued approval after examination. On 25th April 2008, Australia Finance and OOCL applied to this court for investigating and collecting the evidence including the Hull Thickness Measurement Report or Record of 2002, 2003 and 2004 from CCS Shenzhen. This court found such application in compliance with the law and issued approval after examination. On 29th August 2008, the CCS sent a letter to this court claiming that: The thickness of hull was measured by the hull thickness measuring company entrusted by the shipowner. Such measuring company will issue the hull thickness measurement report to the shipowner. CCS did neither carry out the measurement nor provide any measurement report to the shipowner. Through investigation and examination, it is ascertained as follows: I. Qualifications of Shenzhen Shipping and Shenyue Shipping. Shenzhen Shipping was established on 24th March 1982 and was changed as Shenzhen Shipping Group on 11th July 2007. Shenyue Shipping was established on 1st September 1984 with registered capital of RMB10, 000, 000 which was totally contributed by Shenzhen Shipping. Shenyue Shipping is subordinated to Shenzhen Shipping. On 2nd November 2001, Shenzhen Shipping decided to entrust Southern Ocean Shipping to manage Shenyue Shipping. On 6th March 2002, Shenzhen Shipping decided to entrust Shenyue Shipping as the operator of Peng Yang. II. Particulars and Manning Conditions of Peng Yang According to the specifications on the certificate of ownership of Peng Yang, Peng Yang is a steel bulk carrier built on 1st April 1973 with length overall of 206.75ms, molded breadth of 29ms, molded depth of 18ms, light draught of 2.55ms and load draught of 13.27ms, gross tonnage of 30325MT and net tonnage of 18720MT, and port of her registry in Shenzhen. Shenzhen Shipping is the owner. It is specified in her certificate of nationality that Shenzhen Shipping is the owner and Shenyue Shipping is the operator. Based on the records of the certificate of inspection of Peng Yang, her load displacement is 64,000MT, light displacement is 10,561.30MT, reference deadweight is 53, 438MT, and navigation area is coastal waters. On 1st January 2004, Shenzhen Shipping as the owner and Shenyue Shipping as the bareboat charterer concluded the bareboat charter party for hiring the Peng Yang for one year at the hire rate of RMB5,000,000/year or RMB1,250,000/quarter which shall be payable before the 10th day of the first month during the period of hire. According to the charter party, the vessel shall be under complete possession, arrangement and control of the charterer during the period of hire. The charterer shall carry out good commercial maintenance and repair of the vessel, engine, boilers, equipment and spare parts so as to keep then in good and effective operation conditions; The charterer shall bear the cost of manning, accommodation, navigation, operation, fuel oil supply and of the repair required from time to time during the period of hire, and shall be responsible for any duties or taxes incurred by use and operation of the vessel, including those levied by cities and states of foreign countries; The charterer shall be responsible to purchase marine insurance and insurance against war risk and protection indemnity risk. The aforesaid bareboat charter party was not registered in the registration authority of ships. As per the certificate of seaworthiness of cargo ship issued by the Ship Inspection Center of CCS on 18th May 2004, Peng Yang is allowed to navigate in the coastal waters (route) as cargo ship. This certificate was valid until 1st April 2005. It is specified in the remarks of this certificate that: 1. The maximum permissible load shall not exceed 50,000MT under any loading condition; 2. The vessel shall only be loaded with ore, coal and non-inflammable cargo or cargo with minor fire risk; 3. The vessel is only allowed to navigate in waters of Route A1+A2. It is specified in the certificate of seaworthiness of cargo ship issued by the Ship Inspection Center of CCS on 7th March 2005 which was valid until 31st March 2006 that this vessel shall be scrapped compulsively on 1st April 2006. At the time of the incident, Peng Yang held the effective tonnage certificate, oil pollution prevention certificate, load line certificate, minimum safe manning certificate of coastal vessels, certificate of compliance of safety management certificate, and safety management certificate. The Master, Chief Officer, the 2nd Officer, duty sailor, Chief Engineer, and the 2nd Engineer hold the corresponding certificates of competency. Pursuant to the provisions of Article 4 item 4 of the Regulations on the Administration of Old Commercial Vessels promulgated by the Ministry of Communications of the People’s Republic of China on 9th April 2001, bulk carriers and ore carriers over 18 years of age fall within the 4th category of old Commercial Vessels. It is provided in Paragraph 1, Article 24 of the aforesaid regulations that vessels of the age of compulsory scrapping as stipulated in the Appendix shall be scrapped. In accordance with the provisions of Appendix No.1, the age of mandatory scrapping for the 4th category of old Commercial Vessels is over 33 years. III. Particulars and Manning Conditions of OOCL Hamburg As per the certificate of vessel’s registration of OOCL Hamburg issued by the Hong Kong SAR of the People’s Republic of China, OOCL Hamburg is a steel container vessel of which the keel was laid on 18th September 2003, the length overall is 309.2ms, molded breadth is 42.8ms, molded depth is 20.23ms, gross tonnage is 89, 097TM and net tonnage is 55, 204MT, port of registry is Hong Kong, owner is Australia Finance, bareboat charterer is OOCL. At the time of the incident, OOCL Hamburg held the effective classification certificate for hull, safety management certificate, ship safety construction certificate, cargo ship safety equipment certificate, cargo ship safety radio certificate, minimum safe manning certificate, international tonnage certificate, and international load line certificate. Furthermore, when she departed from Shekou, China on 23rd August 2004, her manning complied with the requirements of minimum safe manning. IV. Grounding of Peng Yang On 23rd August 2004 after grounding of Peng Yang, HK MARDEP sent the senior surveyor, Li Yaoguang, to carry out investigation. On 9th November, Li Yaoguang sent a draft of the investigation report to the Master of Peng Yang, Luo Zhongsi, through the agency department of Merchant Shipping and notified the same to submit his opinions or comments (if any) to HK MARDEP before the 24th day of November. On 26th November, HK MARDEP issued an official investigation report regarding the subject incident. It is comprised of seven chapters which in particular include Chapter I Summary, Chapter II Source of Information, Chapter III Ship’s Particulars, Chapter IV Summary of Incident, Chapter V Analysis of Evidence, Chapter VI Conclusion, and Chapter VII Recommendations. During the trial, the parties concerned have no objection to the facts regarding Peng Yang’s grounding, but disagree on the opinions of the analysis on liabilities and proportion thereof. On 15th February 2008, HK MARDEP sent a letter to Ince & Co entrusted by OOCL stating that the draft of investigation report sent to Peng Yang on 9th November 2004 was only for the purpose of consultation, but not an official report. The draft was amended thereafter. The final investigation report issued on 26th November 2004 is the only official report on the subject incident. The facts regarding the subject incident ascertained in Chapter IV of the official investigation report are as follows: (I) Account of Peng Yang 1. On 23 August 2004 at about 1205, Peng Yang arrived at the Pilot Boarding Station in East Lamma Channel near Ngan Chau. The vessel Peng Yang was drawing even Keel drafts at 12.8metres forward and aft. Two pilots boarded on the vessel, named in here as Pilot A and Pilot B. As the length overall of Peng Yang exceeds 198 metres it is classed as a Class A vessel under the existing arrangement. 2. After boarding of the two Pilots, the Master told them that there was no “dead slow ahead” mode with the engine telegraph, other than that the navigational equipment were in good order. The pilots acknowledged the situation and started to direct the vessel towards Ma Wan Fairway. According to the Pilots, throughout the passage prior to the accident the weather was fine and visibility was good. Tidal condition was flooding at about 1 to 1.5 knot in a north-westerly direction during the passage. 3. At the time of the accident the two Pilots together with the Master, the Second Officer and a quartermaster were on the bridge. The quartermaster was steering the ship as per the Pilot’s advice. The Master told the Pilots that Peng Yang had been navigating on this route to and from Shekou for a number of times and he felt quite comfortable to delegate the navigation of the vessel to the Pilots. 4. Due to the long distance of this route, the two Pilots took turns to charge of the pilotage. Under this arrangement they would change over their duties at about mid way. On board the chief Pilot (hereinafter referred to as Pilot A) commenced the pilotage after boarding. The co-pilot (referred to as Pilot B) assisted Pilot A with other auxiliary duties such as responding to VHF radio. According to the existing practice, the assignment of chief pilot for the intended pilotage was arranged according to the roster but not to seniority. In this case Pilot B is more senior than Pilot A. 5. The Pilot had obtained a traffic list from Pilot Association before boarding, which enabled them to know the traffic situation in the area. According to the traffic list the Pilots understood that at about the same time an outbound container vessel named OOCL Hamburg, with a length of 323 metres (another Class A vessel), would be approaching Ma Wan Fairway under pilotage in the opposite direction. 6. Along with Peng Yang there was another container vessel called “MSC Munich” proceeding the same way towards Ma Wan. As the speed of “MSC Munich” was faster, it overtook Peng Yang before passing Green Island. Peng Yang followed “MSC Munich” and navigated in the middle the Western Fairway. One escort tug approached Peng Yang near the west of Mobil Oil Terminal and maintained at a close range to the vessel standing by for any unexpected situation. 7. At about 1245 while passing the Western Quarantine and Immigration anchorage, Peng Yang was called on the VHF channel 11 by OOCL Hamburg, which was then on its outbound passage approaching the Ma Wan Fairway. OOCL Hamburg informed Peng Yang that it would slow down and let MSC Munich and Peng Yang to pass the Ma Wan Fairway first. After the agreement Pilot A reported to VTC for their information. 8. When Passing Caltex Oil terminal Peng Yang reported to VTC that a barge was seen anchored north of Kap Shui Mun. The same was also reported to VTC by OOCL Hamburg which was approaching in the opposite direction. The location of this barge might obstruct the normal entry or Ma Wan Fairway from the west by OOCL Hamburg. VTC responded that they would deal with it after the two Class A vessels (Peng Yang and OOCL Hamburg) had passed clear. 9. At 1307 Peng Yang passed under the Ma Wan Bridge. On approaching Ma Wan, Pilot A used ten degrees port helm in negotiating the bend. The tide was flooding (following current) at time of turning. The turning was smooth without difficulties. After passing Lan Pai light the course was steady on 282 degree. 10. After the turning, Pilot A could see OOCL Hamburg on the port bow. At this juncture, Pilot B requested Pilot A to hand over the navigation to him. After the handing over, Pilot B visually observed OOCL Hamburg on the port bow near ‘Yau Lian’ floating dock. He could also observe a derrick barge anchored near the floating dock. 11. At the same time, Pilot B noted some bow waves from OOCL Hamburg, indicating that the vessel was steaming ahead at speed. This was unexpected by Pilot B as he thought that “”OOCL Hamburg would either stop or slow down at the west of Yau Lian floating dock and let Peng Yang to pass first. OOCL Hamburg was steaming in the middle of the waterway. If OOCL Hamburg proceeded further to the east, it might constrain the sea room that Peng Yang could safely navigate. 12. Peng Yang was steaming at about 9 to 10 knots. As the vessel was drawing a deep draft of 12.8 metres, there was a danger that it might hit the rocky shoal off Tsing Lung Tau if Peng Yang was confined to the northern side of the waterway only. Pilot B said he was well aware of the dangerous shoal which was then lying to the starboard side of his vessel. He stated that normally he would maintain a distance of about 2.5 cables from the north shore in order to pass clear of the shoal. 13. Shortly before Peng Yang ran into the shoal, Pilot A used the radar range to check the distance from shore and found that it was only 1.5cables, a sign indicating Peng Yang was too far north from the normal course. Pilot A reminded Pilot B of the close distance and Pilot B responded to him that he was turning the vessel to port as much as possible to steer away from the danger, while adjusting own ship’s course at the same time to avoid a close-quarter situation that might be developing and imposing upon by OOCL Hamburg in the restricted maneuverable sea room. Pilot B also stated that he had not ordered stop or slow down with the engine due to the oncoming of OOCL Hamburg, as he considered Peng Yang could clear the dangerous shoal with the continuous port turning. 14. Pilot B asked the quartermaster to alter course to port gradually at 5-degree alterations each time, from 280 degree to 275, then 270, 265, 260, 255 and 245 degree hoping that the vessel could clear the danger to the starboard side and at the same time not to collide with OOCL Hamburg. 15. The quartermaster responded to the port alterations by giving 15-20 degree helm to effect the turn. Pilot B said that he was trying to align the course of Peng Yang to the stern of OOCL Hamburg and continued to alter to port as much as he could while keeping OOCL Hamburg clear from the bow of Peng Yang. At the same time he considered that Peng Yang should be able to stay clear of the shoal as it was being turned away from this danger. 16. When OOCL Hamburg was passing north of the anchored barge, Pilot B expected that OOCL Hamburg would turn to starboard substantially at this position so that Peng Yang could gain more sea room to its port side to steer away from the shoal. 17. After passing the anchored barge, OOCL Hamburg was seen to have turned to starboard. However the turning was not adequate for Peng Yang to alter course any further to port as there was still insufficient sea room between them. 18. At about 1319 Peng Yang contacted with the shoal at the starboard side. The air pipes of the starboard double bottom tanks on main deck in way of No. 3, 4 and 5 cargo hold were seen shooting up with rusty dust followed by water splashes. Soon after the contact Peng Yang developed 6-degree list to starboard. The Pilots informed the situation to VTC. Due to imminent danger of further deterioration of situation, the vessel was beached at Yam O to prevent it from sinking in the main waterway. (II) Account of OOCL Hamburg 1. OOCL Hamburg is a container vessel with a length of 323 metres. On 23.8.2004 the vessel departed from Shekou transiting Hong Kong through Ma Wan Fairway (east bound). Two Hong Kong Pilots boarded OOCL Hamburg off Black Point at 1200. After boarding the chief Pilot (referred as Pilot C) took over the pilotage while the co-pilot (referred as Pilot D) assisted in navigation. 2. OOCL Hamburg was also engaged in liner trade and had been transiting Hong Kong to and from Shekou for a number of times before. Both Pilots also obtained a traffic list before boarding. On board OOCL Hamburg the bridge team composed of the master, one navigating officer, a quartermaster and the two Pilots. After boarding the vessel Pilot C ordered slow ahead and then half ahead on the engine which gave a ship speed of about 13 knots. Tidal current was flooding (flowing westward) at about 1.2 knots. 3. At that time two inbound ocean going vessels MSC Munich and Peng Yang were under pilotage and were proceeding near Green Island to Ma Wan. After OOCL Hamburg passed CP5 and CP4 buoys it made direct contact on VHF channel 11 with MSC Munich and Peng Yang to agree that the two inbound vessels would pass Ma Wan Fairway first. After the agreement Pilot C reduced the engine speed from half ahead to slow and then dead slow. 4. When passing CP3 buoy, the escort tug of OOCL Hamburg called the Pilots informing that a barge was anchoring north of Yau Lian floating dock and might obstruct the passage of OOCL Hamburg. Pilot D checked the radar position and opined that due to the size of OOCL Hamburg, it would not be safe to pass south of the anchored barge. The presence of the anchored barge was reported to VTC. 5. The escort tug was tasked to check out what happened to the anchored barge. After checking it replied that the barge was staying there for operational need. The tug, however, could not obtain the identity of the barge. 6. Pilot C put the engine to stop before reaching CP1 buoy. The course of OOCL Hamburg was about 090 degree. At this juncture MSC Munich was seen to have cleared the Ma Wan Fairway. Pilot C tried to keep the anchored barge at fine to the port bow of OOCL Hamburg, but he felt that OOCL Hamburg appeared to have difficulties in holding its heading as the vessel was set to north by the current. Pilot C managed to steady the ship’s course at between 090 to 095 degree. At this time the speed of OOCL Hamburg continued to drop, however the steerage of the vessel could still be maintained. 7. Pilot C intended to pass north of the anchored barge as close to it as was safe as possible. He ordered dead slow ahead engine when passing Cheung Sok and kept the anchored barge to the starboard bow. By that time he could hear from the VHF radio that Peng Yang had entered the Ma Wan Fairway from the other side. 8. At this time Pilot C could observe MSC Munich passing out from Ma Wan Fairway. He stated that if the anchored barge was not there, under normal practice he would pass through the position where the barge was anchoring. By steering more to the south he could avoid the traffic near the north of the Ma Wan Fairway. However, because of the presence of the anchored barge, he had to go further north to avoid collision with this barge. 9. At this juncture Peng Yang could be visually observed. Pilot C concentrated on the passing distance from the anchored barge so as to pass it safely at about one cable. At this stage, he didn’t consider that OOCL Hamburg would pose any danger to Peng Yang, as from the bridge of OOCL Hamburg no anomaly was observed. In view that OOCL Hamburg required more speed to pass the Ma Wan Fairway, Pilot C increased the speed from dead slow to slow ahead engine when passing Yau Lian floating dock. 10. When Peng Yang hit the shoal at about 1319, the Pilot on board OOCL Hamburg could see rusty smoke came out from the deck of that vessel. This was the first time that the Pilots of OOCL Hamburg knew that there might be something wrong with Peng Yang. (III) Account of Ma Wan Station in Vessel Traffic Centre 1. On 23.8.2004 at about 1300, VTC was monitoring the movement of Peng Yang which was the second westbound vessel after MSC Munich. The radar echo of Peng Yang appeared on Ma Wan Station radar screen and the duty Assistant Marine Controller (duty AMC) kept close monitoring of its movement. He had informed the dedicated patrol launch patrolling along Ma Wan Fairway that Peng Yang was approaching so that the patrol launch would clear the other small vessels in the Fairway. 2. Shortly after 1245 the Pilot of Peng Yang informed Ma Wan Station that they would transit Ma Wan Fairway first. The Pilot of OOCL Hamburg also confirmed that he would let Peng Yang to pass the Fairway first. The duty AMC had no objection about this arrangement. The speed of OOCL Hamburg was observed to have slowed down after passing CP1 buoy. 3. At about 1305-1310 the eastbound container vessel OOCL Hamburg was in the position near Yam O. OOCL Hamburg reported to Ma Wan Station the presence of the anchored barge near Yau Lian floating dock. The duty AMC acknowledged the message. Since the patrol launch was busy clearing the traffic for the two vessels, the duty AMC replied to the Pilot of OOCL Hamburg that they would check the barge after the two vessels had passed clear of the Fairway. 4. The radar displayed the 10-metre depth contour line near the coastal water of Tsing Lung Tau. The duty AMC observed that Peng Yang remained outside the 10 metre depth contour line all the time during the passage. 5. In accordance with the traffic regulatory measures, the Ma Wan traffic lights were switched on during the transit of OOCL Hamburg and Peng Yang. 6. After Peng Yang and OOCL Hamburg had passed the Ma Wan Fairway, the patrol launch proceeded to the anchored barge and found that it had already left. The identification of the barge was not known. 7. The accident occurred at about 1319 as Peng Yang passed over the charted shoal. The Pilot of Peng Yang reported to VTC of the situation. The escort tugs of Peng Yang and OOCL Hamburg were called in for assistance. Peng Yang reported that it was listing to starboard and taking in water. Peng Yang was found swinging to its port side towards Yam O after hitting the shoal. Fearing the situation might further deteriorate, Ma Wan Station agreed with the Pilot to beach the vessel at Yam O. The causes of the subject incident are analyzed by HK MARDEP in Chapter VI of the official investigation report as follows: 1. The investigation has established that the immediate cause of the accident was due to the error of judgment of Pilot B after Peng Yang passed out from the Ma Wan bend. While aware that Peng Yang was in a difficult position with the rocky shoal lying close to starboard and the OOCL Hamburg approaching in the middle of the waterway, Pilot B believed that he could be able to avoid hitting the shoal and the close-quarter situation with OOCL Hamburg by altering course to port gradually at five-degree intervals, under the circumstance he had probably underestimated the effects of the following tide and squat and bank suction, and that the rate of port turn might not be fast enough to from entering into such difficult position, e.g. slow down the vessel and altering OOCL Hamburg to give way, the accident might have been prevented. 2. Pilot B of Peng Yang is considered to have overly relied on the normal action that should be taken by Pilot C of OOCL Hamburg and took no contingency action to alleviate the situation. Such behavior rendered him unprepared for any contingency or fail-safe measures to cater for unexpected situations when OOCL Hamburg failed to act as expected. 3. Pilot C of OOCL Hamburg appeared to have failed to observe the Rules of Passage for passing of two Class A vessels within the Ma Wan Service Area. Pilot C was oblivious to the situation of Peng Yang during the passing. He appeared to have not understood correctly the Rules of Passage and misjudged the effect of his decision in continuing to proceed beyond the anchored barge in to the Area. 4. The lack of appropriate guidance on the conditions under which two class A vessels could agree to pass each other within the Ma Wan Service Area had given rise to ambiguity and misinterpretation. While Pilot B though that OOCL Hamburg should have waited outside the Ma Wan Service Area to let Peng Yang to pass first, Pilot C was of the view that OOCL Hamburg could proceed to enter the Area as Peng Yang had already passed clear of the Ma Wan Fairway. 5. The master and navigating officer of Peng Yang had fully delegated the navigation of the vessel to the Pilots without discharging their duties and obligations to monitor the position and movement and to ensure the safety of their vessel. They have failed to comply with the provisions in Section A-VIII/2 of the STCW Code on “Navigation with pilot on board”. It is specified in the Manual of Operating Practices for MW/MTCS provided by the parties concerned that: 1. Class A vessel means any vessel of 198 metres and above in length overall (LOA) for the purpose of this MANOPS. 2. Ma Wan Service Area means the area of the waters bounded on the east, by a straight line along the Ting Kau Bridge; on the south, by straight lines along the Tsing Ma Bridge and the Kap Shui Mun Bridge; and on the west, by a straight line joining the Ha Pang light and Kwai Sheck. 3. The MW/MTCS shall in general follow the Rules of Passage as mentioned below when organizing and scheduling the traffic flow in the Ma Wan Service Area: While Class A vessel with LOA of 198m and above is passing, no passing of other vessels except vessels of less than 20 metres in length and passenger ferries issued with a Speed Restriction Exemption Permit. 4. Under favorable conditions, and only after clear understanding has been reached on Channel 14 or 11 between vessels (Rules of passage in section 7.11 refers) as to the point and manner of passing, two vessels may agree to pass within this area. MW/MTCS shall monitor and evaluate such arrangement. 5. In the event that no safe passing arrangements could be reached or the MW/MTCS conditions the intended arrangement in unsafe, MW/MTCS shall inform the participants of the aforesaid vessels of such and recommend alternatives to them. If the situation is not resolved or the MW/MTCS is not convinced that a safe passage can be made, the MW/MTCS may direct the vessels to resolve the problem. 6. The MW/TMCS will advise each vessel, which has reported to the station with an intention to transit the Ma Wan service area, whenever its intended transit conflicts with the known intent of any other vessel. On 3rd August 2007, HK MARDEP sent a letter to Ince & Co which represents OOCL stating that the Rules of Passage of Class A Vessel in Ma Wan Service Area which became effective as of 30th August 2004 is not a legislative document and has not been published. It only falls within the internal operation practice among the colleagues for the purpose of regulating the traffic in Ma Wan Service Area. During the trial of this case, the Defendants entrusted GHMJAC to give expert opinions on relationship between OOCL Hamburg’s navigation and Peng Yang’s hitting the rocky shoal. GHMJAC issued on 18th March 2008 the Expert Report on the Relationship between Navigation of OOCL Hamburg and the Beaching/Grounding of Peng Yang under the reference of YCJ [2008] HSJ No.6 signed by the assessors, Wu Rusong (senior captain), Zeng Bo (senior pilot) and Li Qinglie (senior engineer) and confirmed by GHMJAC by affixing its official stamp. It is concluded by the expert report that: 1. The immediate cause of the grounding incident is the improper maneuvering of Peng Yang. The master, the duty officers and the pilots onboard Peng Yang overlooked the relative position between the vessel’s position and the rocky shoal, and therefore neglected the threat imposed by the shoal upon the vessel, resulting in improper maneuverings. If Peng Yang were able to estimate the threat of the rocky shoal, she could take various actions (including reducing her speed, making large alterations to port) so as to eliminate the threat and avoid the beaching. Another cause of the accident is that the officers of Peng Yang have bias and concerns about the maneuvering of an old-aged vessel (for instance, she did not adopt large alterations). The old age, weak hull condition and overloading of Peng Yang restricted the pilots’ command of the vessel, which increase the difficulty of the maneuvering and enlarge the extent of damage to the vessel arising from the grounding. 2. OOCL Hamburg entering the Ma Wan Service Area did not break the agreement that Peng Yang passed the Ma Wan Fairway first. Moreover, the Ma Wan Station did not object to such entry of OOCL Hamburg. OOCL Hamburg was proceeding along the middle of the Ma Wan Service Area after passing Yau Lian float dock, which would bring about effect on the specific maneuverings of Peng Yang, but even in such circumstances, it still allowed a navigable area of about 200-meter breadth (the 200-meter transverse distance less the breadths of the two vessels) for the passage of Peng Yang. That means the two vessels could pass each other safely if proper measures were taken. So the navigation of OOCL Hamburg would not necessarily cause, and therefore had no causal connection with the grounding of Peng Yang. Appraiser of the GHMJAC, Capt Wu Rusong, appeared at court, made explanation of the expert report, and accepted inquires from the judges and parties concerned. At the request of Yang & Lin Law Firm, a group of experts composed of Prof. Wu Zhaolin, Prof. Wang Fengchen and Prof. Zhao Yuelin from Dalian Maritime University analyze the liability and the relativity between OOCL Hamburg’s navigation/ maneuverings and Peng Yang’s hitting/grounding within the Ma Wan Service Area. On 20th June 2008, the aforesaid experts group issued a written opinion and concluded as follows: 1. As OOCL Hamburg did not abide by the navigational rules for two Class A vessels within the Ma Wan Service Area, failed to be aware of the difficult situation Peng Yang was in, thus wrongfully estimated the influence brought about by OOCL Hamburg’s navigating near the middle of the fairway after transiting north of the anchored barge, which largely limited the safe navigational waters for Peng Yang and consequently disenabled Peng Yang to substantially alter her course to port so as to keep away from the -10.5m rocky shoal. Therefore, OOCL Hamburg’s maneuverings had causative connection with and should bear the major liability for Peng Yang’s hitting rocky shoal and grounding. 2. Peng Yang honored the agreement with OOCL Hamburg, waiting OOCL Hamburg to take actions to let Peng Yang pass the Ma Wan Service Area first, but Peng Yang failed to maintain sufficient precaution to the special situation when OOCL Hamburg was in breach of the agreement. When observing OOCL Hamburg continued to navigate near the middle of the narrow channel within the Ma Wan Service Area, Peng Yang failed to take emergent actions to mitigate the risk, or keep the due precautions against the surroundings and circumstances. Moreover, it was incorrect and in breach of the Regulations of Crew’s Position and the Regulations of Pilotage that Peng Yang’s master delegated the navigation completely to the pilots. Therefore, Peng Yang should bear the minor liability for the hitting rocky shoal and grounding. Professor Wu Zhaolin and Professor Zhao Yuelin representing the experts group appeared at court and made explanation of the experts report, and accepted inquires from the judges and parties concerned. V. Losses sustained by Peng Yang (I) Salvage Fee 1. After Peng Yang got aground, Shenyue Shipping entrusted Guangzhou Salvage Bureau to carry out salvage. At dawn on 24th August 2004, the salvage vessels, equipment and personnel as organized by Guangzhou Salvage Bureau arrived at the incident site and carried out salvage. On 16th September 2004, Shenyue Shipping and Guangzhou Salvage Bureau concluded a salvage contract stipulating that Guangzhou Salvage Bureau provides vessels, equipment, materials and personnel to carry out salvage of Peng Yang and the cargo and other properties on board. The reward for salvage is agreed as RMB16,300,000. On the same day, Shenyue Shipping issued a payment entrustment to Shenzhen Shipping requesting for payment of part of the salvage reward in the amount of RMB8, 500, 000. On 27th September 2004, Peng Yang was refloated. At 1245 hrs on 2nd October, M/V “De Yue” owned by Guangzhou Salvage Bureau towed Peng Yang away from the site. At 1630 hrs, Peng Yang arrived at Ma Wan Power Wharf. The salvage of Peng Yang was finished on the afternoon of 6th July. Shenzhen Shipping paid for Shenyue Shipping the salvage fee of RMB3,000,000 on 16th September 2004, the salvage fee of RMB3, 300, 000 on 30th September, the salvage fee of RMB200,000 on 8th October, the salvage fee of RMB1,000,000 on 2nd November, and that of RMB1,000,000 on 2nd December, which amount to RMB8, 500, 000 in total. Shenyue Shipping made payments to Guangzhou Salvage Bureau of the salvage fee of RMB1, 000, 000 on 5th January 2005, the salvage fee of RMB1, 000, 000 on 5th February, the salvage fee of RMB1, 000, 000 on 3rd March, the salvage fee of RMB500, 000 on 8th April, the salvage fee of RMB500, 000 on 9th May, the salvage fee of RMB1, 000, 000 on 31st May, the salvage fee of RMB500, 000 on 28th June, the salvage fee of RMB500, 000 on 14th July, the salvage fee of RMB500, 000 on 4th August, the salvage fee of RMB1,000, 000 on 30th September, and the salvage fee of RMB300, 000 on 12th October, totaling RMB7,800,000. From 4th April to 19th October in 2005, Guangzhou Salvage Bureau had issued to Shenyue Shipping for 9 times the invoices of salvage fees totaling RMB16,300,000. The Defendants refused to recognize the salvage fees of RMB16,300,000 paid by Shenyue Shipping on the grounds that: (1) The salvage of Peng Yang falls within commercial salvages for which the commercial rationality and feasibility should be concerned. The insured value of Peng Yang is RMB18,000,000. The aforesaid salvages fees account for more than 90% of the value of the vessel, which is obviously unreasonable. (2) No competent authority including HK MARDEP has ordered in writing a compulsory salvage and removal of Peng Yang and the cargo she carried onboard. The collegial panel held that: CCS Shenzhen conducted investigation after Peng Yang grounded and issued an investigation report. It can be seen from the investigation report that the situation is critical before Peng Yang being refloated. Moreover, there were 48,902MT of coal loaded on board of Peng Yang at the time of the incident. If no appropriate rescue measure has been taken, the vessel and the cargo she carried on board might be subject to total loss. Therefore, it is reasonable for Shenyue Shipping to take salvage measures when the abandonment was not accepted by Taiping Insurance. Shenyue Shipping entrusted Guangzhou Salvage Bureau to carry out salvage not only of the vessel Peng Yang, but also of the cargo and other properties she carried on board. The defense of the Defendants is untenable. The claim for compensation of the salvage fees in the amount of RMB16, 300, 000 filed by the Plaintiffs shall be supported. 2. On 26th November 2004, Shenzhen Shipping issued the employment contracts to Deng Guangquan and Liu Jianzhong for employing the same as the consultants of the salvage and relevant techniques. The term of employment commences from 26th August 2004 and expires upon the completion of salvage of Peng Yang. On 27th November, Shenyue Shipping and Deng Guangquan entered into an Employment Agreement of Technical Consultant stipulating that: From 26th August 2004 to the day when the salvage of Peng Yang is completed, Shenyue Shipping entrusts Deng Guangquan as the salvage technical consultant. All cost and expenses of travel, accommodation, and communication incurred by the technical consultant and the relevant consultancy fees (RMB600/day) shall be borne by Shenyue Shipping. The Plaintiff stated that Liu Jianzhong is an experienced senior loss adjuster of the China P&I Club (CPI), and Deng Guangquan is the head of the Navigation Guarantee Department of the Chinese Navy Headquarters and an expert of salvage and negotiation. Payment made by Shenyue Shipping for the aforesaid technical consultants is as follows: On 31st August 2004, the consultant fee of RMB2,000 paid to Liu Jianzhong; On 6th September, the consultant fee of RMB7,200 paid to Deng Guangquan; On 17th September, the consultant fee of RMB6,600 paid to Deng Guangquan; On 20th September, the cost and expenses of accommodation, communication and reception paid for Liu Jianzhong and Deng Guangquan in the amount of RMB7,007.40; On 29th September, cost of air ticket and reception in the amount of RMB1,630 incurred by Deng Guangyong. The aforesaid cost and expenses total RMB24, 437.40. The Defendants recognized the identity of Liu Jianzhong, but refuse to recognize the payment by Shenyue Shipping of the aforesaid cost and expenses. The collegial panel held that: Shenyue Shipping had already entrusted a professional salvage institute to carry out salvage after Peng Yang’s grounding so that the salvage and technical consultants otherwise employed are unnecessary. Therefore, the consultants’ fee in the amount of RMB24, 437.40 as claimed by the Plaintiff shall not be supported. 3. Shenyue Shipping entrusted Yiu Lian Dockyards to provide towage service to the grounded Peng Yang. Between 23rd and 30th August 2004, Yiu Lian Dockyards arranged vessels, including but not limited to M/V “Hai Fa”, M/V “Hai Li”, M/V “You 26”, M/V “You Fa”, M/V “Hai Shan”, M/V “Hai Ba”, M/V “You 18”, and M/V “Hai Qi” to provide towage service. According to the bills issued by Yiu Lian Dockyards to Shenyue Shipping’s shipping agent, Merchant Shipping, the cost of the towage service provided by Yiu Lian Dockyards amounts to HKD2, 124, 107.50. On 19th October, Shenyue Shipping and Yiu Lian Dockyards concluded an agreement on the emergency tug fees incurred by towage of Peng Yang, where Shenyue Shipping agrees to pay Yiu Lian Dockyards HKD1,550,000 as the tug fees. Shenyue Shipping made payment of the aforesaid fees through Merchant Shipping. On 4th July 2005, Yiu Lian Dockyards issued a receipt to Merchant Shipping indicating that it had received the tug fees in the amount of HKD1, 550, 000. The Defendants refuse to recognize the aforesaid tug fees and believe that it is unnecessary to arrange tugs guarding Peng Yang at such large amount of expenses. The collegial panel held that: Due to the grounding of Peng Yang, it is necessary and reasonable to properly arrange daily towage service with several tugs as required by the salvage and forced discharge of Peng Yang. The Defendants’ defense is untenable. The tug fees in the amount of HKD1,550,000 claimed by the Plaintiff shall be supported. 4. On 24th August 2004, Shenyue Shipping entered into a cargo discharging and shipping agreement with Ying Wei through its shipping agent Merchant Shipping. It is stipulated that Ying Wei arranges barges to get alongside Peng Yang at Yam O to carry out discharge and to deliver the cargo discharged to Ma Wan Wharf thereafter. The cost of discharge is agreed as HKD17/Ton and the freight is agreed as HKD37/Ton. If the cargo fails to be discharged within 3 days after the barges of Ying Wei got alongside Ma Wan Wharf due to reasons on the part of Ma Wan Wharf, Ying Wei shall collect charges at the rate of HKD10,000/vessel/day. The discharge shall commence on 25th August 2004. Between 25th and 28th August, Ying Wei arranged M/V “Kun Xing 18”, “Sui Yue 9”, M/V “Sui Yue 17”, M/V “Lian Xing 388”, M/V “Lian Xing 398”, M/V “Zhang Ji 6”, M/V “Xie Hang 228” to carry out forced discharge for Peng Yang. There were 23,801MT of cargo (with water) discharged, of which the weight of cargo discharged and shipped totaled 18,004MT, and the weight of cargo discharged amount to 5, 797MT. Between 25th and 30th August, Ying Wei issued to Merchant Shipping respectively 10 bills which specify the charges for discharging and shipping in the amount of HKD1,070,765. On 28th August, Merchant Shipping issued to Shenyue Shipping a bill indicating the charges for discharging and shipping in the amount of HKD1,070,765 Shenyue Shipping made payment thereof to Ying Wei through Merchant Shipping. On 19th April 2005, Merchant Shipping issued to Shenyue Shipping the invoices of the charges for discharging and shipping in the amount of HKD1,070,765. The Defendants are of the opinions that Shenyue Shipping had already concluded with Guangzhou Salvage Bureau a salvage contract which includes service of salvage of cargo. The aforesaid charges for discharging and shipping as claimed by Shenyue Shipping are repeated in this regard and should not be recognized. The Plaintiff argued that Shenyue Shipping concluded the salvage contract with Guangzhou Salvage Bureau on 16th September 2004, and entered into the agreement of discharging and shipping with Ince & Co. on 24th August. The aforesaid cost of discharge was incurred before the conclusion of the salvage contract and should not be deemed as repeated cost. The collegial panel held that: It is appropriate for Shenyue Shipping to entrust Ying Wei to carry out discharge of cargo on board of the grounded vessel Peng Yang before officially entering into the salvage contract with Guangzhou Salvage Bureau. The argument of the Plaintiffs is tenable. The cost of discharging and shipping in the amount of HKD1,070, 765 claimed by the Plaintiffs shall be supported. 5. On 24th August 2004, Shenyue Shipping and Guangzhou Southern Yiu Lian Shipping Company (hereinafter referred to as “Southern Yiu Lian”) concluded an agreement on carriage of the cargo on board of Peng Yang. It is stipulated that Southern Yiu Lian arranges vessel to get alongside Peng Yang and transport the cargo to Ma Wan Wharf at a rate of HKD20/MT (excluding stevedorage, trimming charges and other charges relating to the cargo, and the agent fees for ship’s entry and departure and joint inspection fees as well as the tallying charges and cargo agency fees incurred in Shenzhen shall not be included); the freight rate is agreed as HKD23/MT (excluding stevedorage, trimming charges and other charges relating to the cargo); the freight shall be paid within 30 days after discharge. On 25th and 26th August, Southern Yiu Lian arranged M/V “Sui Yue 17” and M/V “Sui Yue 9” to get alongside Peng Yang to carry the cargo of 3, 897MT. On 4th November, Southern Yiu Lian notified Shenyue Shipping of its entrustment of Hai Hong Shipping for receiving the freight of RMB82,616.40. On 17th November, Shenyue Shipping paid the freight of RMB82,616.40 to Hai Hong Shipping. Hai Hong Shipping issued an invoice to Shenyue Shipping thereafter. The Defendants believe that Shenyue Shipping had already concluded with Guangzhou Salvage Bureau a salvage contract which includes service of salvage of cargo. The aforesaid freight cost as claimed by Shenyue Shipping is repeated in this regard and should not be recognized. The Plaintiff argued that Shenyue Shipping concluded the salvage contract with Guangzhou Salvage Bureau on 16th September 2004, and entrusted Southern Yiu Lian to carry the cargo forcedly discharged from Peng Yang. The aforesaid freight cost was incurred before the conclusion of the salvage contract and should not be deemed as repeated cost. The collegial panel held that: The Plaintiffs’ argument is tenable. The freight cost in the amount of RMB82, 616.40 claimed by the Plaintiffs shall be supported. 6. On 27th August 2004, Shenyue Shipping and Xin Tong Yang concluded a voyage charter party with regard to the cargo carried by Peng Yang. It is stipulated that Xing Tong Yang let out M/V “Xie Hang 228” to carry the cargo at the freight rate of RMB20/MT. The freight shall be paid within one month after loading. M/V “Xie Hang 228” got alongside Peng Yang to carry cargo at 1400 hrs on 28th August and finished loading at 2130 hrs on 29th August. The cargo she carried on board amount to 1,900MT. On 10th October, Shenyue Shipping paid Xin Tong Yang by cash the freight of RMB38,000. On 15th October, Xin Tong Yang issued a receipt thereof to Shenyue Shipping. The Defendants put forward that Shenyue Shipping had already concluded with Guangzhou Salvage Bureau a salvage contract which includes service of salvage of cargo. The aforesaid freight cost as claimed by Shenyue Shipping is repeated in this regard and should not be recognized. The Plaintiff argued that Shenyue Shipping concluded the salvage contract with Guangzhou Salvage Bureau on 16th September 2004, which is after hiring of M/V “Xie Hang 228” for carrying the cargo discharged from Peng Yang. The aforesaid freight cost was incurred before the conclusion of the salvage contract and should not be deemed as repeated cost. The collegial panel held that: The Plaintiffs’ argument is tenable. The freight cost in the amount of RMB38,000 paid to Xin Tong Yang as claimed by the Plaintiffs shall be sustained. 7. After the grounding of Peng Yang, the following port charges were incurred during her stay in waters of Hong Kong (from 23rd August to 2nd October 2004): (1) The agency fee in the amount of HKD10,800 paid to Merchant Shipping; (2) The cost of handling the comprehensive permission at HK MARDEP in the amount of HKD111, 223; (3) The cost of using traffic boat owned by Ming Lee Motor Boat Co. in the amount of HKD25,730; (4) The cost and expenses of handling sea protest, purchase of phone cards, SD memory card and prepayment of telephone rate totaling HKD1, 361.80; (5) The cost of 36, 000 litre of fuel oil supplied by Huahu to Peng Yang in the amount of HKD97, 200; (6) The cost of 450MT of fresh water supplied by Hong Kong Water Boat Ltd. in the amount of HKD14, 400; (7) The cost of oil absorbents and oil absorbent pad purchased from Hoi Tung Marine Machinery Co., Ltd. Hong Kong in the amount of HKD5, 500. The aforesaid port charges totally amount to HKD266,214.80. Merchant Shipping confirmed in writing of receiving the above payments. The Defendants believe that the aforesaid port charges have no connection with this case. After Peng Yang got aground, it was impossible to use the auxiliary engine which makes the supply of fuel oil unnecessary. Therefore, the aforesaid port charges claimed by the Plaintiffs should not be recognized. The collegial panel held that regarding 1. the cost of oil, there was severe ingress of water into the engine room after Peng Yang grounded. The engine room crew used the port ballast pump periodically to pump the water so as to keep the ship’s stern floating and prevent the whole vessel from sinking. Therefore, it is necessary and reasonable to supply fuel oil to Peng Yang so as to support the operation of the port ballast pump. 2. Other port charges. The other port charges were also related to the handling of the incident. However, the cost of Hong Kong newspaper in the amount of HKD12 as claimed by the Plaintiff has not connection with this case and shall be deducted. Accordingly, the port charges incurred during Peng Yang’s stay in waters of Hong Kong shall be determined as HKD266, 202.80. 8. In order to encourage Peng Yang to participate in handling of the emergency, Shenyue Shipping paid emergency handling bonuses in the amount of RMB80,000 to the 28 crew members on board Peng Yang on 25th October 2004. The Defendants argued that the crew members have the obligations of emergency handling in case of any incident. The bonuses by no means fall within the necessary expenses incurred by the incident, and should be deemed as the ordinary cost of the shipowner. It is unreasonable for the Plaintiff to claim for bonuses of crew members after claiming for loss of detention. Therefore, the emergency handling bonuses in the amount of RMB80, 000 as claimed by the Plaintiffs should not be recognized. The collegial panel held that it is the crew’s responsibility to deal with the emergency after the incident. Therefore, the emergency handling bonuses in the amount of RMB80,000 as claimed by the Plaintiffs shall not be supported. In summary, the salvage fees caused by the grounding of Peng Yang amount to RMB16,420,616.40 and HKD2,886,967.80. (II) Repair Cost 1. The conditions of Peng Yang after running on the rocky shoal and grounding. At the request of Shenyue Shipping, CCS Shenzhen sent surveyors onboard Peng Yang on 8th September 2004 and the following days to carry out inspection concerning the vessel’s condition. On 16th November, CCS Shenzhen issued a survey report. It is specified as follows: 1. the vessel’s condition before refloating: (1) The vessel’s bow was under water; (2) Cargo holds No.1 to No.4 were all under water; (3) Cargo holds No. 5 to No.7 were filled with water; (4) The left lower part of the engine room front wall was cracked, and water flooded into the engine room through hold No.7; (5) Severe water ingress into the machinery space opening; (6) Water flooded through the measuring holes of the 19th and 31st double bottom cargo tank. (Note: The engine room was the only part had not been flooded before refloating which supported the floating condition of the vessel’s astern. Peng Yang also arranged crew members to pump sea water from the engine room periodically.); (7) The holds were found with damage to different extent. (Note: After review of the Hull Thickness Measurement Report and other relevant materials, the corrosion of the lower part of the front wall of the engine room is more than 20%, and 15ms of sea water was found inside cargo hold No.7 keeping the pressure on the front wall. Furthermore, the sea water had kept flooding into the engine room and being pumped out. The lower part of the front wall kept switching between “dry” and “wet” status, which aggravated the corrosion. If such situation maintained, the damage to the front wall of the engine room will spread and eventually cause the sinking of the whole vessel.) 2. Peng Yang’s conditions after refloating: (1) The hull was generally in good condition; (2) The fore and aft transverse bulkheads of cargo hold No.4 fell down. The damage to the fore transverse bulkhead is about 15ms × 10ms, and that to the aft transverse bulkhead is about 9ms × 5ms; (3) The falling of the transverse bulkheads caused deformation of the deck between hold No.3 and No.4 and between hold No.5 and No.6; (4) Slight leakage was found in the transverse bulkhead between hold No.3 and No.4 and that between hold No.5 and No.6; 3. Peng Yang’s conditions after drydocking: (1) Plates K and A (frame 224- 242) of the hull bottom under the bulbous bow was seriously deformed with indentations. In particular, the largest indentation is about 4.5ms wide and 2.6ms deep; (2) Starboard bottom Plates A and B (frame 28- 216) was seriously deformed with indentations. The largest indentation is about 3.2ms wide and 300mm deep. The widest continuous cracking on midship bottom Plate A (frame 71 -110) of the is 300mm; (3) The second, forth and sixth starboard bottom longitudinal beams (frame 45 - 215) of the was severely deformed; (4) The first starboard bottom longitudinal girder of fore peak (frame 228 - 235), the second starboard bottom longitudinal girder (frame 224 - 229), the first port bottom longitudinal girder (frame 227 -235), the second port bottom longitudinal girder (frame 224 - 229), and the bottom center girder of peak fore (frame 228 - 242) were damaged with severe deformation of 600mm wide; (5) The bottom solid floor of fore peak (frame 224 - 241) was seriously deformed; (6) The solid floor on Plate A (frame 47 - 205) in the starboard double bottom water ballast tank No.1 -7 was seriously deformed with the indentation of 600mm deep; (7) The second longitudinal wall on Plate A (frame 45 -220) in the starboard double bottom water ballast tank No.1 -7 was seriously deformed with the indentation of 600mm deep. 2. At the request of Shenyue Shipping, CCS Shenzhen sent surveyors onboard Peng Yang on 27th October 2004 and the following days to carry out an additional inspection concerning the damage to the vessel’s hull, engine, navigational equipment and electric facilities due to her running on the rocking shoal and grounding as well as the repair thereof. On 16th November, CCS Shenzhen issued an inspection report of Peng Yang’s hull which shows the detailed information of the damage to the hull and the repair thereof. It is also stated that after the permanent repair, relevant tests were carried out and obtained positive results, such as the visual inspection and internal quality inspection of the welding line, the vacuum test of the bottom plates, the watertight test of the fore peak and double bottom tank, and the hose test of the transverse bulkhead plating. It is written on the certificate of seaworthiness with regard to the damage and repair that: carried out damage repair inspection, all in good condition, seaworthy. On 17th November, CCS Shenzhen issued an inspection report of engine, navigational equipment and electric. It is specified that: (1) Engine: withdrew the tail shaft to conduct magnetic particle inspection and found normal; tail bearing (platinum alloy) and tail shaft SIMPLEX oil seal was replaced, installed and passed the tail shaft test; the rudder stock bearing was replaced, installed and inspected as normal; the inspection of tail shaft and propeller was finished. (2) Equipment: the depth sounder was replaced; watertight test was carried out for the underwater transducer, found normal. (3) Electric: Two anchor windlass motors; the winding was replaced, and the steering master controller, controlling cabinet electric and control cable were replaced; all found in good operating condition through inspection and function test. 3. On 28th February 2008, the Defendants entrusted the GHMJAC to carry out inspection and assessment regarding the cost of permanent repair of Peng Yang due to her running on the rocky shoal and grounding. On 8th May 2008, GHMJAC issued the Assessment Report on the Repair Cost of Peng Yang incurred from the Breaching/Grounding Accident (YSJ [2008] CJJZ No.7). On 3rd July, GHMJAC issued the Supplementary Opinion to the Assessment Report on the Repair Cost of Peng Yang (YSJ [2008] CJJZ No.7). The report is signed by the assessors of GHMJAC, i.e. Chen Hongyin (senior engineer) and Li Qinglie (senior engineer), affixed with official stamp of GHMJAC. The assessor Chen Hongyin appeared at court, made illustration and explanation of the assessment report, and accepted inquires from the judges and parties concerned. It is concluded by the aforesaid assessment report that: (1) After verification, it is ascertained that during the repair of Peng Yang in Yiu Lian Shekou, the plates used for replacement weigh 164,081.503kg (including the weight of flat-bulb steel), and that in Shenzhen Bofu Ship Repair Engineering Company, the bulkhead plates used for replacement weigh 184,293kg; the bulkhead plates for repair, 7672kg, and the steel plates for replacement (with used plates), 4555kg. The aforesaid aggregate to 311,760kg in total, which is twice the weight as ascertained in the CCS Survey Report. Therefore, this Center takes the view that the scope of the permanent repair has been extended, accordingly, the repair cost has been increased and the repair time prolonged. (2) An over-aged vessel will inevitably sustain serious corrosion. The extent of the corrosion should be recorded the ship’s thickness information in the previous special survey as per the relevant stipulations. Since GHMJAC was not provided with the general arrangement, basic structure drawing and the latest thickness record, it is impossible to ascertain which repair items have direct connection with the grounding accident and which items were done due to the vessel’s old age and natural corrosion. If the thickness record of Peng Yang is available, GHMJAC may continue to further its assessment on the permanent repair of the damage to Peng Yang. (3) According to the Notice on Implementing the System of Compulsorily Scraping Commercial Vessels [JSF (2001) No.151] issued by the Ministry of Communication, the State Economic and Trade Commission and the Ministry of Finance on 29th March 2001, bulk cargo ships of over 31 years old should be compulsorily scraped, which should be implemented as of 1st May 2001. At the time of the occurrence of the accident, namely 23 August 2004, it has been 31 years plus 4 months and 22 days since “Peng Yang” was built on 1st April 1973, which means that the vessel should be scraped as per the abovementioned regulations. Although CCS permits that with conditions the time limit for scraping such vessels could be extended to 1st April 2006, the owner should consider carefully whether the vessel may be extensively repaired with a huge cost or scrap the vessel directly. (4) On the basis of the Survey Report issued by CCS Shenzhen regarding the conditions of Peng Yang after the Incident, it is concluded through comparison that the following repair costs are not necessary with regard to the subject incident: A. The repair items as listed in Hai An’s Work-Done List and Statement of Account have no inevitable connection with the incident. B. The repair items as listed in the Repair Contract concluded between Hai Cheng and Shenyue Shipping, the Work-Done Lists and the Statement of Account have no inevitable connection with the damage arising from the incident. C. The repair items as listed in the Quotation and Work-Done List issued by Feng Hai concerning the repair of CO2 fire-fighting system have no inevitable connection with the damage arising from the incident. D. The repair items as listed in the Work-Done List and the Statement of Account issued by Shenzhen MST concerning the repair of lifeboats have no inevitable connection with the damage arising from the incident. E. The repairs by Shenzhen Xing Chang Hao, such as the replacement of the starboard windlass, bearings of the steering gears, and so forth have no inevitable connection with the damage arising from the incident. F. The repairs of the crankshaft/engine base/connecting rod of DR0218 diesel engine conducted by Hai Rong on 9th October 2004 have no inevitable connection with the damage arising from the incident. G. The payment of bonus specified in the Application for the Special Self-Repairing Bonus dated 13th November 2004 has no connection with the damage arising from the incident. H. The paints and diluents sold by Hao Da Er should be calculated as per the actual paint required by the plates used for replacement in the permanent repair. I. The supplies, such as floor glue and washing machines purchased from Shenzhen Nanshan Shekou Huakang Metal Store have no inevitable connection with the damage arising from the incident. J. Among the 210 tons of the steel plates (thickness: 8mm/10mm/12mm) purchased from Guangzhou Jin Kai Li Trading Company, the reasonable cost should be calculated as per the actual quantity of the plates replaced for the damage repair. K. Echo sounder’s damage is not tated/ascertained in CCS Shenzhen Survey Report, therefore, echo sounder purchased from Haizhu Hai Xin Ship Supplies has no inevitable connection with the damage arising from the incident. L. The anchor cable connecting ring/zincs purchased from Xin Sheng Fa (Foshan) Company, except for those necessary for replacement of hull plates, have no inevitable connection with the damage arising from the incident, and therefore should be borne by the owner of Peng Yang. M. The sealing elements purchased from Tang Zhen Tai have no inevitable connection with the damage arising from the incident. N. The lubricating oils/gear oil purchased from Shenzhen Wang You Fu Lubricating Oil Co. Ltd. has no inevitable connection with the damage arising from the incident. O. The stern shafts, stern sealing and other spare parts purchased on 27th September and 23rd November 2004 have no inevitable connection with the damage arising from the incident. 4. CCS Shenzhen issued a bill to Shenyue Shipping on 3rd June 2004 requesting for payment of charges for thickness measurement in the amount of RMB130,000. On 30th July, Shenyue Shipping paid CCS Shenzhen RMB130,000 for the special inspection of thickness measurement. CCS Shenzhen issued to Shenyue Shipping the invoice accordingly thereafter. 5. Based on the investigation report issued by HK MARDEP, there were aids to navigation on board Peng Yang, including one depth sounder (has not been started before the incident), one magnetic compass, one gyrocompass, one satellite navigator and two radars. It is reported that the aforesaid equipment was under good operating condition in the course of navigation. 6. On 18th October 2004, Shenyue Shipping and Yiu Lian Shekou concluded a repair contract with regard to Peng Yang. It is stipulated that: Shenyue Shipping entrusts Yiu Lian Shekou to repair Peng Yang based on the Repair List provided by Shenyue Shipping which was confirmed and signed by both parties; the term of repair shall be determined as of Peng Yang’s entry into the dockyard; the price shall be 60% higher than that prescribed in the Standard Quotation of Ship Repair 1992. For those items that are not included therein, it shall be determined as per the repair cost of COSCO vessels in recent years. However, the cost of specialized companies and the price of materials and supplies directly provided to the vessel shall be 15% higher. Peng Yang shall confirm all the bills and make full payment for the repair before leaving the dockyard. The crew members of Shenyue Shipping can also carry out repair without affecting the operation of Yiu Lian Shekou. Peng Yang started the repair in Yiu Lian Shekou on 30th October 2004 and finished it on 12th November. The chief officer of Peng Yang confirmed and signed on the Work-Done List for Repair Items of Peng Yang issued by Yiu Lian Shekou. On 12th November, Yiu Lian Shekou issued the Annual Repair Charges Aggregate of Peng Yang to Shenyue Shipping claiming for total repair cost in the amount of RMB4,444,629. The aforesaid parties jointly determined through negotiation that the total repair cost of Peng Yang amount to RMB4,280,000. Based on the Work-Done List for Repair Items of Peng Yang and Annual Repair Charges Aggregate of Peng Yang, the repair items of Peng Yang in Yiu Lian Dockyards include the docking repair service, docking repair projects and pollution prevention engineering. The docking repair service includes: (1) hull cleaning (including blasting and painting of hull and shell marking); (2) replacement of zinc slab (zinc slab shall be provided by the shipowner); (3) suction box project; (4) replacement of bottom plate; (5) vacuum tank test of log equipment; (6) bottom plugging; (7) repair of anchor chain; (8) repair of rudder plate; (9) removal and inspection of tail shaft; (10) installation of depth sounder; (11) removal and installation of suction pipe of ballast tank; (12) Removal and installation of the plugging of the suction pipe of tank of holds No.2 and No.7 and engine room; (13) removal and installation of vent pipe and sounding pipe of the right bunker and oil bunker in engine room; (14) Fuel oil tank steam pipe test; (15) Airtight test of bunker; (16) Airtight test of the right sludge tank of engine room; (17) Removal and installation of doors for airtight test of oil tank; (18) Replacement of expansion joint and dredging of pipes; (19) Inspection and repair of Emergency fire pump with vacuum pump; (20) Cleaning of bunker No.14; (21) Cleaning of fore, right and left stool tanks and sludge tank of the main engine; (22) Cleaning pipe tunnel; (23) Correction and repair of davit arms in the living quarters; (24) Cleaning of oil tank; (25) Replacement of cable conduit of depth sounder; (26) Replacement of end cap pipe of the ice engine cooler. Shenyue Shipping paid Yiu Lian Shekou RMB4, 000,000 for the repair on 12th November, and RMB280,000 on 23rd November, totaling RMB4,280,000. Yiu Lian Shekou issued an invoice in the amount of RMB4,280 000 thereof. The Defendants are of the following opinions: Firstly, the repair of Peng Yang carried out in Yiu Lian Shekou falls within her annual inspections and repairs instead of the repair for damage caused by the incident. Therefore, it has no connection with the subject incident. Secondly, Peng Yang ran on the rocky shoal so that she was damaged in way of her double bottom. However, the repair she accepted in Yiu Lian Shekou involves substantial replacement of the internal frames and reinforcing materials inside the holds as required by her old age and severe rusting of the steel plate, which have no connection with the damage due to her running on rocky shoal. Thirdly, the depth sounder of Peng Yang was broken before the incident so that the repair thereof has no connection with the subject incident. In summary, the repair cost in the amount of RMB4, 280, 000 as claimed by the Plaintiffs shall not be recognized. The collegial panel held that: (1) In accordance with the provisions of the Regulations on the Administration of Old Commercial Vessels, the age of mandatory scrapping of Peng Yang is above 33 years. Peng Yang was built on 1st April 1973. At the time of the incident, she was 31 years, 4 months and 24 days old, which is below the age of mandatory scraping. Shenzhen Shipping has the right to decide to scrap the vessel in advance or to continue operation after appropriate repair. The conclusion made by GHMJAC that Peng Yang was subject to mandatory scraping at the time of the incident lacks sufficient evidence and should not be supported. (2) In the light of Item 2 of Article 3 of the Provisions of the Supreme People’s Court on Trials of Cases of Disputes over Damages due to Ship Collision and Contacts (hereinafter referred to the “Provisions”), where the annual inspection and repair of a vessel, or the repairs for carried out for the purpose of keeping a vessel’s seaworthiness or for purposes other than repair of the collision damage is carried out along with the repair of the collision damage, the compensation for repair cost shall be limited to that incurred by the repair of damage which was actually caused by the ship collision. In the subject case, the compensation for the repair cost shall be limited to the cost and expenses incurred by the repair of the actual damage to Peng Yang. According to the Work-done List for repair items of Peng Yang and the Annual Repair Charges Aggregate incurred by Peng Yang, the repair items of Peng Yang involve both the damage caused by the subject incident and daily maintenance. The cost of daily maintenance should not be excluded from the compensation. The Plaintiffs failed to provide any evidence in support of the damage to the tail shaft, depth sounder and davit arms in the living quarter caused by the subject incident. Therefore, removal and inspection of the tail shaft, replacement of depth sounders, and correction of the davit arms fall within the daily maintenance of the vessel, and the repair cost arising there from should be deducted from the amount of RMB4,280,00 claimed by the Plaintiff. It is specified in the Annual Repair Charges Aggregate of Peng Yang, the cost of disconnecting and inspection of tail shaft amounts to RMB45,860, the cost of replacement of the depth sounder amounts to RMB12,100, and the cost of correcting davit arms amounts to RMB4, 100. Accordingly, the cost of repair of Peng Yang by Yiu Lian Shekou due to the damage caused by the subject incident actually amounts to RMB4,217, 940. 7. On 1st October 2004, Shenyue Shipping and Bofu Shenzhen concluded a Repair Contract. It is agreed that Shenyue Shipping entrusts Bofu Shenzhen to carry out repair of Peng Yang based on the items specified in the Repair List provided by Shenyue Shipping at the quoted price therein in the amount of RMB1, 585, 416 (of which the cost of replacing steel structure amounts to RMB1, 501, 928, the cost of marine engineering amounts to RMB52, 732, and the cost of electric work amounts to RMB30, 756). Shenyue Shipping provides the steel materials and wharfs. The items actually repaired shall be those confirmed and accepted by Shenyue Shipping. The cost and expenses settled between the parties shall be computed based on items confirmed and accepted and the quoted price. Upon completion of the repair, Bofu Shenzhen issued a bill of the repair cost to Shenyue Shipping claiming for payment of repair in the amount of RMB1,889,429. The aforesaid parties determined through negotiation on 25th November that the total repair cost of Peng Yang is RMB1, 650, 000. Shenyue Shipping paid Bofu Shenzhen for the repair RMB400, 000 no 22nd October 2004, and RMB300, 000 on 28th October, RMB300, 000 on 26th November, RMB200, 000 on 15th December, RMB200, 000 on 3rd February 2005, and RMB250, 000 on 9th March, which amount to RMB1,650,000 in total. On 6th December 2004, Bofu Shenzhen issued an invoice to Shenyue Shipping in the amount of RMB1, 650, 000. The Defendants believe that the repair carried out by Bofu Shenzhen exceeds the items identified in the survey report issued by CCS. Some of the repair which fall within the repair of Peng Yang’s rusting has no connection with the subject incident. Therefore, the Defendants refuse to recognize the aforesaid repair cost of RMB1,650, 000 as claimed by the Plaintiffs. The collegial panel held that the cost of repair of Peng Yang’s rusting which has no connection with the subject incident shall be excluded from the compensation items. On the basis of bill issued by Bofu Shenzhen on 18th November 2004, the cost of repair and replacement of the rusted and broken hatch cover (see page 6 of the bill) in the amount of RMB10,346 shall be excluded from the compensation items. After deduction thereof, the cost of repair of damage caused by the subject incident carried out by Bofu Shenzhen amounts to RMB1,639,654 in total. 8. On 16th October 2004, Bofu Hong Kong issued a bill to Shenyue Shipping claiming for payment of repair in the amount of HKD20,000. The Reimbursement Examination & Approval Sheets of Shenyue Shipping dated 17th March 2005 indicates the payment of repair in the amount of HKD20,000. Shenyue Shipping made no explanation or statement concerning the incurrence of the aforesaid repair cost during the hearing. The Defendants believe that there is no specific list of repair items and payment vouchers in support of the aforesaid repair cost so that they refused to recognize the same. The collegial panel held that the Plaintiffs failed to provide relevant list of repair items and payment vouchers to prove the aforesaid repair cost the claimed. Therefore, such claim shall not be supported. 9. On 18th November 2004, Hai An issued a work done list to Peng Yang stating that Hai An was entrusted by Shenzhen Shipping to carry out repair of Peng Yang at Ma Wan Wharf from 8th October to 18th November and had already finished the repair which also complied with the requirement of repair. The repair items include: removal and installation diesel generator set; removal, installation, shifting, and repair of generator as well as centering of diesel engine midline; removal and installation of inward and outward frame pipeline, supercharger, cooler and other ancillaries as well as shifting and placing of frames; removal and installation of main bearing cover and crank set as well as lifting the same out of the hold into the dockyard and back to the vessel upon completion of repair; inspection of the main bearing hole axis; load test after engine test and completion of repair; repair of engine base; repair of air intake valve No.6 and fuel pump roller bush. The chief engineer of Peng Yang signed on the aforesaid work done list for confirmation. On 19th November, Hai An issued a Statement of Account to Shenzhen Shipping claiming for repair cost in the amount of RMB52,532. On 30th April 2005, Shenyue Shipping paid RMB52,532 to Hai An for the repair. Hai An issued a corresponding invoice to Shenyue Shipping. The Defendants refuse to recognize the aforesaid repair cost on the grounds that the main engine and auxiliary engine of Peng Yang were not damaged in the subject incident, but Shenyue Shipping still arranged oil supply to Peng Yang so that the aforesaid repairs fall within Peng Yang’s daily maintenance and have no connection with the subject incident. The collegial panel held that the Plaintiffs failed to provide evidence in support of the connection between the aforesaid repair and the subject incident. Therefore, the aforesaid repair cost of RMB52,532 claimed by the Plaintiff shall not be supported. 10. Shenyue Shipping concluded a Repair Contract with Hai Cheng (of which the date of conclusion is unknown). It is stipulated that Shenyue Shipping entrusts Hai Cheng to repair generating set No.3 at the price of RMB157,650 (including the cost of fitting and grinding), or RMB142,650 (excluding the cost of fitting and grinding) within 10 days. The chief engineer of Peng Yang signed on the work done lists issued by Hai Cheng respectively on 11th and 24th January and 10th March 2005. Hai Cheng issued a bill to Shenyue Shipping subsequently indicating the repair cost in the amount of RMB198,550. On 10th June 2005, Shenyue Shipping paid RMB180,000 for the aforesaid repair, and Hai Cheng issued an invoice thereof to Shenyue Shipping thereafter. The Defendants believe that generating set No.3 of Peng Yang did not suffer any damage in the subject incident, and the repair was carried out after Peng Yang was repaired and departed. Therefore, the aforesaid repair cost has no connection with the subject incident and should not be recognized. The collegial panel held that, the subject incident did not cause any damage to generating set No.3 of Peng Yang, and the aforesaid repair was carried out and completed after Peng Yang’s departure upon repair on 19th November 2004. Therefore, the aforesaid repair cost in the amount of RMB180,000 as claimed by the Plaintiffs shall not be supported. 11. On 18th October 2004, Feng Hai provided a Quotation Letter to Southern Ocean Shipping with regard to the inspection and repair of carbon dioxide extinguishing system and fire extinguishers. On 24th October, the chief officer of Peng Yang signed on the work done list issued by Feng Hai for confirmation, and Feng Hai issued a quotation letter to Southern Ocean Shipping which specifies that the repair cost of carbon dioxide extinguishing system and fire extinguishers of Peng Yang amounts to RMB55, 270. On 3rd February 2005, Shenyue Shipping paid Feng Hai RMB55,270 for the repair, and Feng Hai issued to Shenyue Shipping the invoice thereof. The Defendants believe that the extinguishing system and fire extinguishers did not suffer any damage in the subject incident so that the former has no connection with the latter. Therefore, the aforesaid repair cost should not be recognized. The collegial panel held that: According to the survey report issued by CCS Shenzhen, after Peng Yang got grounded her bow and holds Nos. 1 to 4 were all underwater. Accordingly, the carbon dioxide extinguishing system of Peng Yang which was equipped in the fore peak was also underwater. During the period of 34 days from 23rd August when Peng Yang got grounded to 27th September when she was refloated, the carbon dioxide extinguishing system might be damaged. Therefore, it is reasonable and appropriate for Shenyue Shipping to carry out repair and inspection thereof. The aforesaid repair cost in the amount of RMB55, 270 as claimed by the Plaintiffs shall be supported. 12. On 12th October 2004, Shenyue Shipping and Lin Zhilong entered into a Repair Contract agreeing as follows: Shenyue Shipping entrusts Lin Zhilong to remove the rust and clean the shell plating above the light water line of Peng Yang at the unit price of RMB8.00/m2 and total price in the amount of RMB48,000. On 26th October, Shenzhen Guan Mei Entity Company issued to Shenyue Shipping an invoice in the amount of RMB38,889 for the cost of construction materials. On 27th October, Shenyue Shipping paid RMB38,889 to Lin Zhilong. The Plaintiffs stated during the hearing that Shenzhen Guan Mei Entity Company issued the invoice of the cost of derusting to Shenyue Shipping for the convenience of payment. The Defendants refuse to recognize the aforesaid cost by reason that this is duplication of the derusting and painting costs incurred in Yiu Lian Shekou. The collegial panel held that the it can be seen from the Work Done List of Peng Yang and the Annual Repair Charges Aggregate incurred by Peng Yang, the cost of cleaning and derusting the shell plate plating above the light water line are not included in the repair items carried by Yiu Lian Shekou. Therefore, the aforesaid cost in the amount of RMB38,889 as claimed by the Plaintiffs shall be supported. 13. Shenzhen MST issued to Shenyue shipping the bill of inspection and repair of the life rafts in the amount of RMB1,797.50 on 18th June 2004, and another bill of inspection and repair of the life rafts in the amount of RMB1,544 on 24th August 2004. On 21st October, the chief officer of Peng Yang signed on the Work Done List issued by Shenzhen MST for confirmation. On 18th November, Shenyue Shipping made payment of RMB2,468 for the inspection and repair of the life rafts in the amount of RMB2, 468. On 27th October, Shenzhen MST issued an invoice thereof to Shenyue Shipping. The Defendants refused to recognize the aforesaid cost on the grounds that the life rafts were placed at the living quarter which did not sink into sea water according to the photos taken after Peng Yang’s grounding. Apparently, the life rafts did not suffer any damage due to the subject incident. The collegial panel held that it can be seen from the photos taken after Peng Yang’s grounding that the life rafts equipped with Peng Yang did not sink into sea water during the incident. Furthermore, one of the bills of inspection and repair of life rafts was issued before the occurrence of the subject incident. Therefore, the aforesaid cost of inspection and repair of life rafts as claimed by the Plaintiffs has no connection with the subject incident and shall not be supported. 14. Xing Chang Hao issued to Peng Yang a Work Done List specifying the repair cost of RMB32,960 on 20th October 2004, a Work Done List specifying the repair cost of RMB5,810 on 25th October, a Work Done List specifying the repair cost of RMB19,963 on 17th November, two Work Done Lists respectively specifying the repair cost of RMB9, 585 and RMB14, 990 on 18th November, a Work Done List specifying the repair cost of RMB5,553 on 6th December, and another two Work Done Lists respectively specifying the repair cost of RMB7, 400 and RMB12, 514 on 7th December, which total RMB108,775. The chief officer and chief engineer of Peng Yang signed on every of the aforesaid Work Done Lists for confirmation. Shenyue Shipping paid Xing Chan Hao for the repair RMB78, 500 on 30th December 2004 and RMB108,775 on 3rd February 2005. Xing Chan Hao issued to Shenyue Shipping three invoices of the repair cost totaling RMB24,427 on 19th August 2004, and another three invoices of the repair cost totaling RMB162,848 on 27th December. The Defendants refused to recognize the aforesaid repair cost on the grounds that the aforesaid repair was carried out for the damage caused by natural corrosion instead of the subject incident, that some of the repairs were carried out after Peng Yang’s departure upon completion of repair, and that some of the invoices of repair cost were issued before the date of incident. The collegial panel held that: The repair cost specified in the Work Done Lists provided by the Plaintiffs which were issued by Xing Chang Hao and confirmed by Peng Yang amount to RMB108,775. The repair cost of RMB187,275 claimed by the Plaintiff is against the fact. Peng Yang first set sail on 19th November 2004 after the repair. The repair carried out by Xing Chang Hao thereafter has no connection with the subject incident so that the cost thereof shall be deducted. Through investigation and examination, RMB25,467 shall be deducted. Furthermore, the three invoices of repair issued by Xing Chang Hao to Shenyue Shipping on 29th August 2004 have no connection with this case and shall not be adopted as effective evidence. In summary, Shenyue Shipping shall pay Xing Chang Hao RMB83,308 for the repair of damage caused by the subject incident. 15. On 9th and 19th October 2004, Hai Rong issued two quotation letters with regard to the repair of the crankshaft, engine base, and connecting rod of DR0218 diesel engine of Peng Yang, which amount to RMB140,000 in total. Shenyue Shipping agreed to pay RMB115,600 after examination and verification. On 18th November, the chief engineer of Peng Yang signed on the Receipt of Goods (substitute for final work acceptance list) issued by Hai Rong. On 23rd November 2004, Shenyue Shipping paid RMB115,600 to Hai Rong for the repair, and Hai Rong issued the invoice thereof to Shenyue Shipping. The Defendants refused to recognize the aforesaid repair cost claiming that it has no connection with the subject incident. The collegial panel held that the Plaintiff failed to prove that Peng Yang’s diesel engine was damaged due to the subject incident. Therefore, the repair cost in the amount of RMB115,600 as claimed by the Plaintiffs has no connection with the subject incident and should not be supported. 16. On 13th November 2004, the chief officer of Peng Yang applied on behalf of the deck department for the special self-repairing bonus. It is stated that for the purpose of saving repair expenses the crew members of the deck department had worked overtime for 10 days to work outboard and overhead so as to hose both sides with high pressure fresh water. They had hosed 4,000m2 in total. The starboard was paint with primary coat and finish coat totaling 2,000m2. The load water line was retraced for 160ms. The crew members applied for bonus for the aforesaid efforts. On 17th November, Shenyue Shipping agreed to pay and the chief officer of Peng Yang received the bonus of RMB10,000. The Defendants refused to recognize the bonus by reason that the aforesaid items of self-repairing correspond to those carried out by Yiu Lian Shekou. The collegial panel held as follows: It is agreed in the repair contract between Shenyue Shipping and Yiu Lian Shekou that the crew members are allowed to carry out self-repairing. The aforesaid crew members did save some expenses for Peng Yang by carrying out self-repair and the amount of bonus applied is also reasonable. Therefore, the self-repairing bonus in the amount of RMB10,000 as claimed by the Plaintiffs should be sustained. 17. On 23rd November 2004, Hao Da Er Huizhou issued two Cargo Sale Inventories to Shenyue Shipping indicating the paint it had provided to Peng Yang for the repair which is worth RMB182,174.60. The Plaintiffs also provide three delivery orders in support thereof. On 30th December 2004, Shenyue Shipping paid Hao Da Er Huizhou RMB182,174.60 for the paint, and Hao Da Er Huizhou issued an invoice thereof to Shenyue Shipping. The Defendants have not raised any objection thereto. The collegial panel held that the Defendants have no objection to the aforesaid expenses of paint in the amount of RMB182,174.60 which should be ascertained. 18. From 2nd October to 19th November 2004, Hua Kang Hardware had provided with Peng Yang 20 lots of supplies and materials which is worth RMB49,569.10 in total. On 29th December 2004, Shenyue Shipping paid Hua Kang Hardware RMB52, 827.10 for the supplies and materials it provided, and Hua Kang Hardware issued the relevant invoices to Shenyue Shipping. The Defendants refused to recognize the aforesaid expenses by stating that the supplies and materials provided by Hua Kang Hardware were for the purpose of daily use in the living quarter which was not flooded after Peng Yang’s grounding incident. Therefore, they believe the aforesaid expenses of supplies have no connection with the subject incident. The Plaintiffs argued that most of the supplies of Peng Yang were stored in the fore peak which was completely flooded with water after the incident. Therefore, the supply of the aforesaid supplies and materials is related to the subject incident. The collegial panel held that it is reasonable for Peng Yang to supplement the supplies and materials during the repair on the grounds that part of the supplies and materials stored in the fore peak which was flooded with sea water after Peng Yang’s grounding could be damaged by sea water. Therefore, the aforesaid expense claimed by the Plaintiffs shall be supported. However, according to the delivery orders provided by Hua Kang Hardware, the total cost of the supplies and materials it provided to Peng Yang amounts to RMB49,569.10. Accordingly, the expenses of supplies claimed by the Plaintiffs shall be ascertained as RMB49,569.10. 19. On 9th October 2004, Shenyue Shipping and Guangzhou Jin Kai Li concluded a Contract for purchase and sales of steel plates. It is stipulated that Guangzhou Jin Kai Li provides Shenyue Shipping with three types of ordinary steel plates totaling 210MT having a worth of RMB994,700. The first batch of steel plates totaling 100MT was provided on 10th October, and the remaining steel plates were supplied before 18th October. Guangzhou Jin Kai Li had sold to Shenyue Shipping by 20th October 196.59MT of steel plates priced at RMB930,760.50. Shenyue Shipping paid Guangzhou Jin Kai Li for the purchase respectively RMB475,327 on 11th October 2004, RMB320,580 on 15th October, and RMB134,853 on 21st October, which amount to RMB930,760. Guangzhou Jin Kai Li issued the invoices to Shenyue Shipping accordingly. The Defendants argued that the dockyard will provide steel plates in general practice so that it is unnecessary for the Plaintiffs to otherwise purchase the same. Therefore, the Defendants refused to recognize the cost of purchasing the steel plates in the amount of RMB930,760 as claimed by the Plaintiff. The collegial panel held that: Shenyue Shipping and Bofu Shenzhen concluded a Repair Contract on 1st October 2004 stipulating that Shenyue Shipping provides the steel plates. Based on the Assessment Report of the Repair Cost of Peng Yang issued by the GHMJAC, 196.52MT of steel plates were used during the repair carried out by Bofu Shenzhen which corresponds to the quantity of steel plates Shenyue Shipping had purchased from Guangzhou Jin Kai Li. Therefore, the cost of purchasing the steel plates in the amount of RMB930,760 as claimed by the Plaintiff should be supported. 20. On 15th November 2004, Shenyue Shipping paid Shenzhen Wei Chuang Xin Industrial Co., Ltd. RMB63,280 for purchase of the steel plates. On 16th November, Shenzhen Wei Chuang Xin Industrial Co., Ltd. issued relevant invoices to Shenyue Shipping. The Defendants refused to recognize the aforesaid expenses for purchasing the steel plates in the amount of RMB63, 280 as claimed by the Plaintiffs on the grounds that it is unnecessary for the Plaintiffs to otherwise purchase any steel plates since the dockyards will usually provide the same, and that the Plaintiffs failed to provide any evidence in support of the specifications, quantity and purposes of the steel plates they had purchased. The collegial panel held that the Plaintiff failed to provide evidence in support of the specifications, quantity and purpose of the steel plates they had purchased. The Defendants’ defense is tenable. Therefore, the expenses for purchasing the steel plates in the amount of RMB63, 280 as claimed by the Plaintiffs should not be supported. 21. On 28th October 2004, Shenyue Shipping paid Hai Xin Supplying Station RMB56,000 for purchase of the depth sounder. On 4th November, Hai Xin Supplying Station issued corresponding invoices. The Defendants refused to recognize the aforesaid expenses incurred by purchase of the depth sounder in the amount of RMB56, 000 as claimed by the Plaintiffs on the grounds that the depth sounder of Peng Yang was broken before the subject incident. The collegial panel held that the Plaintiffs failed to provide any evidence in support that the depth sounder of Peng Yang was damaged due to the subject incident, and the replacement thereof falls within Peng Yang daily maintenance. Therefore, the aforesaid expenses for purchase of the depth sounder in the amount of RMB56,000 as claimed by the Plaintiffs should not be supported. 22. Xin Sheng Fa provided Shenyue Shipping with two triple connecting links which is worth RMB6,700 on 23rd October 2004, and 40 anti-corrosion Zinc blocks priced at RMB10,800 on 3rd November 2004. On 18th November, Shenyue Shipping paid Xin Sheng Fa RMB17,500 for purchase of the triple connecting links and anti-corrosion Zinc blocks. Xin Sheng Fa issued the corresponding invoices to Shenyue Shipping. The Defendants believe that Peng Yang’s grounding caused damage to the bottom plate but would not cause damage to or loss of the triple connecting links and anti-corrosion Zinc blocks. The damage to or loss of the triple connecting links and anti-corrosion Zinc blocks have no connection with such incident. Therefore, they refused to recognize the cost of purchasing the triple connecting links and anti-corrosion Zinc blocks in the amount of RMB17,500. The collegial panel held that: 1. Triple connecting links are not accessory to the cable chains. The Plaintiff failed to prove that the triple connecting links were damaged due to the subject incident; 2. Anti-corrosion Zinc blocks are equipped on the hull bottom to prevent corrosions. They are always placed on the hull bottom no matter Peng Yang got grounded or not. The Plaintiffs’ purchasing of the anti-corrosion Zinc blocks fall within the daily maintenance of Peng Yang. Therefore, the cost of purchasing triple connecting links and anti-corrosion Zinc blocks in the amount of RMB17,500 as claimed by the Plaintiffs should not be supported. 23. On 17th October 2004, Dong Tang Zhen Tai provided Peng Yang with the sealing materials worth RMB1,264 plus the freight charges in the amount of RMB20. On 18th November, Shenyue Shipping paid Dong Tang Zhen Tai RMB1,284 for the aforesaid sealing materials, and Dong Tang Zhen Tai issued the invoices thereof. The Defendants believe that the Plaintiff failed to provide evidence in support of the position where the aforesaid sealing materials were applied and its connection with the subject incident. Therefore, they refused to recognize such expenses. The collegial panel held that the aforesaid sealing materials were used in the joints of the cargo holds. Most of the cargo holds were flooded after the subject incident, but the joints of holds were still above the water according to the photos of the incident provided by the Defendants. The Plaintiffs’ purchasing of the sealing materials falls within the daily maintenance of Peng Yang. Therefore, the cost of purchasing the sealing materials in the amount of RMB1,284 as claimed by the Plaintiffs should not be supported. 24. On 1st November 2004, Wang You Fu provided Peng Yang with main engine oil, anti-wear hydraulic fluids No.32, gear oil No.220 and HT1064 marine diesel engine oil with medium speed, which are worth RMB238,010 in total. On 18th November, Shenyue Shipping paid Wang You Fu RMB238,010 for the aforesaid goods, and Wang You Fu issued the relevant invoices. The Defendants believe that the oil products provided by Wang You Fu fall within those of vessel’s daily consumption. Peng Yang was berthing at Ma Wan Wharf being repair. It is unnecessary to start her engine so that no fuel oil was required then. Therefore, the Defendants refused to recognize the aforesaid cost of oil which has no connection with the subject incident. The collegial panel held that the oil products provided by Wang You Fu fall within those of vessel’s daily consumption. The cost of purchasing aforesaid oil products by Shenyue Shipping falls within the maintenance expenses during Peng Yang’s suspension of navigation. The Plaintiffs had claimed for the vessel’s maintenance expenses based on the assessment report concerning the loss for earnings and vessel maintenance expenses of Peng Yang due to her grounding issued by Xingyue Accountants. The Plaintiffs should not otherwise claim for the aforesaid cost of oil against the Defendants repeatedly. Therefore, the aforesaid cost of oil in the amount of RMB238,010 should not be supported. 25. On 28th September 2004, Shenyue Shipping paid ORE RMB229, 538 (converted from HKD216, 894 based on the exchange rate of 1.0583) by cash for purchase of tail shafts and shaft seals, and ORE issued the payment receipt to Shenyue Shipping. On 22nd December, Shenyue Shipping paid ORE RMB26,981 for freight of the aforesaid tail shafts and shaft seals. On 31st December, ORE issued the payment receipt to Shenyue Shipping. Furthermore, ORE also issued an invoice which indicates the cost of and the cost of delivering the tail shafts and shaft seals. In summary, Shenyue shipping made payments of price the tail shafts and shaft seals and the freight thereof totaling RMB256, 519. The Defendants believe that the Plaintiff failed to prove that the aforesaid tail shafts and shaft seals were delivered to and used for Peng Yang, and that the same were damaged due to the subject incident. Therefore, the Defendants refused to recognize the aforesaid cost incurred by the purchase of the tail shafts and shaft seals which has no connection with the subject incident. The collegial panel held as follows: According to the inspection report concerning the engine, navigational equipment, and electric of Peng Yang issued by CCS Shenzhen, the tail shafts and shaft seals of Peng Yang were repaired and replaced. Therefore, Shenyue Shipping purchased the tail shafts and shaft seals from ORE for Peng Yang. Nevertheless, the Plaintiffs failed to prove that Peng Yang’s tail shafts were damaged due to the subject incident. Accordingly, the repair of Peng Yang’s tail shafts shall be deemed as her daily maintenance. The cost of the aforesaid tail shafts and shaft seals in the amount of RMB256, 519 should not be supported. 26. According to the Work Done List issued by Longshan to Peng Yang, Longshan had carried out cleaning the oil tanks (totaling 70m3) and disposed of the oil water (totaling 740m3) for Peng Yang from 3rd to 6th October 2004. The chief engineer of Peng Yang singed on the aforesaid Work Done List for confirmation. On 14th October, Longshan issued a quotation letter to Shenyue Shipping which specifies that the charges for cleaning the oil tank amount to RMB30/m3, and the charges for disposing of the oil water amount to RMB60/M3. On 1st December 2004, Longshan issued an invoice of the charges for cleaning of oil tank in the amount of RMB54,750. On 3rd February 2005, Shenyue Shipping paid Longshan RMB63,000 for cleaning of oil tank. The Defendants refused to recognize the aforesaid expenses by stating that they have no connection with the subject incident. The collegial panel held as follows: The subject incident caused severe water ingress into cargo holds and engine rooms of Peng Yang. It is reasonable to clean the oil tank before the repair, and the relevant charges therefor shall be ascertained. Based on the operation specified in the Work Done List of Peng Yang and the quotation issued by Longshan, the total tank cleaning charges shall be RMB46, 500. 27. As per the Records of Tug Services and the bills provided by the Plaintiffs, the tug fee incurred by Peng Yang at Ma wan Wharf by entrusting Lianda to arrange tug services for shifting amounts to RMB47,775. On 15th March 2005, Shenyue Shipping paid RMB47,700 for the tug service, and Lianda issued to Shenyue Shipping the relevant invoice. The Defendants believe that the aforesaid tug fee is unnecessary and the Plaintiffs failed to prove the relevance between the tug fee and the subject incident. Therefore, the Defendants refused to recognize the aforesaid charges claimed by the Plaintiff. The collegial panel held as follows: Shenyue Shipping entrusted Lianda to provide tug service as required by the repair of Peng Yang at Mawan Wharf. The tug fee incurred thereby is reasonable. Therefore, the tug fee claimed by the Plaintiffs in the amount of RMB47,700 shall be supported. 28. On the basis of the Records of Tug Services at Shenzhen port and the bills of tug fee issued by Yiulian Shekou provided by the Plaintiffs, on 30th October 2004, Yiu Lian Shekou arranged “Yiu Lian Tuo 27” and “Yiu Lian Tuo 38” to tow Peng Yang from Ma Wan Wharf to Yiu Lian Shekou, which incurred the tug fee in the amount of RMB10,440. On 12th November, Yiu Lian Shekou arranged “Yiu Lian Tuo 27” and “Yiu Lian Tuo 38” to tow Peng Yang from Yiu Lian Shekou to Ma Wan Wharf, which incurred the tug fee in the amount of RMB7,830. Shenyue Shipping paid Yiu Lian Shekou for tug services RMB10,440 on 12th November and RMB7,830 on 19th November. The aforesaid tug fees total RMB18,270. Yiu Lian issued to Shenyue Shipping the invoices thereof. The Defendants believe that Yiu Lian Shekou has already charged for tug services which were listed in the bills of repair cost. The aforesaid tug fee claimed by the Plaintiff was repeated and should not be recognized. The collegial panel held that: Based on the Work-Done List for Annual Repair of Peng Yang and the Annual Repair Charges Aggregate incurred by Peng Yang, Yiu Lian Shekou arranged tugs to assist in Peng Yang’s entry into and departure from the dock once, which incurred tug fee in the amount of RMB23, 040. The aforesaid expense does not include the tug fee incurred by towing of Peng Yang from Ma Wan Wharf to Yiu Lian Shekou before the repair and from Yiu Lian Shekou to Ma Wan Wharf. Therefore, the aforesaid tug fee in the amount of RMB18, 270 as claimed by the Plaintiffs was not repeated and falls within reasonable cost and shall be supported. 29. During the repair at Ma Wan Wharf, the crew members of Peng Yang piloted the vessel in berthing at and departure from the wharf, based on which they applied for service fees for berthing and departure. On 23rd December 2004, Shenyue Shipping paid the relevant crew members RMB3,000 for their efforts of berthing and departure. The Defendants have not raised any objection thereto. The collegial panel ascertained the aforesaid service fees in the amount of RMB3,000. 30. The berthing fee incurred during the Peng Yang’s stay at Ma Wan Wharf for receiving repair amounts to RMB110,000. On 6th December 2004, Ma Wan Wharf issued the invoice of the aforesaid berthing fee to Shenyue Shipping which specifies as “Berthing Fee of Peng Yang during the Repair”. On 20th December, Shenyue Shipping made payment of the berthing fee in the amount of RMB110,000 to Ma Wan Wharf. The Defendants claimed that the berthing fee incurred during the time of unloading (i.e. 3 days) shall be deducted. The collegial panel held that the aforesaid berthing fee was incurred by the repair of Peng Yang and has no connection with the unloading according to the records specified in the invoice. Therefore, the aforesaid berthing fee in the amount of RMB110,000 as claimed by the Plaintiff shall be supported. 31. Inspection Fee (1) On 30th April 2005, Shenyue Shipping paid CCS Shenzhen RMB26,000 for the inspection of Peng Yang after her running on the rocky shoal, and CCS Shenzhen issued the relevant invoice to Shenyue Shipping. (2) After CCS Shenzhen carried out the additional inspection concerning the damage to Peng Yang’s hull, engine, navigational equipment and electric facilities due to her running on the rocking shoal and grounding as well as the repair thereof, Shenyue Shipping paid CCS Shenzhen RMB6, 857 for the inspection on 23rd February 2005. (3) At the request of Shenyue Shipping, CCS Shenzhen arranged surveyor to embark Peng Yang to determine her constant. On 17th November, CCS Shenzhen issued the certificate of constant determination. On 22nd December 2004, Shenyue Shipping paid CCS Shenzhen RMB6,000 for the aforesaid inspection. CCS Shenzhen issued the invoice thereof to Shenyue Shipping. The Defendants have no objection to the cost specified in item (1) and (2), but refuse to recognize that specified in item (3). They believe the cost of determining Peng Yang’s constant has no connection with the subject incident. The collegial panel ascertained the cost specified in item (1) and (2) to which the Defendants have no objection. The vessel’s constant is the important parameter for determining the accuracy of draft survey. After a vessel received repair, her constant might change. Therefore, it is appropriate for Shenyue Shipping to apply for determination of Peng Yang’s constant after repair, which also is related to the subject incident. The inspection fee incurred by determination of Peng Yang’s constant shall also be ascertained. Accordingly, the inspection fee shall be ascertained as RMB38, 857. In summary, the cost and expenses incurred by the repair of Peng Yang due to the subject incident amount to RMB7,471,891.70. (III) Cargo Loss 1. On 10th August 2005, Shenyue Shipping entrusted CCIC to carry out assessment on whether the cargo of coal carried on board of Peng Yang was damaged in the subject incident. On 22nd August, CCIC sent a quotation letter to Shenyue Shipping indicating the assessment fee of RMB30,000. On 28th August, CCIC issued the Assessment Report., Shenyue Shipping paid CCIC the cargo loss assessment fee in the amount of RMB25,000 on 30th August, and RMB5,000 on 20th September, which amount to RMB30,000 in total. CCIC issued to Shenyue Shipping the invoices thereof. The Defendants have not raised any objection thereto. The collegial panel ascertained the aforesaid assessment fee in the amount of RMB30,000. 2. On 19th September 2005, this court accepted the case of dispute over cargo damage under contract of carriage of goods by waterway filed by PICC Shenzhen against Shenzhen Shipping. PICC Shenzhen pleads to this court to order Shenyue Shipping to compensate the cargo loss in the amount of RMB1, 660, 610.50 and the interest thereof, and to bear all the relevant legal cost. On 14th December 2005, this court rendered the Civil Judgment (2005) GHFCZ No.373 ordering Shenzhen Shipping to compensate PICC Shenzhen RMB1,386,314.29 and the interest thereof which shall be calculated based on the current fund loan interest rate published by People’s Bank of China in the corresponding period from 1st January 2005 until the day when all the payments are made in full. The legal cost amounts to RMB18, 600, of which RMB3, 072.31 shall be borne by PICC Shenzhen and RMB15, 527.69 shall be borne by Shenzhen Shipping. Shenzhen Shipping dissatisfied with the aforesaid judgment and filed an appeal to Guangdong Higher People’s Court. On 9th August 2006, Guangdong Higher People’s Court rendered the Civil Judgment under the reference of (2006) YGFMSZ No.62 rejecting the appeal and affirming the original judgment. The acceptance fee incurred by the appeal in the amount of RMB18,600 shall be borne by Shenzhen Shipping. On 1st November, Shenzhen Shipping made the compensation of the cargo loss, interest and legal cost totaling RMB1, 542, 636.06 to PICC Shenzhen. On 2nd November, PICC Shenzhen issued the invoices thereof to Shenzhen Shipping. The Defendants are of the opinion that the aforesaid cargo loss was incurred due to Peng Yang’s unseaworthiness and overloading and should be borne by the Plaintiffs themselves, and that the Plaintiffs have no right to claim such loss against the Defendants. The collegial panel held as follows: based on the specifications on the Certificate of Seaworthiness of Peng Yang issued by the Ship Investigation Center of CCS on 18th May 2004, the maximum loading capacity of Peng Yang under any loading condition shall be no more than 50,000MT. According to the facts ascertained by the Civil Judgment of the aforesaid second instance cargo claim case, the weight of cargo carried by Peng Yang amounts to 48,902MT which is less than 50,000MT. The Defendants’ argument that Peng Yang was overloaded and unseaworthy lacks of factual basis and should not be supported. The cargo loss in the amount of RMB1,542,636.06 claimed by the Plaintiffs shall be included in the compensation for the subject incident. In summary, the cargo loss caused by Peng Yang’s grounding amounts to RMB1,572,636.06. (IV) Loss for Earnings and Maintenance Fee On 11th October 2007, Shenyue Shipping and Xingyue Accountants concluded an Audit Agreement. It is stipulated as follows: Shenyue Shipping entrusts Xingyue Accountants to carry out auditing of the loss for earnings and maintenance fee of Peng Yang at the auditing fee of RMB8,000. On 15th October, Xingyue Accountants issued to Shenyue Shipping an Auditing Report signed by accountants of Xingyue Accountants Luo Zemin and Miao Ming and affixed with the official stamp of Xingyue Accountants. According to the records of the Business License of Partnership held by Xingyue Accountants, its business scope includes auditing (auditing and verification), accounting consultation and accounting service. The aforesaid accountants both hold legal and effective certificate of certified public accountants. Xingyue Accountants’ auditing results are as follows: The loss of earnings caused by Peng Yang’s grounding amounts to RMB3,493,720, which is the daily net earning of RMB41,063.94 multiplying 85.08 days of off-hire peirod (3 days of unloading is deducted). The maintenance fee of Peng Yang due to the grounding amounts to RMB614, 601.39. Xingyue Accountants sent accountant Miao Ming to appear at the court accepting inquires from the judges and parties concerned. The Defendants believe that: 1. According to the evidence provided by Shenzhen Shipping, the hire rate for bareboat charter of Peng Yang is RMB5,000,000/year. Accordingly, the loss of hire during the 85.08 days of navigation suspension (computed from the time of incident to the day when Peng Yang departed upon completion of repair) amount to RMB1,165,479.45 rather than the RMB3,493,720 as claimed by Shenyue Shipping. 2. The Auditing Report provided by Shenyue Shipping should not be adopted as evidence in support of the operating loss sustained by Shenzhen Shipping due to Peng Yang’s running on the rocky shoal. (1) The Auditing Report was issued based on the financial information and proofs provided by Shenyue Shipping and only show the conclusion related to Shenyue Shipping. It is not the effective evidence in support of the loss of profits sustained by Shenzhen Shipping due to Peng Yang’s running on the rocky shoal. (2) The certified public accounts who signed on the Auditing Report did not actually carry out auditing of the financial information or certificates provided by Shenyue Shipping. In fact, the persons who carried out auditing and drafted the report are not certified accountants and did not accept inquiries at court. The report was prepared in a way questionable and should not be adopted. (3) The Auditing Report was not properly issued based on financial principles. The cost was calculated without deducting the expenses such as the business income tax of Shenyue Shipping and depreciation of Peng Yang. The period of normal repair was not deducted when determining the time for calculating the claim amount. Therefore, the Defendants refused to recognize the Auditing Report provided by Shenyue Shipping. The collegial panel held that: 1. Peng Yang was hired by Shenyue Shipping from Shenzhen Shipping on basis of bareboat chartering and thus was actually operated and managed by Shenyue Shipping. Shenyue Shipping is entitled to possess, operate, and benefit from Peng Yang and to any other rights and interests stipulated by law. When its rights to possess, operate, and benefit from Peng Yang is infringed by other parties, Shenyue Shipping shall have the right to claim against the infringer. Peng Yang was suspended from navigation due to the subject incident, which surely would cause loss for detention and maintenance fee. It is reasonable for Shenyue Shipping to claim for loss for detention and maintenance fee against the parties at fault in the subject incident. 2. Peng Yang was hired and operated by Shenyue Shipping which holds all the basic materials relating to the income, cost, tax and business management fee for calculation of the loss for detention and maintenance fee. Therefore, it is reasonable for Shenyue Shipping to provide the auditing materials. 3. After accepted to be entrusted to carry out auditing of the loss for earnings and maintenance fee of Peng Yang due to the subject incident, Xingyue Accountants arranged personnel to look up and collect the account books of Shenyue Shipping and materials concerning the income, cost and taxes obtained and incurred by Peng Yang during the two voyages before the subject incident and two after, and to carry out auditing based on the aforesaid information. Xingyue Accountants complied with relevant auditing procedures. 4. Xingyue Accountants has already deducted relevant operation taxes and management fees based on appropriate apportionment while calculating the net operating profits. The depreciation of Peng Yang was also apportioned in the management fee. 5. Peng Yang had been suspended from navigation for 88.08 days since 1319 hrs on 23rd August 2004 to 1520 hrs on 19th November 2004 when Peng Yang took her first departure after repair. The time of handling the incident and repair is 85.08 days after deducting three days of unloading. The Defendants argued that the time of normal repair should also be deducted from the period of suspension, but failed to provide supportive evidence. Therefore, such argument should not be supported. In summary, the auditors from Xingyue Accountants who issued the Auditing Report have relevant professional qualifications, and carried out auditing according to relevant laws and regulations. There is no conflict between the Auditing Report and other evidence. Accordingly, the aforesaid Auditing Report shall be adopted. (V) Other Expenses 1. Lawyer Fee (1) On 27th October 2004, Shenyue Shipping paid lawyer fee in the amount of RMB8,280 to Guantao Shenzhen for entrusting the latter to send lawyers to participate in the discussion on the incident of Peng Yang. Guantao Shenzhen issued the invoice of the lawyer fee to Shenyue Shipping. (2) On 29th August 2004, Shenzhen Shipping and Zhong Lun Shenzhen concluded the Engagement Agreement. It is stipulated that Shenzhen Shipping entrusts Zhong Lun Shenzhen to deal with the legal issues relating to Peng Yang, and the lawyer fees for the non-litigious procedures shall be RMB130,000 and that for the litigious procedures shall be determined through negotiation. On 6th September, Shenzhen Shipping paid Zhong Lun Shenzhen the lawyer fee in the amount of RMB130,000, and Zhong Lun Shenzhen issued the invoice thereof to Shenzhen Shipping. (3) Shenzhen Shipping and Shenyue Shipping entrusted Holman Fenwick & Willan to deal with relevant legal issues in Hong Kong. On 16th September 2004, Shenzhen Shipping paid the lawyer fee in the amount of USD25,000 to Holman Fenwick & Willan through its subordinate company Shenzhen Peng Xing Shipping Ltd. On 20th June 2007, Shenyue Shipping paid Holman Fenwick & Willan the lawyer fee in the amount of USD20,863.75. According to the bills issued by Holman Fenwick & Willan to Shenyue Shipping in December 2006, Shenyue Shipping still should pay HKD112,195. However, Shenyue Shipping did not provide the payment voucher of the aforesaid lawyer fee in the amount of HKD112, 195. The Defendants claimed that the lawyer fee should be borne by the entrusting parties themselves in the Chinese judicial practice. The collegial panel held that the lawyer fees incurred in mainland China as claimed by Shenzhen Shipping and Shenyue Shipping lack of legal basis and shall not be supported. Shenzhen Shipping and Shenyue Shipping failed to provide evidence in support of the relevance between the subject case and the lawyer fees incurred in Hong Kong. Therefore, such expenses shall not be supported neither. 2. Shenzhen Shipping had paid HKD17,240 of notarial fees to Lo & Lo Solicitors & Notaries Public for handling the certification of evidence originated in Hong Kong. In particular, Shenzhen Shipping paid HKD7, 935 on 6th December 2006, HKD445 on 23rd December 2006, and HKD8, 860 on 26th October 2007. The Defendants claimed that the notarial fees incurred by handling the certification of evidence should be borne by the entrusting parties themselves in the Chinese judicial practice. The collegial panel held as follows: in accordance with the provisions of Article 11 of the Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures, if the evidence submitted by the parties concerned is originated in Hong Kong, Macao or Taiwan, relevant formalities shall also be gone through. The evidence provided by Shenzhen Shipping was formed in Hong Kong and thus relevant formalities shall be gone through. Therefore, Shenzhen Shipping’s claim for the notarial fees in the amount of HKD17,240 incurred by handling relevant formalities complies with the law and shall be supported. 3. For the purpose of determining the loss of earnings and maintenance fee of Peng Yang due to the subject incident, Shenyue Shipping entrusted Xingyue Accountants to carry out auditing of relevant expenses and paid the auditing fee in the amount of RMB8,000. On 9th November 2007, Xingyue Accountants issued the invoice of the aforesaid auditing fees. The Defendants claimed that the auditing fees incurred for collecting evidence by Shenyue Shipping should be borne by Shenyue Shipping itself. The collegial panel held that Shenyue Shipping entrusted Xingyue Accountants to carry out auditing for the purpose of determining the loss of earnings and maintenance fee caused by the subject incident, the cost and expenses of which are reasonable. Therefore, the aforesaid auditing fee in the amount of RMB8,000 shall be supported. 4. Shenyue Shipping had paid traveling expenses in the amount RMB51,457.83 for handling the subject incident (including RMB2,788 kept account on 14th September 2004 and RMB48,669.83 kept on account on 30th September 2004). On 30th November 2004, Shenyue Shipping paid RMB20,351 for the accommodation/entertaining fees incurred in the course of the repair of Peng Yang. The Defendants claimed that the traveling expenses and accommodation/entertaining fess arising from handling of the subject incident by Shenyue Shipping should be borne by itself. The collegial panel held that the arrangement of business travel by Shenyue Shipping for the purpose of handling the subject incident is reasonable and appropriate and thus the traveling expenses in the amount of RMB51, 457.83 arising therefrom shall be supported. However, Shenyue Shipping’s claim of the accommodation/entertaining fees into the range of compensation lack of evidence and shall not be supported. In summary, other reasonable expenses incurred by the incident of Peng Yang shall be RMB59, 457.83 and HKD17, 240. VI. Insurance Indemnification On 31st March 2004, Taiping Insurance issued to Shenyue Shipping the Insurance Policy for Coastal and Inland Water Vessels No.1205331022004000001 stipulating that: Shenyue Shipping is both the policy holder and insured; the name of vessel is Peng Yang; time insurance against total loss of coastal and inland water vessels to which the Insurance Clause of Coastal and Inland Water Vessels promulgated on 1st November 1996 by the People’s Bank of China shall apply; the insured value and amount are both RMB18,000,000; the insurance period shall be 12 months computed from 0000 hrs of 4th April 2004 to 0000 hrs of 3rd April 2005; insurance premium amounts to RMB504,000. According to the provisions of Article 1 of the Insurance Clause of Coastal and Inland Water Vessels, the total loss of the insured vessel caused by reasons, such as collision, contact, grounding and running on the rocky shoal, shall be indemnified by the insurer. According to the provisions of Item 1 of Article 7 thereof, the total loss of the insured vessel shall be indemnified based on the insured amount. Where the insured amount is more than the insured value, the indemnity shall be determined within the insured value. In line with the provisions of Article 9 thereof, in case of marine accident which involves the common safety of vessel, cargo and freight, the insurer shall only be responsible to indemnify the salvage fee in proportion to the ratio that the salved vessel value bears to the total value of the salved vessel, cargo and freight. On 2nd April 2004, Shenyue shipping paid Taiping Insurance the insurance premium in the amount of 504,000, and Taiping Insurance issued the invoice thereof to Shenyue Shipping. On 17th May 2005, Shenyue Shipping filed a lawsuit requesting this court to order Taiping Insurance to pay it RMB18,000,000, the insured amount stipulated in the insurance contract and the interest of the amount of RMB12,988,506.86 and HKD1,336,979.80 paid by Shenyue Shipping, computed from the date of payment by Shenyue Shipping to the date of indemnity by Taiping Insurance. This court accepted the case. On 10th October, Shenyue Shipping applied for modifying its claims requesting this court to order Taiping Insurance to pay the insured amount of RMB18,000,000 according to the insurance contract and the interest of the amount of RMB16,842,503.06 and HKD1,336,979.80, computed from the date of payment by Shenyue Shipping to the date of indemnity by Taiping Insurance. On 29th August 2007, Shenyue Shipping and Taiping Insurance reached an settlement agreement stipulating that: Taiping Insurance pays Shenyue Shipping RMB7,700,000 in a lump sum as the full and final settlement of the dispute; After payment of the aforesaid RMB7,700,000, any dispute or outstanding issues between the parties with regard to Peng Yang arising from and/or that may arise out of the vessel insurance contract (including but not limited to any damage, loss, responsibility, expense or claim caused by the subject incident of Peng Yang including the salvage fees which has been or has not been, or which is or is not, or will or will not be held liable ) shall be immediately, completely, finally and thoroughly settled. On 3rd September, Taiping Insurance paid the compensation of RMB7,700,000 to Shenyue Shipping through China Merchants Bank, Shenzhen Branch, and Shenyue Shipping issued the receipt to Taiping Insurance. On 5th September, Shenyue Shipping issued the Letter of Subrogation to Taiping Insurance and agreed to transfer relevant rights and interests in relation to the paid insurance indemnity to Taiping Insurance who may file recourse claim against the parties liable. VII. Other Facts. The parties concerned agreed the law of the Mainland China shall apply to determine the merits of this case. The collegial panel holds as follows: I. Causes of Actions OOCL Hamburg did not directly contact with Peng Yang, but the Plaintiff claimed damages against the Defendants on the grounds that OOCL Hamburg was not manoeuvred properly or failed to comply with the rules for navigation, which caused losses of and damage to Peng Yang and the cargo and other properties she carried on board. In accordance with the provisions of Article 170 of the Maritime Code of the People’s Republic of China, the provisions of Chapter VIII shall apply in such circumstance. Therefore, it falls within the disputes over ship collision damages. II. Jurisdiction Pursuant to Item (1) of Paragraph 2 of Article 6 of the Special Maritime Procedure Law of the People’s Republic of China, a lawsuit brought on maritime tort may be, in addition to the provisions of Articles 19 to 31 of the Civil Procedure Law of the People’s Republic of China, under jurisdiction of the maritime court of the place of its port of registry. It is provided in Article 4 of the Interpretation of the Supreme People’s Court on the Application of the Special Maritime Procedure Law of the People’s Republic of China, the term “port of registry” as prescribed in Item (1) of Paragraph 2 of Article 6 of the Special Maritime Procedure Law of the People’s Republic of China refers to the port of registry of the defendant ship. Where the port of registry of the defendant ship is not within the People’s Republic of China and that of the plaintiff ship is within the People’s Republic of China, the case shall be under the jurisdiction of the maritime court of the place where the port of registry of the plaintiff ship is located. The port of registry of Peng Yang is Shenzhen which is under the jurisdiction of this Court. Therefore, this Court shall have the jurisdiction over the subject case. III. Applicable Law In the light of the provisions of Item 1 of Article 273 of the Maritime Code of the People’s Republic of China, the law of the place where the infringing act is committed shall apply to claims for damages arising from collision of ships. It is also provided in Article 187 of the Opinions of the Supreme People’s Court on Several Issues concerning the Implementation of the General Principles of the Civil Law of the People's Republic of China (For Trial Implementation), the lex delicti (law of the place where a tort is committed) shall include the lex loci delicti commissi (law of the place where a tort is committed) and the law of the place where the result of a tort took place. If the two places are different, the people’s court may choose to apply either law. In the subject case, the collision took place in waters of Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong SAR”), and the consequence took place in Shenzhen. The parties concerned did not refer to any sustentative law of Hong Kong SAR and agree to apply the law of the People’s Republic of China. Accordingly, the law of mainland China shall apply to this case. IV. Subjects of Litigation 1. In accordance with Article 4 of the Provisions of the Supreme People’s Court on Some Issues about the Trial of the Cases of Ship Collision Disputes, 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 charter period and the bareboat charter is registered according to law. National Australia Finance (Vessel Leasing No.2) Limited is the owner of OOCL Hamburg, and Orient Overseas Container Line (U.K.) Limited (OOCL) is the bareboat charterer thereof. The bareboat charter there between has already been registered according to law. Therefore, Orient Overseas Container Line (U.K.) Limited as the bareboat charterer shall be held liable for compensation for losses of and damage to Peng Yang and properties on board due to the misconduct of OOCL Hamburg. National Australia Finance (Vessel Leasing No.2) Limited shall not assume the compensation liability. 2. Shenzhen Shipping as the owner of Peng Yang has the right to claim damages in case of any infringement upon its property rights. As above mentioned, Shenyue Shipping chartered Peng Yang from Shenzhen Shipping based on a bareboat charter and actually controls, operates and profits from Peng Yang. Thus, Shenyue Shipping enjoys every right over Peng Yang that is protected by law. In accordance with provisions of Paragraph 2 and 3 of Article 117 of the General Principles of the Civil Law of the People’s Republic of China, anyone who damages the property of the state, a collective or another person shall restore the property to its original condition or reimburse its estimated price. If the victim suffers other great losses therefrom, the infringer shall compensate for those losses as well. Even though Peng Yang has not gone through the registration of bareboat charter, Shenyue Shipping shall have the right to claim damages against anyone who infringed its rights to possess, operate, and profit from Peng Yang. It is also provided in Article 4 of the Provisions of the Supreme People’s Court on Some Issues about the Trial of the Cases of Ship Collision Disputes, 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 charter period and the bareboat charter is registered according to law. Accordingly, the ship owner shall be exempted from compensation liability provided that the bareboat charter is registered according to law. However, the aforesaid provisions can not be interpreted as the bareboat charterer is not entitled to claim damages against the infringer without registration of the bareboat charter. Therefore, Shenzhen Shipping and Shenyue Shipping shall have the right to claim damages against OOCL based on their respective losses caused by the subject incident. 3. Shenyue Shipping has insured Peng Yang with Taiping Insurance Shenzhen Branch (“Taiping Insurance”) for fixed term insurance against total loss of vessels for coastal and inland waterways shipping. Taiping Insurance issued the Fixed Term Insurance Policy against Total Loss of Vessels for Coastal and Inland Waterways Shipping, and Shenyue Shipping paid relevant insurance premium. Taiping Insurance and Shenyue Shipping have concluded a ship insurance contract. After the subject incident, Taiping Insurance indemnified Shenyue Shipping by lump sum payment of RMB7,700,000 on the 3rd of September, 2007. In line with the provisions of Article 93 of the Special Maritime Procedure Law of the People’s Republic of China, where the occurrence of an insured event is caused by a third party, after having paid insurance indemnity to the insured, the insurer may subrogate the right of the insured to demand indemnity against the third party up to the limit of insurance indemnity. Accordingly, Taiping Insurance should have the right of subrogation against OOCL. V. Liability Apportionment 1. Peng Yang (1) At 1245 hrs on 23 August 2004, OOCL Hamburg and Peng Yang agreed that OOCL Hamburg would slow down and let Peng Yang pass the Ma Wan Fairway first. Therefore, Pilot B on board Peng Yang assumed that OOCL Hamburg would slow down and wait outside of the Ma Wan Service Area on the west of the anchored barge until Peng Yang passes this area. However, the said Pilot B and the Master of Peng Yang failed to keep cautious of such special situation and overly relied on their agreement when OOCL Hamburg failed to follow such agreement. Peng Yang violates the provisions of Paragraph 1 of Rule 2 of the International Regulations for Preventing Collisions at Sea, 1972 (COLREGS). (2) While OOCL Hamburg was approaching in the middle of the channel, Pilot B was aware of the rocky shoal nearby the starboard side of Peng Yang. He underestimated the risk and assumed that the vessel could avoid the rocky shoal and the close-quarters situation with OOCL Hamburg by making several times of small course alteration to port. Pilot B failed to correctly assess the influences of flows and depth of water, shallow water effect, bank effect and other circumstances, and failed to take precaution according to the ordinary practice of seaman as provided by the COLREGS. (3) Peng Yang failed to promptly slow down or even stop engine, go astern, drop anchor when necessary, or give warning to OOCL Hamburg, or take any other useful measures when she realized that there was not enough space for her to turn substantially to port for avoiding the shoal. As a result, Peng Yang grounded at the speed of 10 knots. This is in violation of the provisions regarding safe speed under Rule 6 of the COLREGS. (4) The Master and deck officers improperly shifted the entirety of their duty in navigation to the pilot when they were still obliged to monitor the position and movements of the vessel and to ensure the vessel’s safety. It constitutes a violation of the provisions on “Navigation with pilot embarked” of A-VIII/2 under the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978 (STCW78). 2. OOCL Hamburg (1) At 1245 hrs on 23 August 2004, OOCL Hamburg and Peng Yang agreed OOCL Hamburg would let Peng Yang pass the Ma Wan Fairway first, which means OOCL should have been waiting outside of the Ma Wan Service Area. However, OOCL Hamburg failed to comply with the agreement and to take proper precaution as per the ordinary practice of seaman as provided in Paragraph 1 of Rule 2 of the COLREGS. (2) OOCL Hamburg failed to navigate to the right of the channel, and indeed she proceeded in the middle of the channel, which restricted the space available for Peng Yang. It violates the provisions on “narrow channels” under Paragraph 1 of Rule 9 of the COLREGS. (3) OOCL Hamburg failed to carry out consistent observation of Peng Yang’s movements and was not aware of the difficulties she caused to other vessels by navigating in the middle of the channel, particularly when she was passing the anchored barge. She only focused on keeping distance with the barge at anchor, and failed to observe Peng Yang’s movements. It violates the provisions on “lookout” under Rule 5 of the COLREGS. In summary, the analysis of causes of the incident as issued by the Hong Kong Marine Department (“MARDEP”) is proper and consistent with the facts and should be recognized. The negligence committed by Peng Yang is the immediate cause of this incident so that Peng Yang should assume major liability thereof. OOCL Hamburg also contributed to the incident and should assume the secondary liability. According to their respective degree of fault, Peng Yang should bear 55% of liabilities and OOCL Hamburg should bear 45% of liabilities. VI. Damages In accordance with the provisions of Paragraph 1 and 2 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 faults; if the respective faults are equal in proportion or it is impossible to determine the extent of the proportion of the respective faults, the liability of the colliding ships shall be apportioned equally.” “The ships in fault shall be liable for the damage to the ship, the goods and other property on board pursuant to the proportion 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.” OOCL should bear 45% of the compensation liabilities towards Shenzhen Shipping and Shenyue Shipping based on the degree of her fault, the remaining 55% of liabilities should be assumed by the aforesaid companies themselves. According to the facts ascertained by the collegial panel, Shenzhen Shipping has sustained from the incident the loss of cargo in the amount of RMB1, 542,636.06 and the cost of handling notarization and authentication of evidence in the amount of HKD17, 240 (i.e. RMB16, 640.05 as calculated based on the middle exchange rate of 1:0.9652 between HKD and RMB on the day when such cost was incurred), totaling RMB1, 559, 276.11. Based on the proportion of liabilities that should be assumed by OOCL Hamburg, OOCL Hamburg should compensate Shenzhen Shipping RMB701, 674.25 and the interest thereof for the aforesaid losses. The interest should be computed from the day when the aforesaid losses and cost were incurred to the day of payment as determined by this Judgment on the basis of the current fund loan interest rate published by the People’s Bank of China in the corresponding period. The losses sustained by Shenyue Shipping due to the incident are as follows: 1. Salvage fee in the amount of RMB16,420,616.40 and HKD2, 886, 967.80 (of which HKD1, 550,000 is converted into RMB1, 649, 665 based on the middle exchange rate of 1:1.0643 between HKD and RMB on the day when such expense was incurred; HKD1,070,765 is converted into RMB1,135,974.59 based on the middle exchange rate of 1:1.0609 between HKD and RMB on the day when such expense was incurred; and HKD266, 202.80 is converted into RMB282, 467.79 based on the middle exchange rate of 1:1.0611 between HKD and RMB on the day when such expense was incurred, totally amount to RMB3, 068, 107.38), totaling RMB19,488,723.78. 2. Repair cost in the amount of RMB7, 471, 891.70. 3. Cost of cargo damage survey in the amount of RMB30,000. 4. Loss of earning in the amount of RMB3, 493, 720. 5. Cost of ship maintenance in the amount of RMB614, 601.39. 6. Other reasonable costs in the amount of RMB59, 457.83. The aforesaid losses and cost amount to RMB31, 158, 394.70. Based on the proportion of liabilities that should be assumed by OOCL Hamburg, OOCL should compensate Shenyue Shipping RMB8,769,925.70 and the relevant interest, of which RMB7,700,000 should be paid to Taiping Insurance based on its right of subrogation, and the interest shall be calculated from 3rd September 2007 until the day of payment determined by this Judgment. OOCL should make payment of the remaining amount of the salvage fee, i.e. RMB1,069,925.70, to Shenyue Shipping and the interest thereof computed from the day when the salvage fee was incurred until the day of payment determined by this Judgment. The interest of the aforesaid cost shall be calculated based on the current fund loan interest rate published by People’s Bank of China in the corresponding period. Based on the proportion of liabilities that should be assumed by OOCL Hamburg, OOCL shall compensate Shenyue Company for the cost of repair and cargo survey, loss for earning, ship maintenance and other reasonable cost in the amount of RMB5,251,351.91. The interest thereof shall be computed from the day when such loss or cost was caused until the day of payment determined by this Judgment and based on the current fund loan interest rate published by People’s Bank of China in the corresponding period. Accordingly, in accordance with the provisions of Paragraph 1 and 2 of Article 169 and Article 170 of the Maritime Code of the People’s Republic of China, the judgment is rendered as follows: I. The Defendant OOCL shall compensate the Shenzhen Shipping, for loss in the amount of RMB701,674.25 and the interest thereof. The interest of the compensation for cargo damage in the amount of RMB694,186.23 shall be computed from 1st November 2006 until the day of payment determined by this Judgment. The interest of the cost of notarization and authentication for evidence in the amount of RMB7,488.02 shall be computed from 26th October 2007 until the day of payment determined by this Judgment based on the current fund loan interest rate published by People’s Bank of China in the corresponding period. II. The Defendant OOCL shall compensate the Taiping Insurance for loss in the amount of RMB7,700,000. The interest thereof shall be computed from 3rd September 2007 until the day of payment determined by this Judgment based on the current fund loan interest rate published by People’s Bank of China in the corresponding period. III. The Defendant OOCL shall compensate Shenyue Shipping for salvage fee, cost of repair and cargo damage survey, loss for earning, ship maintenance fee and other reasonable cost totaling RMB6,321, 277.61. The interest of the aforesaid losses and expenses shall be computed from the day when such losses or expenses arose as follows: 1. Salvage fee in the amount of RMB127, 110.51, computed from 2nd October 2004; 2. Salvage fee in the amount of RMB17,100, computed from 10th October 2004; 3. Salvage fee in the amount of RMB37, 177.38, computed from 17th November 2004; 4. Salvage fee in the amount of RMB146, 188.57, computed from 19th April 2005; 5. Salvage fee in the amount of RMB742, 349. 25, computed from 4th July 2005; 6. Repair cost in the amount of RMB418, 842, computed from 21st November 2004; 7. Repair cost in the amount of RMB17,500.05, computed from 27th October 2004; 8. Repair cost in the amount of RMB4,500, computed from 17th November 2004; 9. Repair cost in the amount of RMB8,221.50, computed from 19th November 2004; 10. Repair cost in the amount of RMB1, 898, 073, computed from 23rd November 2004; 11. Repair cost in the amount of RMB49,500 computed from 20th December 2004; 12. Repair cost in the amount of RMB1,350, computed from 23rd December 2004; 13. Repair cost in the amount of RMB22,306.10, computed from 29th December 2004; 14. Repair cost in the amount of RMB81, 978.57, computed from 30th December 2004; 15. Repair cost in the amount of RMB83, 285.10, computed from 3rd February 2005; 16. Repair cost in the amount of RMB737, 844.30, computed from 9th March 2005; 17. Repair cost in the amount of RMB21,465, computed from 15th March 2005; 18. Repair cost in the amount of RMB17,485.65, computed from 30th April 2005; 19. Cost of cargo damage survey in the amount of RMB13,500, computed from 20th September 2005; 20. Loss of earning in the amount of RMB1,572,174 computed from 19th November 2004; 21. Ship maintenance fee in the amount of RMB 276,570.63 computed from 19th November 2004; 22. Travel expense in the amount of RMB23, 156.02, computed from 30th September 2004; 23. Auditing fee in the amount of RMB3,600 computed from 9th November 2007. The interest of the aforesaid losses or expenses shall be calculated until the day of payment determined by this Judgment based on the current fund loan interest rate published by People’s Bank of China in the corresponding period. IV. The claims brought by Shenzhen Shipping, Shenyue Shipping and Taiping Insurance against National Australia Finance (Vessel Leasing No.2) Limited are dismissed. V. Other claims brought by Shenzhen Shipping and Shenyue Shipping are dismissed. The litigation fee is RMB195,410, of which the amount of RMB108,228 shall be borne by Shenyue Shipping, and the amount of RMB87,182 shall be borne by OOCL. The litigation fee in full has been prepaid by Shenyue Shipping, and this Court will not make refund to Shenyue Shipping. The OOCL shall directly make payment of its share to Shenyue Shipping. The aforesaid obligation on money payment shall be fulfilled within 10 days upon the effectiveness of this Judgment. In case of failure of payment within the period specified in this Judgment, the failing party shall double pay the interest for the delayed period in accordance with Article 229 of the Civil Procedural Law of the People’s Republic of China. In case of dissatisfaction with this Judgment, the Plaintiffs, Shenzhen Shipping, Shenyue Shipping, and Taiping Insurance S, may within 15 days, while the Defendants, National Australia Finance (Vessel Leasing No.2) Limited and OOCL, may, within 30 days upon the service of this Judgment, submit a Statement of Appeal to this Court with copies according to the numbers of the other parties to the case, appealing with the Higher People’s Court of Guangdong Province. Presiding Judge: Chen Bin Judge: Wu Zili Judge: Li Lifei (Official Chop of Guanghzou Maritime Court Affixed) 14th June 2011 Certified to be true to the original Clerk Zeng Huifen The translation is provided by Wang Jing & CO.

Guangzhou Maritime Court of People’s Republic of China Civil Judgment (2006)GHFCZ No.422 (2007)GHFCZ No.269 Plaintiff (Defendant in the counterclaim)：Textainer Equipment Management Limited Address：Century House, 16 Par-La-Ville Road Hmilton HM, Bermuda Legal Representative：Dudley R. Cottingham, Chairman of Board Agent ad litem：ZHAO Shuzhou, attorney from Wang Jing & Co., Agent ad litem：HAN Yongdong, attorney from Wang Jing & Co., Defendant：Shenzhen Lianfu Transportation Industrial Co. Ltd. Address：Rm.18-20, F/27, Southern International Plaza B, No.3013, Yi Tian Road, Futian District, Shenzhen City, Guangdong Province, China Legal Representative：LU Xun, Chairman Agent ad litem：FU Qi, legal counsel Agent ad litem：LIU Yang, legal counsel Defendant (plaintiff in the counterclaim)：Shenzhen Agricultural Products Transportation Co., Ltd. Address：Buji Agricultural Products Wholesale Market, Luohu District, Shenzhen City, Guangdong Province, People’s Republic of China Legal Representative：LENG Siguang, Chairman Agent ad litem：ZHENG Tao, attorney from Guangdong Chenggong Law Firm Agent ad litem：ZHONG Songmin, attorney from Guangdong Chenggong Law Firm The third party: CHEN Yao, Male, Han Nationality, born on 16 August 1972, address: F/21, Tian Le Building, Bu Ji Road, Luohu District, Shenzhen, Guangdong Province, China With respect to the case of dispute over marine container lease agreement filed by the Plaintiff, Textainer Equipment Management Limited (hereinafter referred to as “Textainer”) against Shenzhen Lianfu Transportation Industrial Co. Ltd. (hereinafter referred to as “Shenzhen Lianfu”) and Shenzhen Agricultural Products Transportation Co., Ltd. (hereinafter referred to as “Shenzhen Agricultural Products”) and the case of counterclaim over guaranty contract dispute filed by the Defendant, Shenzhen Agricultural Products, against the Plaintiff, Textainer, this Court accepted them on 16 November, 2006 and 27 June, 2007 respectively and formed a collegial panel in accordance with the law for trial. Shenzhen Agricultural Products raised an objection to the jurisdiction of this court over the subject case within the period for filing defense. Through investigation, on 13 December, 2006, this Court ruled to dismiss the objection raised by Shenzhen Agricultural Products pursuant to the law. Shenzhen Agricultural Products was dissatisfied and filed an appeal. The Higher People’s Court of Guangdong Province on 15 May, 2007 overruled the appeal and sustained the original ruling. On 30 July, this Court approved the application filed by CHEN Yao, who is not involved in this case, to participate in court trial of the cases as a third party. On 6 November, this Court summoned the parties hereto to carry out pre-trial evidence exchange and conducted an open trial on both cases. Mr. ZHAO Shuzhou, agent ad litem of Textainer, Mr. ZHENG Tao and Mr. ZHONG Songmin, agents ad litem of Shenzhen Agricultural Products and Mr. CHEN Yao, the third party, appear before this court to participate in the court trial; Shenzhen Lianfu, after being duly summoned, failed to attend the trial without justified reasons. The trial of this case is hereby closed. The Plaintiff alleged that: on 16 November, 2005, a Container Lease Agreement was concluded by and between Textainer and Shenzhen Lianfu, under which Textainer should lease out to Shenzhen Lianfu 350 containers, including 200 dry-cargo containers of 20 feet (hereinafter referred to as standard containers) and 150 high-cube dry-cargo containers of 40 feet (hereinafter referred to as high-cube containers), at a daily rental of USD1.22 and USD2.08 respectively; Shenzhen Lianfu should, within 30 days of the date of the invoice issued by Textainer per month, pay the amount indicated on the invoice. To ensure the performance of the Lease Agreement, Shenzhen Agricultural Products signed a Guaranty Agreement on 16 November 2005, to guarantee unconditionally to Textainer the payment of any debt which may incur under the Lease Agreement. Due to the fact that Shenzhen Lianfu had failed in paying to Textainer any rental of the leased containers as agreed in the Lease Agreement since March 2006, Textainer terminated the Lease Agreement on 15 September of the same year and demanded Shenzhen Lianfu to promptly redeliver the leased containers and pay the outstanding rental of leased containers and other relevant expenses; besides, Textainer had also demanded Shenzhen Agricultural Products to bear joint and several liabilities for payment of the outstanding rental of containers and other relevant expenses but Shenzhen Agricultural Products refused to assume any liability. The failure of fulfillment of relevant obligations under the Lease Agreement and the Guaranty Agreement by both Shenzhen Lianfu and Shenzhen Agricultural Products infringeD on the legitimate rights of Textainer. The court was requested by Textainer to order: 1. Shenzhen Lianfu and Shenzhen Agricultural Products to bear joint and several liability for compensating Textainer for the outstanding rental of containers and other relevant expenses at a total amount of USD640,556.08, plus interest thereof; 2. Shenzhen Lianfu and Shenzhen Agricultural Products to bear all litigation fees and other legal fees in relation to this case. On 23 October, 2007, Textainer applied for modifying the first item of the above litigation requests as follows: to order Shenzhen Lianfu and Shenzhen Agricultural Products to bear joint and several liability for compensating Textainer for the outstanding rental of containers at an amount of USD353,960.57 and other relevant expenses (including loss of rental amounting to USD305,467.08 and service fee of USD48,463.49 calculated till 23 October 2007) as well as a service fee calculated from 24 October, 2007 till the day of actual payment (at an annual interest rate of 18% of the outstanding amount) plus corresponding interest of the aforesaid amounts. The Plaintiff provided the following evidences within the period of adducing evidence: 1.Notarized Container Lease Agreement; 2.Guaranty Agreement; 3.delivery certifications of and gate-out records of 200 standard containers of 20 feet and 100 high-cube containers of 40 feet; 4. correspondences on delivery of 50 containers of 40 feet by Textainer and those exchanged between Textainer and Shenzhen Lianfu; 5.Lawyer’s Letter issued on 7 August 2006 by Textainer to Shenzhen Lianfu and Shenzhen Agricultural Products; 6. Lawyer’s Letter issued on 15 September 2006 by Textainer to Shenzhen Lianfu and Shenzhen Agricultural Products; 7. correspondences on redelivery of 4 high-cube containers of 40 feet between Textainer and Shenzhen Lianfu and Equipment Interchange Receipts; 8. correspondences on redelivery of 2 standard containers of 20 feet and 4 high-cube containers of 40 feet between the Container Yard and Textainer /Shenzhen Lianfu; 9.correspondences on redelivery of 107 standard containers of 20 feet and 7 high-cube containers of 40 feet between the Container Yard and Textainer/Shenzhen Lianfu; 10.Equipment Interchange Receipts for redelivery of 4 high-cube containers of 40 feet; 11.Damage Assessment Form; 12.Notarized correspondences on confirmation of container repair fees between the Container Yard and Shenzhen Lianfu; 13.Notarized statements, instructions on collecting containers, and Equipment Interchange Receipts; 14.Notarized Damage Assessment Form; 15.Notarized correspondences on confirmation of container repair fees between the Container Yard and Shenzhen Lianfu; 16.Notarized statements, records of the Container Yard and correspondences provided by Shenzhen Lianfu; 17.Invoices of Rental; 18.Invoices of Repair Fees; 19.Invoices of Replacement; 20.Invoice of Trailer Fees; 21.information announced by the Bureau of International Container Registration. The Defendant Shenzhen Lianfu defended in writing that: 1.Shenzhen Lianfu has kept redelivering the leased containers and paying for the rental thereof. The amount of outstanding rental and other relevant expenses owed by Shenzhen Lianfu is far less than the amount claimed by Textainer. All the containers leased-in by Shenzhen Lianfu have been redelivered and the outstanding amount has been substantially paid. Shenzhen Lianfu agreed to settle the dispute out of court with Textainer on the conditions that the outstanding amount should be correct or substantially correct and Shenzhen Agricultural Products was not held liable; 2. As stipulated in Paragraph (K) of Article 17 of the Container Lease Agreement, the Agreement shall be interpreted pursuant to the laws of the State of California USA; this case shall be governed by the laws of the State of California USA. Shenzhen Lianfu didn’t agree to change the governing law; 3. The rental income earned by Textainer from Shenzhen Lianfu has neither been taxed within the territory of China nor been withheld by Shenzhen Lianfu for tax payment; Textainer signed the Lease Agreement in the name of a foreign company and then commissioned a domestic Chinese enterprise to perform the Agreement in China before collecting the income through a Canadian bank aiming to evade taxes in China; therefore, the Lease Agreement shall be deemed as an invalid contract; 4. ZHANG Kai, general manager of Shenzhen Lianfu, told a lie when the person in charge of Shenzhen Agricultural Products was absent; he took advantage of the fact that CHEN Yao, keeper of the company’s official seal, couldn’t understand English, and mislead Chen Yao to believe that the Guaranty Agreement was the one which was to be signed for guaranteeing the contract between Shenzhen Lianfu and Xiamen Hongxin Development Container Leasing Co., Ltd., thus deceiving CHEN Yao into affixing the official seal on the Guaranty Agreement involving in this case, and also forged CHEN Yao’s signature on the Guaranty Agreement. Textainer failed to confirm the signature with Shenzhen Agricultural Products. Shenzhen Agricultural Products was made the guarantor of Shenzhen Lianfu without knowledge of the actual circumstances. Shenzhen Lianfu expressed its apologies for any harm incurred to Shenzhen Agricultural Products and the third party CHEN Yao. The Defendant Shenzhen Lianfu didn’t provide any evidential material within the period of adducing evidence. The Defendant Shenzhen Agricultural Products defended that: 1. The Lease Agreement involved in this case was actually a financial lease contract. Textainer was unqualified to conduct the business operation activities thereunder in Mainland China; judging from performance of the Agreement by both parties thereto, evasion of taxes in China are involved and thus the Lease Agreement shall be deemed as an invalid contract; as provided for in the PRC Guaranty Law, if the master contract is invalid, the guaranty contract shall also be invalid. 2. The amount claimed by Textainer is inconsistent with the facts. Shenzhen Agricultural Products affirmed with ZHANG Kai, who was from Shenzhen Lianfu and handled conclusion of the Agreement, that the amount owed by Shenzhen Lianfu was less than the amount claimed by Textainer. 3. The Guaranty Agreement in this case was concluded through malicious and fraudulent means by Textainers and ZHANG Kai, general manager of Shenzhen Lianfu and has not been approved by the State Administration of Foreign Exchange; therefore, it is invalid or voidable. There is no fault on the part of Shenzhen Agricultural Products who thus shall not be held liable therefor. 4. Even though the Agreement is valid, the security thereunder is provided in a general form. Shenzhen Agricultural Products has the right of discussion and is entitled to refuse assuming guaranty liabilities. To sum up, the Court was requested to dismiss all litigation requests by Textainer against Shenzhen Agricultural Products. The Defendant Shenzhen Agricultural Products provided the following evidential materials within the period for adducing evidence: 1. Customer Advice；2. Phone Calls Records. The third party CHEN Yao alleged that: Shenzhen Lianfu deceived me into affixing the seal on the Guaranty Agreement by taking advantage of the facts that: I couldn’t understand English; Shenzhen Agricultural Products had previously dealt with a similar business requiring provision of security; and I trusted ZHANG Kai, general manager of Shenzhen Lianfu. The official seal was affixed thereon under the circumstance that the third party was deceived. I agreed upon the opinions of defense by Shenzhen Agricultural Products. The Plaintiff in the counterclaim “Shenzhen Agricultural Products” counterclaimed that: On 19 August 2005, with respect to the container lease transaction conducted between Shenzhen Lianfu and Xiamen Hongxin Development Container Leasing Co., Ltd. (hereinafter referred to as Hongxin), Shenzhen Agricultural Products issued a letter of guarantee to guarantee Shenzhen Lianfu’s contract obligation. On 16 November, ZHANG Kai, general manager of Shenzhen Lianfu, lied that the Guaranty Agreement in this case was an Annex in English to the Container Lease Contract concluded with Hongxin and that “I forgot to submit this Annex together with the original Contract to LIN Zhihua, general manager, for approval and signature; now the business urgently requires a signature but Manager LIN is absent”. CHEN Yao, keeper of the official seal of Shenzhen Agricultural Products was requested to affix the seal onto the Guaranty Agreement which was entirely in English and beyond CHEN Yao’s understanding. CHEN Yao knew that LIN Zhihua had not long ago reviewed and approved the Container Lease Contract concluded with Hongxin, and thus believed what ZHANG Kai said and affixed the official seal onto the Guaranty Agreement without signing thereon. Shenzhen Agricultural Products didn’t know about the existence of the Guaranty Agreement until 7 August, 2006 when it received the Lawyer’s Letter sent by the agent ad litem of the Plaintiff demanding Shenzhen Agricultural Products to jointly and severally assume liabilities for outstanding rental of containers owed by Shenzhen Lianfu. On 9 August, Shenzhen Agricultural Products urgently submitted a report on the situations to its parent company Shenzhen Agricultural Products Holdings Ltd. (hereinafter referred to as “Agricultural Products Holdings”), a state-owned assets administration entity at a higher level, and subsequently provided it with further information. The company seal of Shenzhen Agricultural Products on the Guaranty Agreement was affixed as a result of deception through malicious and fraudulent means by Textainer and Zhenzhen Lianfu and was not the true intention of Shenzhen Agricultural Products. Pursuant to the provision of Paragraph 2, Article 54 of the Contract Law of the People’s Republic of China and Paragraph 3, Article 58, and Paragraph 1 Article 59 of the General Principles of the Civil Law of the People's Republic of China, Shenzhen Agricultural Products is entitled to request the court to annul the Guaranty Agreement. The third party CHEN Yao’s act of sealing without authorization directly led to Textainer’s initiation of lawsuits against Shenzhen Agricultural Products. To respond to the lawsuit initiated by Textainer, Shenzhen Agricultural Products has spent RMB2,400 for translation, RMB780 for notarization and RMB251 for searching industrial and commercial information. The court was requested to annual the Guaranty Agreement, confirming that the Agreement is invalid, and order the Defendant in the counterclaim “Textainer” and the third party CHEN Yao to jointly and severally compensate for the defense costs incurred from Shenzhen Agricultural Products’ responding to the lawsuit in the amount of RMB3,431 and bear the litigation fee for counterclaim. The Plaintiff in the counterclaim, Shenzhen Agricultural Products provided the following evidential materials within the period of adducing evidence for counterclaim: 1.Statement of Facts written by the third party CHEN Yao; 2.Situation Report submitted by Shenzhen Agricultural Products to its superior entity; 3.Container Lease Agreement, Supplementary Agreement thereto and Warranty entered into by and between Hongxin and Shenzhen Lianfu; 4.Civil Judgment (2006)XHFSCZ No.274 rendered by Xiamen Maritime Court; 5.Invoice of Defense Costs; 6.Guaranty Agreement; 7. Police Report and Acknowledgement Receipt of Police Report; 8.Customer Call Records; 9.Graduation Certificate of CHEN Yao; 10.Official Seal Comparison Table and Attachment thereto. The Defendant in the counterclaim, Textainer defended that: the seal affixed onto the Guaranty Agreement was the official seal of Shenzhen Agricultural Products; Shenzhen Lianfu was the subsidiary of or controlled subsidiary of Shenzhen Agricultural Products, thus Shenzhen Agricultural Products should have had knowledge of all business activities conducted by Shenzhen Lianfu. There was no evidence available in this case to prove that Shenzhen Agricultural Products had disapproved the act of providing security or that the Guaranty Agreement had been sealed through coercion. 2. Even though the allegation by Shenzhen Agricultural Products that the employee wouldn’t have affixed the seal thereon if he could understand English was true, it shall not prejudice the legal effect of the official seal onto the Guaranty Agreement and liabilities arisen from the sealing shall be borne by Shenzhen Agricultural Products. To sum up, the Guaranty Agreement was legitimate and valid and the court was requested to dismiss the counterclaim filed by Shenzhen Agricultural Products against Textainer. The third party CHEN Yao alleged that: the third party was deceived into affixing the seal onto the Guaranty Agreement and shall not be held liable for the defense costs incurred by Shenzhen Agricultural Products. The third party CHEN Yao didn’t provide any evidential material within the period of adducing evidence. Shenzhen Lianfu, after being summoned, refused to attend the trial without justified reasons and shall be deemed as having given up its right of cross-examination on evidence and making defense. Based on the evidences provided by Textainer and through hearing and cross-examination, the collegial bench ascertains the following: Shenzhen Agricultural Products and CHEN Yao raised objections to Evidences No.1-3, Evidence No.5, Evidence No.6, Evidence 10, Evidence No.11 and Evidences No.13-16 provided by Textainer without presenting any sufficient evidences to the contrary. In accordance with the provisions of Paragraph (1), Article 70 of Some Rules of the Supreme People's Court on Evidence in Civil Procedures (hereinafter referred to as “Evidence Rules”), the truthfulness of the above 11 evidences provided by Textainer are confirmed. Evidences No.4, Evidences No.7-9, Evidences No.12, Evidence No.17-21 provided by Textainer could be cross-proved by Evidences 1-3, Evidence No.5, Evidence No.6, Evidence No.10, Evidence No.11 and Evidences No.13-16 provided by Textainer; Shenzhen Agricultural Products and CHEN Yao raised objections thereto but failed to provide any sufficient evidences to the contrary. In accordance with the provisions of Paragraph (1) of Article 72 of the Evidence Rules, the truthfulness of the above 10 evidences provided by Textainer is admitted. Based on the evidences provided by Shenzhen Agricultural Products and through hearing and cross-examination, the collegial bench makes the following ascertainments: The third party CHEN Yao affirmed the truthfulness of Evidence No.1 “copy of Customer Advice” provided by Shenzhen Agricultural Products; Textainer denied the truthfulness thereof on the grounds that it is only a duplicate copy without the original for verification. The collegial bench holds that the aforesaid evidence shall not be ascertained as true in the absence of its original or any other evidence in corroboration thereof. The third party CHEN Yao affirmed the truth of Evidence No.2 “Phone Calls Records” provided by Shenzhen Agricultural Products; while Textainer denied the truthfulnes thereof by the reason that the recording had not been consent by the party receiving the calls. The collegial bench holds that the aforesaid phone calls records have neither infringed on the legitimate rights and interests of the receiving party nor violated prohibitive provisions of laws, and thus shall be ascertained as true. The truthfulness of the Counterclaim Evidences No.1, No.3-6 and No.9 provided by Shenzhen Agricultural Products has not been objected by the third party CHEN Yao. In accordance with the provisions of Paragraph 1, Article 72 of the Evidence Rules, the aforesaid 6 evidences provided by Shenzhen Agricultural Products shall be ascertained as true. The Counterclaim Evidences No.2, No.7, No.8 and No.10 provided by Shenzhen Agricultural Products could be cross-proved by other evidences provided by the same company; the third party CHEN Yao raised no objection thereto while Textainer has an objection thereto without providing any sufficient evidence to the contrary. In accordance with the provisions of Paragraph 1, Article 72 of the Evidence Rules, the aforesaid 4 evidences provided by Shenzhen Agricultural Products shall be ascertained as truthful. Based on the above analysis and ascertainments, and taking into consideration of the hearing situations, the collegial bench ascertains the following facts: 1. Facts about the Container Lease Agreement On 16 November, 2005, a Container Lease Agreement was concluded by and between Textainer and Shenzhen Lianfu which was signed by ZHANG Kai, general manager of Shenzhen Lianfu, and affixed with the official seal of Shenzhen Lianfu; under the Agreement, Textainer is the Lessor and Shenzhen Lianfu is the Lessee. As stipulated in Article 1 of the Agreement, the “Redelivery Period” refers to the period specified in Annex 1 during which, after termination of the Agreement, the Lessee remains liable for paying the rental for the leased-in containers at an agreed rate until the leased containers are actually redelivered; the “Handling Charges” means charges levied by Lessor based upon movement of the Containers into and out of Lessor’s depot; “In Service Charges” refers to all charges incurred in ports, depots, storage areas or otherwise arising out of the use of the Containers, including without limitation, customs charges, wharf fees, all taxes, fees, penalties and charges levied on or in connection with the Containers subsequent to delivery, including without limitation, property, sales, use and all further government levies, fees or charges, including without limitation, fines, penalties and interest thereon; “Location Charges” means charges, including but not limited to pick-up, drop-of, off-hire Service, Direct Interchange and handling Charges levied by Lessor whenever any Container is delivered from or returned to a Lessor’s depot or to another lessee; “On-Hire Date” means the date upon which any Container is delivered to the Lessee by Lessor or Lessor’s agent; “Return Date” means the date of physical return of any Container to a depot designated by Lessor. According to Clause 5 of the Agreement, after the return of the leased containers, the Lessee shall be responsible for any container repair expenses under Clauses 9 & 10. Clause 6 of the Agreement provides that payment of all charges must be made in accordance with instructions state on each invoice issued by Lessor. All charges invoiced by Lessor are due and payable within 30 days from the date of each invoice. If Lessor’s invoice is not paid when due, Lessor may charge, as additional rental, a service charge at the rate of 1% per month (18% per annum) on the unpaid balance. Lessor’s depots may mail or dispatch to Lessee invoices for repair and other charges for the containers. All charges invoiced by Lessor’s depots are due and payable to such depots within 30 days from the date of each invoice. If such invoice is not paid when due and Lessor is required to pay such invoice to its depot on behalf of Lessee, Lessor may charge Lessee, as additional rental, a service charge at the rate of 1.5% per month (18% per annum) on the unpaid balance: (a) Rental Handling and Location Charges. During the Term, Lessee will be invoiced on a monthly basls for specified Rental, Handling and Location Charges; (b) Repair Charges. If repairs are required to Containers pursuant to either Section 9 or 10 of this lease, and Lessee fails to make such repairs, Lessor will charge Lessee and Lessee will pay Lessor all costs and expenses incurred by Lessor in making such repairs; (c) Replacement Value. In the event thar Lessee shall become responsible under the Lease for the Replacement Value of Containers, Lessor will charge Lessee, and Lessee will pay Lessor for the Replacement Value of such Containers; (d) In-Service Charges. During the Term, Lessee will be responsible for, and shall pay directly, all In-Service Charges. Clause 9 of the Lease Agreement stipulates that Lessee shall, at its sole expense, keep the containers free from damage, and maintain the containers in good order and repair, and shall be liable for damage suffered by containers before they are returned. Clause 10 of the Lease Agreement stipulates that Lessee is liable for all loss and Damage to the Containers subsequent to delivery and prior to return to Lessor, regardless of when such loss or damage may be discovered. Lessee is obligated to pay all Rental Charges on lost or damaged Containers until the Off-hire Date of each Container: (a) If a Container is lost, stolen or, in Lessor’s sole judgment, damaged beyond economic repair while on lease to Lessee, Lessee shall pay to Lessor the Replacement Value for such Container in accordance with the provisions of the Lease. Loss of a Container includes the Container being held by a third party (including, but not limited to, a governmental entity) after expiration or termination of this Lease with respect to such Container and Lessee’s inability or unwillingness to return the Container to Lessor within 60 days after the termination or expiration of the Lease with respect to the Container. Should Lessee return a Container to Lessor after having paid the Replacement Value for such Container to Lessor, Lessor will such Replacement Value to Lessee, net of any Rental Charges and other charges due on such Container due to such Container from its Off-hire Date; (b) If a Container is returned to Lessor with Damage, Lessor shall, in its sole discretion, determine whether it is economically feasible to repair such Container. Clause 14 of the Lease Agreement stipulates that: (a) if the Lessee shall fail to pay any Rental Charge, Repair Charge, location Charge or other charges, and such failure shall continue for 10 days or more from the date such payment first came due, the Lessee shall be regarded to be in default; (b) upon the occurrence of any event of default, and at any time thereafter so long as the same shall be continuing, Lessor may forthwith, by notice in writing to the Lessee, declare this Lease to be in default and may exercise any permitted remedy at law or equity, including: to accelerate all rental charges for the full term to and including the return dates set forth in the Lease Agreement, causing these Rental Charges to become due and payable immediately for all containers; terminate this Lease Agreement with respect to all or any of the containers, whereupon, this Lease shall, except as otherwise provided in Section 2, terminate and Lessee shall be bound to return any Container in its possession as soon as possible after termination, in a state of repair satisfactory to Lessor in Lessor’s absolute discretion, and to pay within the same time all rental and other charges due under the Lease; if the Lessee failed to return the containers within 60 days of the termination of this Lease, the loss of such containers shall be irrebuttably presumed and Lessee shall pay the Replacement Value therefore, plus USD400 per container for relocation/positioning charges. Schedule 1 of the Lease Agreement stipulates that Textainer shall lease out minimum 350 containers to Shenzhen Lianfu, including minimum 200 standard containers of 20 feet and minimum 150 high-cube containers of 40 feet at a daily rental rate of USD1.22 and USD2.08 respectively; 200 standard containers of 20 feet and 100 high-cube containers of 40 feet shall be delivered in Shanghai and another 50 high-cube containers of 40 feet shall be delivered in Shenzhen; the term of Schedule 1 to the Agreement shall be effective for five years commencing from the date of pick-up, for each Container, except that all claims and liabilities respecting each such Container arising out of acts and omissions occurring during the Term shall survive any termination of the Lease Agreement; upon termination of Schedule 1 to the Lease Agreement, Lessee shall pay to Lessor the amount of USD1.00 for each Container, after which Container shall become the property of the Lessee; each container to be leased for a minimum period of five years commencing from the date of pick-up (“Minimum Term’); the replacement value of each container shall be equal to any and all unpaid rental payments plus USD1.00; during the Minimum Term, Lessor shall invoice Lessee monthly in advance for the minimum quantity specified herein whether or not such Containers are actually on lease. Schedule 2 to the Lease Agreement stipulates that the Lessor shall not provide container damage protection plan coverage under the terms of the Agreement. Schedule 3 to the Lease Agreement stipulates that handling fee for depot movement shall be USD15 per 20 fee container and USD25 per 40 fee container. 2. Facts about the Guaranty Agreement On 16 November, 2005, Shenzhen Agricultural Products signed a Guaranty Agreement which was accepted by Textainer. Clause 1 of the Agreement stipulates Shenzhen Agricultural Products unconditionally guarantees to Textainer (hereinafter called “Obligee”), the payment of any and all indebtedness of Shenzhen Lianfu (hereinafter called “Obligor”) to Obligee that arise due to the Container Lease Agreement. Clause 2 stipulates that should Obligor fail to perform any of its obligations or pay any of its indebtedness to Obligee, Guarantor shall forthwith, and in not more than 10 days after receipt of demand by Obligee: (a) pay to Obligee all sums due and payable by Obligee; and (b) perform all outstanding obligations of Obligor under the Lease Agreement and continue to do so until Obligor’s default thereunder has been remedied. Clause 3 stipulates Guarantor further agrees that Guarantor or Obligor shall have become insolvent or bankrupt, or shall have made an assignment for the benefit of their creditors, or there shall have been appointed a trustee or receiver of Guarantor or Obligor for all or a substantial part of either Obligor’s or Guarantor’s property, or any case or proceeding shall have been commenced or other action taken by or against Guarantor or Obligor in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition or readjustment or other similar act or law of any jurisdiction now or hereafter existing, or there shall have been issued a warrant of attachment, execution, distraint or similar process against any substantial part of the property of Guarantor or Obligor, and any such event shall have continued for 60 days without being dismissed, bonded or discharged, then any and all of Guarantor’s obligations hereunder shall, at Obligee’s option, forthwith become due and payable without notice. Clause 5 of the Guaranty Agreement stipulates that Guarantor waives its right to revoke or terminate this guaranty at any time with respect to future obligations of Obligee. Clause 6 of the Guaranty Agreement stipulates that the obligations of Guarantor hereunder are independent of the obligations of Obligor, and a separate action or actions may be brought and prosecuted against Guarantor whether action is brought against Obligor or whether Obligor be joined in any such action or actions. Guarantor waives, to the fullest extent permitted or the enforcement of this agreement, the benefit of any statute of limitations affecting their liability under this agreement or the enforcement of this agreement. Clause 8 of the Guaranty Agreement stipulates that it is not necessary for the Obligee to inquire into the capacity or powers of Obligor of the officers, directors, partners, or agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance on the professed exercise of those powers shall be guaranteed under this agreement. Clause 10 of the Guaranty Agreement stipulates that Guarantor waives any right to require Obligee to (a) proceed against Obligor; (b) proceed against or exhaust any security held from Obligor; or (c) pursue any other remedy in Obligee’s power whatsoever. Guarantor waives any defense base on or arising out of any defense of Obligor other than payment in full of the indebtedness, including without limitation any defense based on or any part thereof from any cause, or the unenforceability of the indebtedness or any part thereof from any cause, or the cessation from any cause of the liability Obligor other than payment in full of the indebtedness. The aforesaid Guaranty Agreement is affixed with the company seal of Shenzhen Agricultural Products, and there is the hand-written name “CHEN YAO” at the place of signature, job title General Manager. The Container Lease Agreement concluded between Textainer and Shenzhen Lianfu on 16 November 2005 was made an annex to the Guaranty Agreement. On 27 June, 2007, Shenzhen Agricultural Products applied with this Court for verifying the handwriting of the signature “CHEN Yao” on the Guaranty Agreement. The aforesaid Guaranty Agreement has not been submitted to the State Administration of Foreign Exchange for approval or registration. As stated in the Situation Report submitted by Shenzhen Agricultural Products to its superior entity: on 16 November, 2005, ZHANG Kai, general manager of Shenzhen Lianfu, brought a document entirely in English, saying that the document is an English Annex to the Container Lease Agreement concluded with Hongxin and that he forgot to submit this Annex together with the original Lease Agreement to LIN Zhihua, general manager of Shenzhen Agricultural Products, for approval and signature, requesting CHEN Yao, keeper of the official seal of Shenzhen Agricultural Products, to affix the seal onto the English document. CHEN Yao couldn’t understand the English document brought by ZHANG Kai; however, because Shenzhen Agricultural Products who is Shenzhen Lianfu’s holding company, should support the business development of Shenzhen Lianfu, besides, CHEN Yao knew that the general manager LIN Zhihua had indeed examined and approved the Container Lease Agreement concluded with Hongxin, CHEN Yao thus believed what ZHANG Kai said and affixed the official seal onto the Guaranty Agreement yet without signing thereon. On 9 August 2006, Buji Agricultural Products Wholesale Center of Shenzhen Agricultural Products Holding Ltd. (hereinafter referred to as “Agricultural Products Holdings”) (the Center has no legal personality but shares the same personnel with Shenzhen Agricultural Products under a different name) submitted to its superior entity Agricultural Products Holdings a Latest Situation Report on Guaranty Provided Shenzhen Agricultural Products for Shenzhen Lianfu, stating that the Center received on 7 August from Wang Jing & Co., agent ad litem of Textainer a Lawyer’s Letter requesting Shenzhen Agricultural Products to assume joint and several liabilities under the Guaranty Agreement. Through investigation, it’s found that the Guaranty Agreement was in English and beyond the understanding of CHEN Yao, the then general manager of the transportation department of Shenzhen Agricultural Products; ZHANG Kai, general manager of Shenzhen Lianfu, lied that the Agreement was an Annex to the Container Lease Agreement concluded with Hongxin and said the business urgently required the signature by CHEN Yao; that is why CHEN Yao afterwards affixed the seal thereon but didn’t sign his name thereon. The signature on the Guaranty Agreement was a forged one. On 14 November, 2006, XIAO Tong and OU Xintao, respectively General Manager and Manager of the Security Department of Buji Agricultural Products Wholesale Center of Agricultural Products holdings Ltd. reported the suspected fraudulent act by Shenzhen Lianfu to Dongxiao Police Station under Shenzhen Public Security Bureau. According to Dongxiao Police Station, the reported case was not a criminal case and fell beyond the scope of functions and duties of a public security organ. The police also suggested that Buji Agricultural Products Wholesale Center of Agricultural Products Holdings Ltd. should strengthen internal management of its use official seal. On 19 August, 2005, a Container Lease Agreement was concluded by and between Hongxin and Shenzhen Lianfu, under which Hongxin is the Lessor, Shenzhen Lianfu is the Lessee and Shenzhen Agricultural Products is the Guarantor of Shenzhen Lianfu, jointly and severally liable for Shenzhen Lianfu’s debts. On 11 September 2005, Hongxin filed a lawsuit with Xiamen Maritime Court against Shenzhen Lianfu with respect to the dispute over Shenzhen Lianfu’s delay in paying the rental of containers, on-hire/off-hire fees and container repair fees owed to Hongxin. On 5 March, 2007, Xiamen Maritime Court adjudged that Shenzhen Lianfu shall pay Hongxin USD17,886.09 in total for the container rental, on-hire/off-hire fees and container repair fees and pay RMB43,033.93 as penalty for late payment and RMB5,923 as attorney’s fee. Shenzhen Agricultural Products shall be jointly and severally liable for the aforesaid fees under the Guaranty Agreement. According to the Senior Middle School Diploma of CHEN Yao, he gained 62 scores in graduation examination of English. 3. Facts about Delivery of Leased Containers After the Container Lease Agreement was concluded between Textainer and Shenzhen Lianfu on 16 November 2005, Textainer delivered 200 standard containers of 20 feet and 100 high-cube containers of 40 feet during the period from 23 November 2005 to 8 May 2006. The specific dates and quantity of delivery of standard containers of 20 feet are as follows: 1 container shall be delivered on 8 December 2005; 3 containers shall be delivered on 15 December 2005; 1 container on 16 December 2005; 1 container on 29 December 2005; 40 containers on 28 February 2006; 154 containers on 8 May 2006. The specific dates and quantity of delivery of high-cube containers of 40 feet are as follows: 13 containers shall be delivered on 23 November 2005; 1 container shall be delivered on 25 November 2005; 4 containers on 30 November 2005; 1 container on 1 December 2005; 9 containers on 7 December 2005; 1 container on 8 December 2005; 10 containers on 14 December 2005; 3 containers on 21 December 2005; 3 containers on 28 December 2005; 3 containers on 29 December 2005; 2 containers on 8 February 2006; 1 container on 9 February 2006; 1 container on 16 February 2006; 1 container on 20 February 2006; 1 container on 22 February 2006; 1 container on 23 February 2006; 1 container on 24 February 2006; 2 containers on 26 February 2006, 42 containers on 28 February 2006. Textainer delivered 50 high-cube containers of 40 feet to Shenzhen Lianfu at Shekou Shenzhen on 13 May 2006; arrival of the same at Sekou Shenzhen on 13 May 2006 was confirmed by the container yard, Shenzhen Southern CIMC Containers Manufacture Co., Ltd., in its Letter sent on 15 May, 2006 to Textainer (the Letter was provided by Textainer). Prior to such arrival, Textainer sent an email on 14 March 2006 to Shenzhen Southern CIMC Containers Manufacture Co., Ltd., stating that the on-hire time of the aforesaid 50 high-cube containers of 40 feet was 15 March 2006 and requesting that Company to send the on-hirel time back to Textainer in the form of EDI for follow-up. Shenzhen Lianfu raised no objection to the on-hire time. 4. Facts about Chasing Rentals and Terminating the Container Lease Agreement by Textainer On 7 August 2006, Textainer appointed Wang Jing & Co. to send a lawyer’s letter to Shenzhen Lianfu and Shenzhen Agricultural Products requesting Shenzhen Lianfu to pay USD84,541.68 of container rentals to Textainer and requesting Shenzhen Agricultural Products to bear joint and several liabilities for Shenzhen Lianfu’s debts under the Guaranty Agreement. On 15 September 2006, Textainer appointed Wang Jing & Co. to send a lawyer’s letter to Shenzhen Lianfu and Shenzhen Agricultural Products informing Shenzhen Lianfu of termination of the Container Lease Agreement concluded between Textainer and Shenzhen Lianfu and requesting Shenzhen Lianfu to return the leased containers and pay all outstanding amounts. 5. Facts about Return of Leased Containers During the period from August 2006 to November 2006, Shenzhen Lianfu returned 150 standard containers of 20 feet and 150 high-cube containers of 40 feet to Textainer at four ports respectively in Shanghai, Hong Kong, Singapore and Port Kelang of Malaysia, with 50 containers of 20 feet left not-returned. The specific dates and quantity of return of standard containers of 20 feet are as follows: 13 containers shall be returned on 30 August, 2006; 16 containers shall be returned on 31 August, 2006; 3 containers on 1 September, 2006; 1 container on 6 September, 2006; 1 container on 7 September, 2006; 14 containers on 8 September, 2006; 20 containers on 9 September, 2006; 18 containers on 10 September 2006; 8 containers on 11 September, 2006; 8 containers on 12 September, 2006; 10 containers on 13 September, 2006; 2 containers on 14 September, 2006; 4 containers on 16 September, 2006; 8 containers on 17 September, 2006; 2 containers on 18 September, 2006; 10 containers on 19 September, 2006; 4 containers on 20 September, 2006; 2 containers on 27 September, 2006; 1 container on 19 October, 2006; 1 container on 23 October, 2006; 2 containers on 9 November, 2006; 1 container on 18 November, 2006. The specific dates and quantity of return of high-cube containers of 40 feet are as follows: 4 containers shall be returned on 30 August, 2006; 1 container shall be returned on 31 August, 2006; 3 containers on 1 September, 2006; 7 containers on 7 September, 2006; 1 container on 8 September, 2006; 1 container on 20 September, 2006; 5 containers on 21 September, 2006; 4 containers on 27 September, 2006; 3 containers on 4 October, 2006; 1 container on 5 October, 2006; 1 container on 6 October, 2006; 1 container on 4 November, 2006; 25 containers on 6 November, 2006; 53 containers on 7 November, 2006; 27 containers on 8 November, 2006; 7 containers on 9 November, 2006; 8 containers on 11 November, 2006; 2 containers on 13 November, 2006; 1 container on 19 November, 2006. 6. Facts about Various Expenses and Losses Incurred under the Container Lease Agreement Based on the delivery date and redelivery date of 350 leased containers ascertained as above (of which 50 standard containers of 20 feet have not yet been returned, the rental thereof shall be calculated until 60th day following termination of the Container Lease Agreement), calculated at a daily rental of USD1.22 for each standard container of 20 feet and USD2.08 for each high-cube container of 40 feet under the Container Lease Agreement, the outstanding rentals of containers owed by Shenzhen Lianfu to Textainer amounted to USD150,704.06 in total, of which USD11,205.72 incurred in March 2006, USD11,044 incurred in April 2006, USD15,921 incurred in May 2006; USD16,680 incurred in June 2006; USD17,236 incurred in July 2006; USD19,796.82 incurred in August 2006; USD13,082.44 incurred in September 2006; USD10,334.48 incurred in October 2006; USD35,384.08incurred in November 2006; USD19.52 incurred in December 2006. As agreed in Schedule 3 to the Container Lease Agreement, handling fee for depot movement shall be USD15 per 20 fee container. The handling fees incurred from delivery by Textainer of 154 standard containers of 20 feet at Shanghai Port on 8 May 2006 amounted to USD2,310. Redelivery of 20’ Standard Container numbered TGHU3784618 by Shenzhen Lianfu on 16 December 2006 at Port Kelang of Malaysia resulted in USD70 of terminal handling charges and USD25 of entry fee; that is USD95 in total. According to the finding of facts above, 50 of the 154 standard containers of 20 feet delivered by Textainer on 8 May 2006 at Shanghai Port to Shenzhen Lianfu have not been redelivered. As stipulated in Clause 14 of the Container Lease Agreement, if Lessee fails to return a container within sixty days after termination of the Lease Agreement, with respect to such container, the loss of such container shall be irrebuttably presumed and Lessee shall pay the Replacement Value therefore, plus USD400 per container for relocation/positioning charges. The aforesaid 50 standard containers of 20 feet shall be presumed to be lost and Shenzhen Lianfu shall compensate for the loss thereof to Textainer as agreed. As agreed in Schedule 1 to the Container Lease Agreement, the minimum lease term for each container shall be 5 years commencing from the date of delivery; the replacement cost for each container shall be equivalent to any or all outstanding rentals plus USD 1. The loss of the aforesaid 50 standard containers of 20 feet amounts to USD119,785. According to the Price Assessment Document issued by container service factory, Invoice of Repair Fees issued by Textainer and Shenzhen Lianfu’s email for confirmation, it’s ascertained that, with respect to a total of 83 containers (consisting of 30 standard containers of 20 feet and 53 high-cube containers of 40 feet) of the 350 containers involved in this case, a total of USD2457.26 of container repair fee was incurred. According to the Invoices of Trailer Fees issued by Fai Shanghai International Container Repair Co., Ltd., Tech-tainer Services Pte Ltd. and Eng Kong Container Agencies (Ptd) Ltd, the trailer fees incurred by Textainer from colleting leased containers redelivered by Shenzhen Lianfu amount to USD3,264.79 in total. 7. Facts about Counterclaims Filed by Shenzhen Agricultural Products The following expenses were incurred by Shenzhen Agricultural Products from preparing evidential materials in this case: 1. RMB620 incurred from notarizing the Web page of Textainer, RMB160 of translation fee and RMB11 of other expenses; that is, RMB791 in total; 2. RMB2,400 of translation fee incurred from translating the Container Lease Agreement and the Guaranty Agreement provided by Textainer; 3. RMB240 incurred from searching industrial and commercial information. The aforesaid fees total RMB3,431. 8. Facts about Property Preservation On 28 September 2006, Textainer filed with this Court an application for pre-litigation property preservation, requesting this Court to freeze USD150,000 (or RMB1,200,000 or other properties of equivalent value) of bank deposits of Shenzhen Lianfu and Shenzhen Agricultural Products. This Court approved Textainer’s application for pre-litigation property preservation and sealed vehicles under the names of Shenzhen Lianfu and Shenzhen Agricultural Products. On 10 August 2010, Shenzhen Intermediate People’s Court sent to this Court the Letter Calling for Assistance in Lifting Preservation Measures against Shenzhen Lianfu’s Bankruptcy Assets, by reference number: (2009)SZFMQQSZ No.17, which states “on 15 October, 2009, the said Shenzhen Intermediate Court announced pursuant to law that the procedures for bankruptcy liquidation of Shenzhen Lianfu have been initiated and Shenzhen Zhuoxiao Liquidation Co., Ltd. was appointed as the administrator for taking over Shenzhen Lianfu’s assets.” Because this Court had sealed up vehicles and bank accounts of Shenzhen Lianfu, for the disposal of Shenzhen Lianfu’s bankruptcy assets, this Court was requested to lift the preservation of vehicles and bank accounts of Shenzhen Lianfu in accordance with the provisions of Article 19 of the Enterprise Bankruptcy Law of People’s Republic of China. On 27 September 2010, this Court provided assistance pursuant to the law and adjudicated to lift the attachment of vehicles and bank accounts under the name of Shenzhen Lianfu. 9. Facts about Governing Laws As stipulated in Paragraph (K), Clause 17 of the Container Lease Agreement in this case, the Lease Agreement shall be governed by and construed in accordance with the internal law of the State of California, USA applicable to contracts between residents of California to be performed wholly within California. Clause 15 of the Guaranty Agreement stipulates that this guaranty shall be deemed to be made under, and shall be governed by, the laws of the State of California in all respects, including matters of construction, validity, and performance, and its terms and provisions may not be waived, altered, modified, or amended except in writing duly signed by an authorized officer of Obligee and by Guarantor. Clause 16 of the Guaranty Agreement further stipulates that Guarantor further agrees that all actions and proceedings shall be litigated only in courts having situs within the State of California and Guarantor hereby consents to the jurisdiction of any local, state or federal court located within the State of California. Members of the collegial bench unanimously hold that: 1. Nature of the Case Under the Container Lease Agreement in this case, the Lessor is Textainer; the Lessee is Shenzhen Lianfu; Textainer shall deliver 350 containers to Shenzhen Lianfu for use; while Shenzhen Lianfu shall pay rentals of the leased containers to Textainer. The Container Lease Agreement contains no stipulations on any seller of the leased object or purchase by the Lessor of any leased object from the seller and thus the Least Agreement is not in conformity with the feature of a financial lease contract. Therefore, the legal relationship between Textainer and Shenzhen Lianfu is of no essential element of a financial leas contract; Shenzhen Agricultural Products’ claim that the Container Lease Agreement in this case should be regarded as a finance lease contract is untenable for lack of evidence. Considering that, in this case, Shenzhen Agricultural Products provided Textainer with the Guaranty Agreement which was also accepted by Textainer, Shenzhen Agricultural Products is the Guarantor of Shenzhen Lianfu and the Creditor is Textainer which is a foreign enterprise. To sum up, this case involves dispute over foreign maritime container lease contract and guaranty contract in relation thereto. 2. About Jurisdiction The Higher People’s Court of Guangdong Province, pursuant to the law, adjudicated on 15 May 2007 that this Court has competent jurisdiction over this case. 3. About Governing Law In accordance with provisions of Paragraph 1, Article 126 of the Contract Law of the People’s Republic of China, “Parties to a foreign-related contract may select the applicable law for resolution of a contractual dispute, except as otherwise provided by law. Where parties to the foreign-related contract fail to select the applicable law, the contract shall be governed by the law of the country with the closest connection thereto”, both the Container Lease Agreement and the Guaranty Agreement stipulate that the governing laws shall be the laws of the State of California USA. In accordance with the provisions of Paragraph 1, Article 9 of the Rules of the Supreme People's Court on the Relevant Issues concerning the Application of Law in Hearing Foreign-Related Contractual Dispute Cases in Civil and Commercial Matters, “The parties choosing a foreign law to govern a contractual dispute or modifying a choice of law governing a contractual dispute to a foreign law shall provide or prove the relevant content of the foreign law”, the parties to this case shall be burdened for providing or proving relevant content of the laws of the State of California USA; however, the parties hereto failed in providing documents to this Court to prove the relevant content of the laws of the State of California USA. In accordance with provisions of Paragraph 3, Article 9 of the Rules of the Supreme People's Court on the Relevant Issues concerning the Application of Law in Hearing Foreign-Related Contractual Dispute Cases in Civil and Commercial Matters, “Where neither the parties nor the people's court can ascertain the content of the foreign law through proper channels, the people's court may apply the law of the People's Republic of China”, the substantive disputes in this case shall be governed by the laws of the People’s Republic of China. 4. About Validity of the Container Lease Agreement and Assumption of Liabilities thereunder The Container Lease Agreement concluded between Textainer and Shenzhen Lianfu is a true expression of the intent of the parties thereto, violates no mandatory provisions of laws and regulations and thus shall be deemed as a legitimate and valid contract which is binding upon both parties thereto. Shenzhen Agricultural Products’ claim that the above Lease Agreement shall be void is factually and legally groundless and shall not be sustained. After the above Lease Agreement was concluded, Textainer performed its obligations of delivering the leased containers in accordance therewith. Pursuant to the provisions of Paragraph 1, Article 60 and Paragraph 226 of the Contract Law of the People’s Republic of China, Shenzhen Lianfu shall, in accordance with terms and conditions of the Agreement, pay rentals and other relevant expenses regularly. In this case, Shenzhen Lianfu, after being duly summoned, failed to attend the trial without justified reasons and failed in proving that it had performed its obligations thereunder; thus Shenzhen Lianfu shall be deemed as having waived its litigation rights. Shenzhen Lianfu’s failure in performing its obligations of paying rentals and other relevant expenses has constituted a breach under Article 14 of the Lease Agreement; Textainer is entitled to terminate the above Lease Agreement by giving a written notice to Shenzhen Lianfu and request Shenzhen Lianfu to promptly redeliver the leased containers to Textainer and to pay all rentals and other expenses payable under the above Lease Agreement; since Shenzhen Lianfu failed in redelivering some of the leased containers within 60 days of termination thereof, Textainer is also entitled to request Shenzhen Lianfu to compensate for the loss of the containers. 5. About Validity of the Guaranty Agreement and Assumption of Liabilities hereunder According to the facts ascertained by this Court, the Guaranty Agreement, after being affixed with the official seal of Shenzhen Agricultural Products, was issued to and accepted by Textainer. CHEN Yao, who affixed the seal thereon and acted then as general manager of Shenzhen Agricultural Products, held a senior middle school diploma and must have an appropriate level of professional skills and a reasonable judgment. The Guaranty Agreement, once affixed with the seal of Shenzhen Agricultural Products, shall become effective to the external third parties. Deficiency in Shenzhen Agricultural Products’ internal management shall not be act against Textainer. Shenzhen Agricultural Products’ request of rescinding the act of affixing the seal thereon is factually and legally groundless and shall not be sustained. Whether the third party CHEN Yao has signed the Guaranty Agreement makes no difference in respect of the effect of the seal affixed onto the Guaranty Agreement of Shenzhen Agricultural Products; therefore, Shenzhen Agricultural Products’ application for verifying the handwriting of the signature “CHEN Yao” on the Guaranty Agreement to determine whether it was signed by CHEN Yao himself shall not be approved. Under the above Guaranty Agreement, Shenzhen Agricultural Products is the Guarantor, Textainer is the Creditor and Shenzhen Lianfu is the Debtor. Considering that Textainer is a foreign enterprise while Shenzhen Agricultural Products and Shenzhen Lianfu are domestic enterprises, the above Guaranty Agreement is a foreign related guaranty contract. In accordance with the provisions of Article 12 of the Administrative Measures for the Provision of Foreign-related Guaranty by Domestic Institutions promulgated by the People’s Bank of China, “the guarantor may provide a foreign entity with security after obtaining approval from the State Administration of Foreign Exchange”. Shenzhen Agricultural Products shall obtain an approval from the State Administration of Foreign Exchange before providing the foreign enterprise with the guaranty. According to Paragraph (1), Article 6 of Interpretations of the Supreme People’s Court on Several Issues Concerning Application of the “PRC Guaranty Law”, any contract for provision of foreign guaranty without being approved or registered by relevant competent authorities of the State shall be null and void. The above Guaranty Agreement has not been approved by the State Administration of Foreign Exchange and therefore shall be deemed as null and void. Shenzhen Agricultural Products is at fault because it provided a foreign related guaranty without first obtaining the approval of the State Administration of Foreign Exchange. Upon accepting the above guaranty, Textainer as the creditor was obligated to find out whether Shenzhen Agricultural Products’ provision of such guaranty had been approved by relevant authorities and whether the guarantor had completed the approval formalities; if the guaranty approval formalities had not been completed, the creditor was obligated to urge the guarantor to complete them so that a valid guaranty may be gained. Textainer failed in performing the aforesaid obligation upon accepting the guaranty provided by Shenzhen Agricultural Products and shall be deemed as being at fault. According to Article 7 of Interpretations of the Supreme People’s Court on Several Issues Concerning Application of the “PRC Guaranty Law”, “The guaranty provider and debtor shall assume joint compensation liability for the creditor's loss on the condition that the principal contract is valid while the guaranty contract is invalid, and the creditor is not at fault. If the creditor and guarantor are both at fault, the guarantor 's portion of civil liability shall not exceed half of the amount which the debtor is unable to pay”; Shenzhen Agricultural Products shall be liable for compensating 50% of the amount which Shenzhen Lianfu is unable to compensate. 6. About Assumption of Various Losses and Expenses According to the finding of facts about losses and expenses incurred to Textainer due to Shenzhen Lianfu’s breach, Shenzhen Lianfu shall pay Textainer USD150,704.06 of container hires, USD2,310 of repair fees, USD70 of terminal handling fees, USD25 of entry fees, USD119,785 for cost of losses, USD2,457.26 of repair fees and USD3,264.49 of trailer fees; that is, USD278,616.11 in total. In accordance with the provisions of Paragraph 1, Article 114 of the Contract Law of the People’s Republic of China, “The parties may agree that if one party breaches the contract, it shall pay a certain sum of liquidated damages to the other party in light of the circumstances of the breach, and may also agree on a method for the calculation of the amount of compensation for the damages incurred as a result of the breach”, the service fee calculated at a monthly rate of 15% (annual rate of 18%) of the amount due and unpaid by the lessee as agreed in Clause 6 of the Container Lease Agreement is of the nature of liquidated damages. The Defendant Shenzhen Agricultural Products defended in the court trial that the service fee as stipulated in the Agreement exceeds a reasonable scope. Although the contractual stipulations on the aforesaid liquidated damages is a true expression of the parties to the contract, the annual rate of 18% for calculation of liquidated damages obviously is excessively high and shall be reduced appropriately in accordance with the provisions of Article 29 of Interpretation II of the Supreme People's Court of Several Issues concerning Application of the Contract Law of the People's Republic of China, “Where a party alleges that the agreed amount of liquidated damages is too much and requests a proper reduction, the people's court shall weigh the request and make a ruling on the basis of the actual losses, in consideration of the performance of contract, seriousness of the fault of the party, expected benefits and other comprehensive factors and under the principles of fairness and good faith.” “If the amount of liquidated damages agreed on by the parties exceeds the losses incurred by 30%, generally, it shall be deemed as “significantly higher than the losses incurred” as mentioned in paragraph 2 of Article 114 of the Contract Law.” Therefore, this Court, by taking into consideration of the actual circumstances, determines that the amount of liquidated damages in this case shall be 30% of the losses actually incurred. The total amount of various losses incurred to Textainer from Shenzhen Lianfu’s breach of the Agreement is USD278,616.11, thus 30% of which shall be USD83,584.83. Any amount of liquidated damages claimed exceeding USD83,584.83 shall not be supported by this Court. Considering that the service fee agreed under the Container Lease Agreement includes interests, Textainer’s claim for interests is duplicate and is thus denied. 7. About Counterclaim Considering Shenzhen Agricultural Products has fault in the conclusion of contract, it’s appropriate for Textainer to join Shenzhen Agricultural Products as a co-defendant in this case. Shenzhen Agricultural Products’ claim that Textainer shall compensate for defense costs incurred from Shenzhen Agricultural Products’ responding to the lawsuit is factually and legally groundless and shall not be supported. Shenzhen Agricultural Products’ claim that the third party shall compensate for such defense costs is a kind of internal management affairs and shall be handled according to the legal relationship between Shenzhen Agricultural Products and CHEN Yao under the Labor Contract Law and internal policies of Agricultural Products. Shenzhen Agricultural Products’ request that the third party CHEN Yao shall be ordered to bear the defense losses incurred in this case shall not be supported. In summary, in accordance with Paragraph 1 Article 60, Article 107, Paragraph 1 and Paragraph 2 of Article 114, Article 226 of the Contract Law of the People’s Republic of China, Paragraph 2 Article 5 of the Security Law of the People’s Republic of China, Paragraph (1) Article 6 and Article 7 of Interpretations of the Supreme People’s Court on Several Issues Concerning Application of the “PRC Security Law”, Article 29 of Interpretation II of the Supreme People's Court of Several Issues concerning Application of the Contract Law of the People's Republic of China, Article 130 of the Civil Procedure Law of the People's Republic of China, the judgment is rendered as follows: 1. The Defendant Shenzhen Lianfu Transportation Industrial Co. Ltd. shall compensate the Plaintiff in this case “Textainer Equipment Management Limited” the amount of USD278,616.11 for various losses and expenses and the amount of USD83,584.83 as damages for breach of contract, that is USD362,200.94 in total; 2. In the event that the Defendant Shenzhen Lianfu Transportation Industrial Co. Ltd. fails to pay clear its debts as indicated in paragraph 1 above, the Defendant in this case “Shenzhen Agricultural Products Transportation Co., Ltd.” shall be liable for payment of 50% thereof to the Plaintiff “Textainer Equipment Management Limited”; 3. The Defendant Shenzhen Agricultural Products Transportation Co., Ltd, after assuming the compensation liabilities as indicated in paragraph 2 above, is entitled to recourse against the Defendant Shenzhen Lianfu Transportation Industrial Co. Ltd.; 4. Other litigation requests put forward by the Plaintiff Textainer Equipment Management Limited are dismissed; 5. Litigation requests by the Plaintiff in the counterclaim-Shenzhen Agricultural Products Transportation Co., Ltd. are dismissed. The litigation fee in this case is RMB36,060, of which the amount of RMB15,670 shall be borne by the Plaintiff Textainer, the amount of RMB10,195 shall be borne by the Defendant Shenzhen Lianfu, and the amount of RMB10,195 shall be borne by the Defendant Agricultural Products. The litigation fee in the counterclaim case is RMB50 which shall be borne by the Plaintiff in the counterclaim-Agricultural Products. The court fee has been prepaid by the Plaintiff Textainer, and this court will not refund thereof. The Defendant Shenzhen Lianfu and Shenzhen Agricultural Products shall each pay their respective portion of court fee directly to the Plaintiff Textainer. The pre-trial property preservation fee in the amount of RMB6,550, and enforcement fee in the amount of RMB5,000, shall be borne by the Defendant Shenzhen Lianfu and Shenzhen Agricultural Products in half each. The forgoing pecuniary obligations shall be performed within 10 days when this Judgment becomes legally effective. In the even of failure of payment of any sums as adjudged herein within the designated time period, the defaulting party shall pay double interest for the period of delay as penalty in accordance with the provisions of Article 229 of the Civil Procedure Law of China. In event of dissatisfaction with this Judgment, Textainer may, within 30 days of service of this Judgment, and Shenzhen Lianfu and Shenzhen Agricultural Products may, within 15 days of service of this Judgment, submit a Statement of Appeal to this Court with copies according to the number of the other parties to this case, for appealing to the Higher People’s Court of Guangdong Province. Presiding Judge: Wu Zili Judge: Song Weili Acting Judge Yang Yaxiao (Official Chop of Guangzhou Maritime Court Affixed) August 1, 2012 Certified to be true to the original Clerk Zeng Huifen The translation is provided by Wang Jing & CO.

Guangzhou Maritime Court The People’s Republic of China Civil Judgment (2005) GHFCZ No. 334 Plaintiff: Poly Technologies, Inc. Address: No. 14 Nan Da Jie, Dong Zhi Men, Dongcheng District, Beijing Legal Representative: Chen Hongsheng, Chairman of Board of Directors Agents ad litem: Chen Longjie and Liu Yun, Attorneys of Greenleaf Law Firm Defendant: Pyramid Navigation Co., E.S.A. Address: 10 Al Mesaha Square-Dokki-Giza-Egyt. A1 Massreen Building Business Center – 2nd floor Legal Representative: Mahmoud Hamdy Hassan Hamdy, Executive Director Agents ad litem: Zhao Shuzhou and Han Yongdong, Attorneys of Wang Jing & Co. Law Firm The Plaintiff Poly Technologies, Inc. (hereinafter referred to as “Poly Technologies”) filed an action against the Defendant Pyramid Navigation Co., E.S.A. (“Pyramid Navigation”) to this court on 11 August 2005 with regard to the case of dispute over the contract of carriage of cargo by sea. After the court entertained the subject case, the court constituted a collegiate bench according to law and organized both parities to exchange the evidence on 13 October. The subject case was tried openly. The agent ad litem of the Plaintiff Chen Longjie and the agent ad litem of the Defendant Han Yongdong attended the court hearing. The subject case has been finalized. The Plaintiff Poly Technologies alleged as follows: M/V “Amira” carried a consignment of Brazilian soybeans to Yangjiang Port on 9 July 2005. The Bs/L stated that the soybeans weighed 58,037.549 tons and the Plaintiff was the consignee of this shipment of cargo. Through weight by draft, it was found that the actual quantity of the cargo discharged by the vessel was 57,660 tons, which was 377.549 tons less than the weight of cargo stated on the Bs/L. As the carrier, the Defendant should be obligated to deliver the cargo to the Plaintiff according to the quantity stated on the Bs/L. Because the Defendant did not perform its obligation and caused the Plaintiff to sustain economic losses, which were calculated as follows: (Cost and freight USD 332.56/ton + USD 332.56 * insurance rate 0.11% + USD 332.56 * import duty 3% + USD 332.56 * import VAT 13% = USD 387.492/ton * 377.549 tons in short = USD 146,297.33. The court was requested to order the Defendant to indemnify the Plaintiff for USD 146,297.33, the interest accrued thereon (calculated at the loan rate for flowing cash by a bank for the same period from 20 July 2005), the case acceptance fee, fees for preservation of evidence and ship arrest prior to the litigation, and other relevant litigation fees. The Plaintiff provided the following evidence within the time limit for evidence adduction: 1. a soybean contract entered into by and between Poly Technologies and CHS Inc. and two final commercial invoices issued by CHS Inc.; 2. Bs/L No. 01 and 02; 3. the written Protest for Short Loaded Cargo Quantity issued by the master of M/V “Amira”; 4. the Draft Survey Report of M/V “Amira” at the port of loading; 5. the Inspection Certificate (of Weight by Draft) issued by the Yangjiang Entry-exit Inspection and Quarantine of the People’s Republic of China (“CIQ Yangjiang”); 6. the Quantity Confirmation of the soybeans’ entry to the warehouse from M/V “Amira” issued by Yangjiang Baofeng Wharf Co., Ltd. (“Baofeng Co.”) and the qualification license for electronic scale of Baofeng Co.; 7. the Cargo Transportation Insurance Policy issued by Ping An Property & Casualty Insurance Company of China Ltd. (“Ping An Insurance Co.”), two Endorsements, the supplementary agreement entered into by and between Ping An Insurance Co. and Yangjiang Fengyuan Cereals and Oils Industrial Co., Ltd. (“Fengyuan Co.”) and the insurance trade invoice; 8. the import duty invoices and the import VAT invoices; 9. the duplicates of the Civil Judgment (2003) DHSWCZ No. 11 ruled by Dalian Maritime Court; 10. two notices from this court; 11. the ship registration certificate and the ship’s particulars of M/V “Amira”; 12. two L/C and Collection / Payment forms issued by Bank of China. The Defendant Pyramid Navigation defended as follows: from 3 to 5 June 2005 M/V “Amira” loaded Brazilian soybeans in bulk at Paranagua Port and set sail on 6 June to carry the cargo to the port of destination, Yangjiang Port, China. After the said cargo was loaded onboard, the agent at the port of loading signed two sets of Bs/L No. 01 and 02 on behalf of the master and stated that the weights of the cargo were respectively 29,018.774 tons and 29,018.775 tons in a total of 58,037.549 tons. The clause on the face page of the Bs/L noted that “weight, measure, quality, quantity, condition, contents and value unknown”. On 8 July, M/V “Amira” arrived at the port of destination. On 14 July, the vessel completed the discharge of cargo and the relevant parties signed the Vessel’s Free of Cargo. The consignee entrusted CIQ Yangjiang to compute the weigh of cargo by draft. In the course of draft survey, the surveyor and the consignee had a dispute over the quantity of cargo with the Defendant. In order to commence the vessel’s voyage as soon as possible, the master had to accept the survey result by draft provided by CIQ Yangjiang. In the subject case, the Plaintiff was not qualified to act as a subject in the action. On the Bs/L in question, the consignee was “to order” and the Plaintiff was merely a notifying party. It is Fengyuan Co. that negotiated with the Defendant about the quantity of discharged cargo in the course of discharging. It was known that the Plaintiff was merely an agent for foreign trade and was not able to file the claim against the Defendant as a qualified plaintiff. The cargo in question was not in short at the port of discharge. After M/V “Amira” completed the discharge of cargo, the relevant parties signed the Vessel’s Free of Cargo indicating that the cargo in all holds had been discharged. As the carrier, the Defendant had stated on the Bs/L that it did not know the weight and quantity. After the cargo onboard the vessel had been discharged, the carrier should be deemed to have fulfilled the obligation for delivery. With regard to the cargo shortage alleged by the consignee, because CIQ Yangjiang did not follow relevant procedures strictly in the course of draft survey, the conclusion drawn therefrom could not serve as the evidence to ascertain the quantity of discharged cargo. Moreover, the survey of the quantity of discharged cargo at the port of discharge was conducted by measuring the draft. Even if the element that CIQ Yangjiang did not follow relevant procedures strictly is not taken into consideration, the allowable range of deviation for weight by draft is 0.5% according to the provisions of Article 3 of the Rules for the Weight Survey of Import and Export Commodities, the industrial standard of the People’s Republic of China for inspection of import and export commodities. The Defendant need not be liable for the cargo shortage within the said range of deviation. A big number of leading cases tried by Chinese courts also demonstrate that the carrier need not be liable for the cargo shortage within the allowable range of deviation for weight by draft. In the subject case, if the deviation of weight by draft is within the range of 0.5% of 58,037.549 tons (290.187 tons), the Defendant should not be liable for the deviation. It is apparently unreasonable for the Plaintiff to claim against the Defendant on the ground that the weight of the cargo by draft was 377.549 tons less than the quantity stated on the Bs/L. To sum up the above, the litigation requests filed by the Plaintiff are groundless and should be dismissed by the court. The Defendant provided the following evidence within the time limit for evidence adduction; 1. the Vessel’s Free of Cargo; 2. the Letter of Protest issued by Wang Jing & Co. Law Firm on behalf of the shipowner of M/V “Amira” to the Plaintiff and CIQ Yangjinag; 3. the industrial standard of the People’s Republic of China for inspection of import and export commodities, the Rules for the Weight Survey of Import and Export Commodities – Weight by Draft; 4. the duplicates of the Civil Judgment (2002) GHFCZ No. 303 and the Civil Judgment (2003) GHFCZ No. 342 ruled by this court and the Civil Judgment (2003) YGFMSZZ No. 35 ruled by the Guandong Higher People’s Court. Upon the application by the Plaintiff, this court went to CIQ Yangjiang to collect the duplicates (certified copies) of the two L/C and Collection / Payment forms No. AB1005807/05 and AB1005800/05 issued by Bank of China. After examinations the collegiate bench adopts the evidence since the parties has no objection to the evidence No. 1, 2, 4, 10 and 11 provided by the Plaintiff and the evidence No. 1 provided by the Defendant. The Defendant has no objection to the authenticity of the evidence No. 12 provided by the Plaintiff but it holds that the Plaintiff did not file the application for investigation and collection of evidence within the stipulated time limit for evidence adduction. After examinations, the Plaintiff has applied for extension of evidence adduction within the time limit for evidence adduction and is approved by the collegiate bench so the Plaintiff applies for investigation and collection of evidence within the time limit for evidence adduction and has not violated the legal provisions. The collegiate bench affirms the evidence No. 12. The Defendant has no objection to the authenticity and legitimacy of the evidence No. 3 but has objection to its relevance. The evidence No. 3 is a written Protest for Short Loaded Cargo Quantity issued by the master of M/V “Amira”. The content thereof and the evidence No. 4 can verify each other and has connection with the facts in the subject case so the evidence No. 3 should be adopted. The evidence No. 5 provided by the Plaintiff is the Inspection Certificate (of Weight by Draft) produced by CIQ Yangjiang which is a statutory authority of China to inspect quality and quantity of import commodities. CIQ Yangjiang has relevant survey qualification and the Inspection Certificate produced thereby gives an account of the course and basis of the survey. CIQ Yangjiang also replies to the inquiry filed by the party without contradiction and inappropriateness. The Defendant has objection to the said Inspection Certificate but did not provide contrary evidence to rebut it so the collegiate bench takes the view that the Inspection Certificate produced by CIQ Yangjiang is legitimate and valid and should be adopted. The evidence No. 6, 7 and 8 provided by the Plaintiff is true to the originals. The Defendant has no objection to the authenticity of the said evidence. After examinations, the forms of the aforesaid evidence are in compliance with the legal provisions and relevant to the facts in the subject case so they can serve as the evidence to affirm the facts in the subject case. The parties have no objection to the authenticity and legitimacy of the evidence No. 9 provided by the Plaintiff and the evidence No. 4 provided by the Defendant but these two pieces of evidence have no connection with the facts in the subject case so they are not adopted by the collegiate bench. The Plaintiff has no objection to the authenticity and legitimacy of the evidence No. 2 and 3 which relate to the facts in the subject case so they are adopted by the collegiate bench. After examinations the collegiate bench affirms the relevant facts as follows according to the evidence for the subject case and in consideration of cross-examinations and court hearing. On 1 June 2005, the Plaintiff concluded a soybean contract (contract No.: 2005DOCX/LM94006MR) with CHS Inc. and agreed that the Plaintiff purchased 55,000 tons of Brazilian soybeans from CHS Inc. and CHS Inc. may choose 10% more or less with the packing in bulk. According to the price of future soybean futures at the Chicago Board of Trade in July 2005, the price was USD 1.78 per bushel, cost plus freight, CNFFO, to a safe berth in Yangjing Port, China. When the Plaintiff opened the L/C at the provisional price, a minimum of USD 50 should be added to each ton as down deposit for future trade. The provisional price was based on the price on the day before L/C opening at the Chicago Board of Trade. Hence, the provisional price = USD 1.78/bushel + the price on L/C opening at the Chicago Board of Trade * USD 36.7433 bushel/ton + USD 50/ton and so forth. From 3 to 5 June, M/V “Amira” owned by the Defendant loaded the aforesaid cargo as purchased by the Plaintiff at Paranagua Port. On 5 June, Agencia Maritima Cargonave Ltda (“Agencia Ltda”) signed two sets (3 copies for each) of Bs/L (No. 01 and 02) on behalf of the master Emmanouil Tsouros. The two sets of Bs/L both stated the following information: the shipper: CHS Inc. (CHS Do Brasil – Comercio Exportacao De Graos Ltda); the consignee: to order; the notifying party: the Plaintiff; carrying vessel: M/V “Amira”; port of loading: Paranagua; port of discharge: Yangjiang, China; goods: Brazilian soybeans in bulk; gross weight of the soybeans under the B/L No. 01: 29,018.774 tons; gross weight of the soybeans under the B/L No. 02: 29,018.775 tons (both were printed). The standard clause “weight, measure, quality, quantity, condition, contents and value unknown” had been pre-printed on the face page of the Bs/L before the weight of cargo was printed thereon. As the surveyor of the Shipowner's Mutual Protection & Indemnity Association, AC Brazil Marine Surveyors surveyed the aforesaid cargo and the draft survey document stated that the weight of cargo loaded onboard M/V “Amira” was 57,780.7 tons. The Draft Survey Report produced by SGS Do Brasil Ltda stated that the quantity of cargo on the shore was 58,037.549 tons and the weight by draft was 57,776.128 tons having a difference of 261.421 tons. On 6 June, the master of M/V “Amira” stated on the Protest to the shipper CHS Inc., “the total quantity of cargo 58,037.549 MT as presented on the Mate’s Receipt and Statement of Fact does not coincide with figures calculated by the Messrs UK P&I Club Surveyors / SGS / and Ship’s Draft Survey. The total shortage cargo is 256,849 MT and I was therefore compelled to sign the Mate’s Receipt and Statement of Fact under protest reserving all rights as far as quantity is concerned.” On 21 June, Bank of China accepted the payments under the Ls/C NO. LC1004186/05 and LC1004187/05 with the respective amounts of USD 9,650,483.48 and USD 9,650,483.81 (the Bs/L were numbered 01 and 02). The Plaintiff obtained the two sets of original Bs/L which were endorsed by the shipper CHS Inc. and the Plaintiff only. On 30 June, CHS Inc. issued two final commercial invoices to the Plaintiff. The two invoices stated the following information: name of commodity: Brazilian soybeans produced in 2005; unit price: USD 332.56/ton; price term: CFR Yangjiang Port, Guangdong Province, China; weights of cargo stated thereon: 29,018.774 tons and 29,018.775 tons; the respective amounts: USD 9,650,483.48 and USD 9,650,483.81. On 3 June 2005, the Plaintiff and Fengyuan Co. took out insurance to cover cargo transportation for the aforesaid cargo with Ping An Insurance Co. which issued an insurance policy to the Plaintiff and Fengyuan Co. The insurance policy agreed on the following information: insured cargo: 55,000 tons of Brazilian cargo in bulk; insured amount: USD 18,150,000; carrying vessel: M/V “Amira” from Paranagua Port, Brazil to Baofeng Wharf, Yangjiang, China; coverage: all risks in ocean shipping with additional war risk and strike risk; the absolute excess of cargo shortage and other insurance incidents: respectively 0.3% of the value of entire consignment of cargo; the quantity of cargo and the day of shipment are subject to the Bs/L; the Plaintiff is the first beneficiary of the insurance policy. On 7 June, Fengyuan Co. paid RMB 174,366.57 as the premium to Ping An Insurance Co. On 15 June, Ping An Insurance Co. issued the Endorsements and stated the following information: upon the application of the insured and Fengyuan Co., the company agrees to change the cargo under the said insurance policy from 55,000 tons to 58,037.649 tons at 0000hrs on 7 June 2005 and the insured amount increases USD 1,002,424.17 so that the valid insured amount is changed to USD 19,152,424.17; the insured shall pay USD 1,102.67 to increase the premium; the absolute excess of cargo shortage and other insurance incidents is changed to 0.3% of the insured amount; the other conditions stated on the insurance policy remain unchanged. In the court hearing, the Plaintiff and the Defendant mutually confirmed that the insurance rate for the aforesaid cargo was 0.11%. On 9 July, M/V “Amira” carried the aforesaid cargo to Yangjiang Port and commenced the discharge. Baofeng Co. accepted the discharged cargo. On 14 July, M/V “Amira” completed the discharge of cargo. Baofeng Co. issued the Quantity Confirmation of the soybeans’ entry to the warehouse from M/V “Amira” on the same day, alleging that the entry of the soybeans discharged from the said vessel to the warehouse totally weighed 57,551.31 tons. On 20 July, CIQ Yangjiang produced the Inspection Certificate (of Weight by Draft) which stated that “having checked the ship’s draft and elements at time before and after discharging and basing on the ship’s displacement scale provide on board said vessel with necessary corrections made, we computed the weight of the discharged cargo in bulk to be 57,669 MT.” On 23 July, the Plaintiff paid the import duty in respective amounts of RMB 2,398,782.30 and RMB 2,398,782.36 and the import VAT in respective amounts of RMB 10,706,565 and RMB 10,706,565.27 according to the weights of cargo stated on the Bs/L No. 01 and 02. According to the import duty invoices and the import VAT invoices produced by CIQ Yangjiang on 23 July, the exchange rate between US dollars and RMB yuan was 1:8.2765. Article 3 of the Rules for the Weight Survey of Import and Export Commodities, the industrial standard of China for inspection of import and export commodities, provides that in the course of computation of weight by draft, there are many elements to affect the accuracy of computation; if the preparation of record of the ship has an accuracy of 0.1%, the accuracy of computation of weight by draft may be within 0.5%. On 13 July, the Plaintiff applied to this court for preservation of evidence and arrest of M/V “Amira” for the dispute in question. On 14 July, this court rendered the Civil Ruling (2005) GHFBZ No. 66 to collect duplicates or copies of the certificate for ownership of M/V “Amira”, its nationality certificate, the Draft Survey Report at the port of loading, the quality report, other records on computation of weight of cargo, the Protest for Short Loaded Cargo Quantity at the port of loading, the relevant records to the weight of cargo, the Mate’s Receipt and the Stowage Plan. The said Ruling had been served and executed. On the same day, this court rendered the Civil Ruling (2005) GHFBZ No. 67 to approve the Plaintiff’s application for arresting M/V “Amira”. Before this court served the legal instrument for ship arrest to Yangjiang Maritime Safety Administration and other assistant authorities to execute the ship arrest, the Plaintiff applied for lifting the ship arrest on the ground of the valid and reliable security provided by the shipowner and the demise charterer of M/V “Amira”. This court approved the Plaintiff’s application for lifting the ship arrest and did not execute the Ruling for ship arrest. The Plaintiff paid RMB 5,000 for the application fees respectively for preservation of property and preservation of evidence and RMB 2,000 for the execution fee in a total of RMB 14,000. In the court hearing, both of the Plaintiff and the Defendant agreed to apply the law of the People’s Republic of China to settle the dispute. All members of the collegiate bench take the view that the subject case is a foreign-related case of dispute over the contract of carriage of goods by sea. Both of the Plaintiff and the Defendant agreed to apply the law of the People’s Republic of China to settle the dispute. According to Article 269 of the Maritime Code of the People’s Republic of China (“the Maritime Code”) which provides that the parties to a contract may choose the law applicable to such contract, the law of People’s Republic of China applies to the subject case. The cargo in question was carried by M/V “Amira” owned by the Defendant. Agencia Ltda signed the Bs/L on behalf of the master. According to the provisions of the second paragraph of Article 72 of the Maritime Code, the Bs/L should be deemed to be signed by the master on behalf of the carrier. The Defendant also confirmed that it was the carrier of the cargo in question so the Defendant was the issuer of the Bs/L in question and the carrier of the cargo. The Bs/L in question signed by the Defendant was the order Bs/L. The Plaintiff concluded the sales contract of soybeans in its name with CHS Inc. and made the cargo payment to obtain the Bs/L for customs declaration. The Bs/L had been held by the Plaintiff through the legitimate endorsement by CHS Inc. so the Plaintiff was the final legitimate holder of the Bs/L in question. The contract of carriage of goods by sea as proven by the Bs/L existed between the Plaintiff and the Defendant. The relationships of rights and obligations between both parties are to be determined according to the provisions of the Bs/L. The Plaintiff is entitled to claim against the Defendant in its own name. It has no factual and legal basis for the Defendant to defend that the Plaintiff is merely an agent for foreign trade and is not qualified to act as a subject in the action. Such defense should not be supported. As the carrier, the Defendant should deliver the cargo to the consignee according to the statement of the Bs/L. The standard clause pre-printed on the face page of the Bs/L states that the weight is unknown but the agent of the Defendant printed specific weights of cargo when signing the Bs/L. It is obviously contradictory. According to the provisions of Articles 75 and 77 of the Maritime Code, if the B/L contains the weight of goods with respect to which the carrier or the other person issuing the B/L on his behalf has the knowledge or reasonable grounds to suspect that such weight does not accurately represent the goods actually received, the carrier or such other person may make a note in the B/L specifying those inaccuracies, the grounds for suspicion or the lack of reasonable means of checking. The Defendant did not specify the ground that it did not know the weight with the provision of relevant evidence so the weights of cargo stated on the Bs/L had final evidential effect upon the Plaintiff, the third party in addition to the carrier. The result of draft survey of the cargo in question at the port of discharge was 377.549 tons less than weight stated on the B/L. The said tonnage had exceeded 0.5%, the allowable range of deviation for weight by draft. Furthermore, when the Defendant signed the Bs/L, it had known the cargo was 256.849 tons in short but it still signed the Bs/L based on the weight of 58,037.549 tons. The Defendant therefore was at fault and should be liable for the indemnity. The computation of weight by draft is one of the statutory methods for CIQ to inspect the loading and discharge weights of cargo. CIQ Yangjiang has made necessary correction to the deviation at the time of draft survey. Although the allowable range of deviation for weight by draft is 0.5%, the cargo shortage in question has exceeded the allowable range. It demonstrates that there is some unreasonableness when the Defendant stated the weights of cargo. The Defendant did not adduce evidence to prove the value of deviation in the reasonable computation and the quantity in the unreasonable computation for the cargo shortage. Hence, the Defendant shall bear the unfavorable consequences due to its inability to adduce evidence. Because the 0.5% allowable range of deviation for weight by draft does not mean that the computation of the weight of cargo in question has a deviation of 0.5%. Moreover, the said 0.5% shall be reasonable deviation of computation. The unreasonable element that the carrier has known the cargo shortage at the time of loading which exceeds the allowable range of 0.5% shall not be sophisticated for trial. Hence, the Defendant shall not claim to be exempted from the liability of indemnification for the 0.5% shortage of cargo stated on the Bs/L. The Defendant shall indemnify the Plaintiff according to the quantity of cargo stated on the Bs/L minus by the shortage of 377.549 tons in the actually delivered quantity to the Plaintiff. According to the first and second paragraphs of Article 55 of the Maritime Code, 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 and the actual value shall be the value of the goods at the time of shipment plus insurance and freight. The price of the cargo in question is subject to the price stated on the final commercial invoices. The cost plus freight is USD 332.56 per ton. The Plaintiff and the Defendant mutually confirm that the cargo’s insurance rate is 0.11%. Hence, the actual value of the cargo in question = USD 332.93/ton + USD 332.56 * the insurance rate 0.11% = USD 332.93/ton. The cargo is 377.549 tons in short so the loss sustained by the Plaintiff due to the cargo shortage amounts to USD 125,697.39 by USD 332.93/ton multiplying 377.549 tons. According to the provisions of the first and second paragraphs of Article 55 of the Maritime Code, the loss of shortage for which the Defendant shall indemnify the Plaintiff shall be calculated on the basis of the actual value. The overpaid tax as requested by the Plaintiff for indemnity by the Defendant has no casual connection with the short discharged cargo by the Defendant. According to the provisions of Article 63 of the Maritime Code, the Plaintiff may request the Customs to refund the tax that was over-levied. It is legally groundless for the Plaintiff to request the Defendant to indemnify it for the import duty and import VAT overpaid to the Customs in an amount of USD 20,089.23 so such request should not be supported. The Inspection Certificate produced by CIQ Yangjiang on 20 July 2005 confirms the shortage of cargo in question. The Defendant shall indemnify the Plaintiff for the loss resulting from the cargo shortage. The Plaintiff is entitled to claim the interest accrued on the USD 125,697.39 loss of cargo against the Defendant if the indemnity is not paid in due course. Such interest shall be calculated from 20 July 2005 to the day of payment confirmed by this Judgment with the principal being the RMB yuan exchanged from USD 125,697.39 at the time of the Defendant’s indemnification according to the RMB loan rate for enterprises’ flowing cash set by the People’s Bank of China for the same period. In summary, according to the provisions of the first and second paragraphs of Article 55 of the Maritime Code, the judgment is rendered as follows: The Defendant Pyramid Navigation Co., E.S.A. shall indemnify the Plaintiff Poly Technologies, Inc. for the loss of cargo shortage in an amount of USD 125,697.39 and the interest accrued thereon (calculated from 20 July 2005 to the day of payment confirmed by this Judgment; the US dollars shall be exchanged into RMB at the exchange rate on the actual day of payment according to the RMB loan rate for enterprises’ flowing cash set by the People’s Bank of China for the same period.) With regard to the RMB 15,935 case acceptance fee, the Plaintiff shall bear RMB 2,444 and the Defendant shall bear RMB 13,691. The RMB 5,000 application fee for preservation of property and the RMB 2,000 execution fee shall be borne by the Plaintiff. The RMB 5,000 application fee for preservation of evidence, the RMB 2,000 execution fee and the RMB 500 fee for collection and investigation of evidence shall be borne by the Defendant. The aforesaid fees have been pre-paid by the Plaintiff and this court will not refund them. The Defendant shall pay the aforesaid fees to the Plaintiff. The aforesaid obligation for payment shall be effected within ten days from the effective day of this Judgment. In case of any objection to this Judgment, the statement of appeal may be submitted before this court by the Plaintiff within 15 days, the Defendant within 30 days upon the service of this Judgment, and the copies thereof shall be submitted in the number of the opposite parties. The appeal court is Guangdong Higher People’s Court. Presiding Judge: Yu Xiaohan Judge: Wen Jing Acting Judge: Du Junyang (Official Seal of Guangzhou Maritime Court) 19 December 2005 The certified copy of the original Clerk: Zhang Rong The translation is provided by Wang Jing & CO.

Guangzhou Maritime Court of P. R. C. Civil Judgment Case No.: (2005) G H F C Z No.417 Plaintiff: China Pacific Property Insurance Co., Ltd. Shenzhen Branch Domicile: Floor 7 & 20, Building No.1, News Tower, 2# Shen Nan Zhong Road, Futian District, Shenzhen City, Guangdong province Responsible Person: Zhang Hengguo, General Manager Plaintiff: Sinochem International Oil Company Domicile: A2# Fu Xing Men Wai Revenue, West City District, Beijing Legal Representative: Li Hui, General Manager Agent ad Litem: Chen Longjie, lawyer of Guangdong Evergreen Leaf Law Firm Agent ad Litem: Liu Yun, lawyer of Guangdong Evergreen Leaf Law Firm Defendant: MELINDA HOLDING S.A. Domicile: 14, Skouze Str-185 36 Piracus-Greece Legal Representative: THANOS THEOCHARIS, President Agent ad Litem: Huang Yaquan, lawyer of Huang & Huang Co. Law Firm Agent ad Litem: Huang Hui, lawyer of Huang & Huang Co. Law Firm With respect to the case of dispute arising from the cargo shortage under contract of carriage of goods by sea filed by the plaintiffs China Pacific Property Insurance Co., Ltd. Shenzhen Branch (hereinafter referred to as “China Pacific Shenzhen”) and Sinochem International Oil Company (hereinafter referred to as “Sinochem”) against the defendant MELINDA HOLDING S.A. (hereinafter referred to as “MELINDA”), this court accepted it for handling on November 2, 2005, thereafter formed a collegiate bench in accordance with law, which consists of Judge Wu Zili, Acting Judge Huang Xiwu and Acting Judge Fang Jianhua, and then organized the parties concerned to exchange evidences on March 29, 2006, and held open hearings on June 7, 2006. Mr. Chen Longjie and Ms. Liu Yun , the agent ad litem jointly appointed by the plaintiffs, as well as Mr. Huang Yaquan and Mr. Huang Hui, the agents ad litem of the defendant, attended the court hearing. Now the case has been finalized. The two plaintiffs claim that: the defendant was the ship owner of M/V “Silva”. Sinochem was the holder of the bill of lading issued by Captain of M/V “Silva” on 28th August 2005. The cargo recorded in the bill of lading was 280 # fuel oil, weighing 75,293 MT. The vessel arrived at Nansha Port of China on 18th September 2005 and actually discharged the cargo weighing 74,052.503 MT, suffering an economic loss of cargo shortage in amount of CNY 4,330,000. Sinochem applied to this court for arresting the vessel before litigation on 23rd September 2005, and paid the application fee in CNY 5,000, and the execution fee in CNY 30,000. China Pacific Shenzhen indemnified Sinochem CNY 2,566,080 and paid the inspection fee in CNY 44,432. the plaintiffs requested the court to order the defendant to: ⑴ compensate China Pacific Shenzhen CNY 2,610,512 and Sinochem for the cargo loss in amount of CNY 1,719,488; ⑵ bear the Court Charges paid by Sinochem in amount of CNY 68,960, which consists of fee of ship arrestment before litigation in CNY 35,000, investigation fee in CNY 2,000 and the entertainment fee in CNY 31,960. The two plaintiffs jointly submitted to the court the following evidences: 1. Facsimile of the attachment of Agreement of Open Insurance, Policy No.ASHZ08824105B000297Z and its endorsement, invoice of premium, the original Payment Voucher of Insurance Indemnity, evidencing the fact that China Pacific Shenzhen gained the subrogation rights; 2. Bill of lading, Attestation Letter issued by China Ocean Shipping Agency Guangzhou, and the original Certificate Registry of M/V “Silva”, evidencing the lawful contractual relationship of carriage of goods by sea; 3. Weight Certificate issued by CCIC Guangdong Company and Re-Certification Report issued by SGS, evidencing the cargo shortage. CCIC Guangdong Company dispatched expertise to attend the court hearing for inquiry; 4. Sales Contract No. 05BS11XA5332F0111, Commercial Invoice, Application for TT from Abroad, Payment Record of Tariff on Imported Goods, and the original Payment Record of VAT on Imported Goods, evidencing the value of cargo in shortage; 5. Civil Decision of (2005) Guang Hai Fa Bao Zi No.105, the original Notice of Entertainment, the duplicate of Payment Voucher of Litigation Fee, and the original Invoice of Inspection Fee issued by CCIC Guangdong Company, evidencing the litigation fee, inspection fee and other expenditure. Upon the request of the two plaintiffs, this court called for the Letter of Protest for “Silva” did not provide the original Ullage Table when discharging the cargo from ENTRY-EXIT INSPECTION AND QUARANTINE OF PANYU (hereinafter referred to as CIQ). Sinochem paid the investigation fee in CNY 2,000. Mr. Wang Rusong, the expertise applied for by the plaintiffs, attended the court hearing and answered the inquiries made by both parties concerned as well as the court. The defendant raised objection to the authenticity of the attachment of Agreement of Open Insurance, the Sales Contract and the Commercial Invoice, for the attachment was not the original one, the Sales Contract and Commercial invoice had not undergone legal proceedings of verification. The defendant also raised objection to the relevancy of the invoice of inspection fee. The collegiate bench were united in there conclusion that the objected authenticity and relevancy should be approved for although the controversial attachment of Agreement of Open Insurance was not original, yet it mutually confirmed with the Policy; the Sales Contract, the Invoice, the Payments and the tax vouchers, etc. could prove each other; the invoice of inspection fee and the inspection report issued by CCIC Guangdong Company could support each other. Thus, the court approved the authenticity, validity and relevancy of the aforementioned evidences. The defendant MELIDA defended that: the actual shortage of the cargo in question was 385.692MT, the cause of shortage laid in the inherent defect of the cargo itself, the defendant should be exempted from liability in accordance with law. Even if the defendant was liable for compensation, the number of cargo in shortage should exclude the natural allowance and the gauging tolerance, which was in the percentage of 0.5%. Loss should not be calculated basing on the price in the Sales Contract submitted by the plaintiffs, for they were not the first hand buyers of the cargo in question. Thus, the defendant requested the court to reject the claim of the plaintiffs. Within the time for adducing evidences, the defendant submitted the following evidences: 1 Certificates proving Silva’s seaworthiness during navigation, such as Cargo Ship Safety Construction Certificate, Cargo Ship Safety Equipment Certificate and so on; 2 Certificates proving Silva’s cargoworthiness before navigation, including the ROB Report issued at the loading port of the voyage in question, Inspection Certificate, and Cargo Tank Inspection Certificate; 3 Cargo Tank Pipe Line System Plan, Ship Bunker Pipeline System Plan, and Ballast System Plan, evidencing that any one of the cargo tank pipeline system, the ship bunker pipeline system and the ballast water pipeline system of “Silva” has no affection on the others. 4 Certificates proving that the quantity of the goods concerned at the loading port is 75293 MT, including Certificate of Origin, Vessel Ullage Report, Manifest, and B/L; 5 Vessel Ullage Report of the voyage in question of “Silva”, evidencing the quantity of the goods concerned at the discharging port before discharge is 75,344.565 MT, what is to say, no shortage occurred; 6 Three sets of inspection reports on the fuel oil of “Silva”, proving the quantity of the bunker on board “Silva” did not have abnormal changes during the process of discharge; 7 Two Sets of ROB report issued respectively by Guangdong Marine Engineering Consultants & Surveyors Corporation (hereinafter referred to as “Marine Engineering”) and CIQ of the discharging port, evidencing the quantity of the remaining materials in the holds of “Silva” after discharge; 8 Survey Report No. GM05195 on the weight of the discharged cargo issued by Marine Engineering, evidencing of the quantity of cargo in shortage; 9 Note of (2005) Guang Hai Fa Bao Zi No.106, evidencing Marine Engineering is the inspection unit acknowledged by the plaintiffs and the defendant; 10 Inspection Report No.HAS/2005H/XLQ/158 on the discharged cargo weight issued by Haijiang Surveyors & Adjustors Co., Ltd. (hereinafter referred to as “Haijiang Company”), evidencing the quantity of cargo in shortage after discharge. The defendant applied to this court before litigation for the preservation of maritime evidences on the relevant certificates of “Silva” of the voyage in question. The above evidences No.1 to 9 have been duplicated and inspected by the clerks of this court during the period of the evidence preservation. During the trial of this case, this court on 1st May 2005, upon the application of the defendant, executed preservation of maritime evidences on the Slops Removal Service Report, Oil Record Book and Ullage Table when “Silva” was at Qingdao Beihai Shipyard; the two plaintiffs cross-examined the aforesaid evidences. They raised objection to the validity of the application for preserving the Ship certificate and Ullage Table, etc., on the ground that the application was not in accordance with the condition of preservation of maritime evidence because the evidences were in the possession of the applicant. The collegiate bench reached the consent that although part of the preserved evidences was under the control of the defendant itself, yet these evidences were on board “Silva”, it would be difficult to acquire once “Silva” leaves China. This court thus granted permission to the application for preservation of maritime evidence for it met the stipulations in law, and this court disapproved the objection to the validity of preservation of evidence by the plaintiffs. In respect of Evidence 10 submitted by the defendant, the two plaintiff raised objection for the legal representative of Haijiang Company was also the lawyer of the same law firm with the lawyers ad litem appointed by the defendant in this case. After investigation, Lin Cuizhu, the legal representative of Haijiang Company was also a registered lawyer of Huang & Huang Co. Law Firm, which is the law firm appointed by the defendant. The collegiate unanimously hold that there was interest relationship between the inspection unit and the defendant, thus Haijiang Company, as the inspector in this case, should withdraw from this case according to Article 45 of Civil Procedure Law of the P. R. C, and the Survey Report issued by it should not be considered the basis of facts in this case. According to the ascertained evidences after cross-examination at the court hearing, the ascertained facts of this case are as follows: On 17th August 2005, Sinochem signed the Sale Contract No. 05BS11XA5332F0111 with Sinochem International Oil Company (Bahamas) Co., Ltd (hereinafter referred to as “Sinochem Bahamas”) and ordered 75,000MT (±10%)of 280# fuel oil from the latter, the specific number is subjected to the number at loading port. The price condition as agreed in the Sales Contract was CIF Huangpu Port in P. R. China, carried by “Silva” or ship in substitute accepted by the seller to Huangpu Port in P. R. C. or Guangzhou Gangfa Port in P. R.C. Sinochem paid the seller Sinochem Bahamas USD 25,873,686.52 for the cargo through Bank of Communications, Beijing Branch, at the unit price of USD 343.64 per metric ton. China Pacific Shenzhen undertook to provide insurance for the transportation of the cargo in question, and issued a Cargo Transportation Policy No. ASHZ08824105B000297Z on August 28, 2005, which reads that the insured is Sinochem Bahamas, the cargo is 75,293 MT of 280# fuel oil, and the insured amount is CNY 223,611,927.77. On the same day, China Pacific Shenzhen changed the insured into Sinochem Bahamas / Sinochem through the endorsement No. BSHZ01824105B0002, other terms and conditions remaining unchanged. Sinochem paid China Pacific Shenzhen the insurance premium in CNY 134,167,16. MELINDA is the ship owner of “Silva”. This ship, upon the appointment of National Iranian Oil Company (NIOC), carried 280# fuel oil from BANDAR MAHSHAHR in Iran to Huangpu Port of China. The port inspection unit DELFI S.A. issued an OBQ/ROB REPORT on August 27, 2005, evidencing that the cargo holds of “Silva” was clean and dry. The cargo hold Inspection Certificate issued by NIOC proved that “Silva” was seaworthy for the cargo in question. Certificate of Origin recorded that the quantity of cargo in question was 494,039 drums/ 74,143.236 long tons/ 75293 metric tons, which was the same as weight of cargo recorded in the Manifest and B/L; the Ullage Table after loading showed the cargo weight was 75,333.046 MT / 74,143.236 long tons. The Captain of “Silva” issued an instructive B/L on August 28, 2005, which recorded that the cargo weight was 75,293 MT. This B/L was endorsed for four times, and was used by Sinochem to take the delivery. On September 18, 2005, CIQ inspected the cargo on board “Silva” when it was at the anchorage of Shajiao Guangzhou Port. The result showed that at 15℃ the standard overall volume was 78,573.955 m3, and the weight was 75,344.565 MT. Guo zhijian, the inspector of CIQ, remarked in the Ullage Table “for ull & temp only”. The fuel oil report before discharge showed that the weight of fuel oil in the air was 1107.97 MT. On September 22, the fuel oil report after discharge showed that the weight of fuel oil in the air was 1014.27 MT. On September 22, Sinochem paid the imported Custom Tariff in CNY 11,405,829.96, and VAT in CNY 34,255,509.31 to Panyu Custom for 68,293 MT of cargo; and paid the imported tariff in CNY 1,169,092.14, and VAT in CNY 3,511,173.39 to Custom of the old Huangpu Port for 7000 MT of cargo. The Custom Tariff was 6% of the cargo value, the VAT was 17% of the sum of cargo value and Custom Tariff, the exchange rate between USD and CNY was 1:8.1002, and the cargo value was calculated as USD 343.64 per metric ton. The barges arranged by Sinochem transferred the cargo in question. CCIC Guangdong Company took the actual weights of the cargo distributed into each one of the 75 barges for transference, and issued the Weight Certificate No. GD2005/PY233-6 on September 26, 2005, which alleged that the weight of cargo transferred by the barges from “Silva” was 74,050.44 MT in accordance with the Volume Table provided by the party of the barge and the necessary correction on the temperature and density of the oil after test. SGS Petrol-Chemistry department made verification on the Weight Certificate issued by CCIC Guangdong Company, and thought that the result of weight calculation could be acknowledged for the standard used in the calculation process was reasonable. Meanwhile, the data from the test made by CCIC Guangdong Province led to the calculation that 75 barges received cargo in a total amount of 74,050.444 MT. On September 23, Sinochem applied to this court for arresting “Silva” and ordering the defendant to provide a security in CNY 5,000,000. On the same day, this court granted permission to the application of Sinochem and issued the Ship Arrest Order, and thereafter arrested “Silva”. After PICC Property and Casualty Company Limited, Guangdong Branch issued an LOU in amount of CNY 4,500,000 for MELINDA; this court released the arrested ship on September 26. The application fee in CNY 5000 and execution fee in CNY 30,000 that paid by Sinochem for the application for arresting the ship are the actual fee that have taken place. On September 26, the defendant MELINDA applied to this court for preservation of maritime evidence, requesting to perform preservation on the relevant certificates on board “Silva” as well as inspection on the discharge conditions at the same time. This court granted permission to the application for preservation of evidence by MELINDA, and called for the agents of Sinochem and MELINDA to negotiate about the designated inspection unit. Both parties agreed unanimously that Marine Engineering should perform inspections on “Silva” after discharge. On September 28, Zheng Hui Bo, the inspector of Marine Engineering, embarked on “Silva” and inspected the tank, getting the result that the remaining of cargo oil with a density of 0.948 g / cm3 at 31℃ had a volume of 255.89 m3 and the weight of 242.583 MT; the weight of the sludge at the bottom of the tank was 206.61 MT, which density was hard to acquired for it could not be drawn out. At 1530 hours of the same day, the inspector got the testing result that there were 969.353 MT of fuel oil and 129.664 MT of diesel oil on board “Silva”. On September 29, CIQ inspected “Silva” and thereafter issued a ROB, showing that the total volume of the sludge in each tank was 488.31 m3 . On the same day, CIQ gave “Silva” a Letter of Protest, claiming that the vessel part had not provided with original Ullage Table and related certificates for it. The Captain of “Silva” signed and stamped on this Letter of Protest and indicated that this file was for receipt only. On September 30, Marine Engineering issued a Survey Report No. GM05195, which includes not only the inspection result on September 28 but also the remarks that the ship was unable to provide the original Ullage Table and that what was used in the measurement was the duplicated Ullage Table acknowledged by BUREAU VERITIES in 1999. On December 12, 2005, Marine Engineering issued the supplementary report No.GM05195-1, which points out that where it is impossible to measure the density of the sludge at the bottom of the tank directly, it could adopt the calculation as follows: to deduct the standard volume (459.583 m3) of the remaining cargo after discharge from the standard volume (78,573.955 m3) at 15℃ confirmed in the Ullage Table by the CIQ before discharge, which leads to the standard volume (78114.372 m3) of discharged cargo; the standard density of the cargo at 15℃ was 0.9600 g / cm3 , thus could calculate the weight of discharged cargo in the air was 74,907.308 MT, 385.692 MT less than the cargo weight in the B/L. On December 19, 2005, China Pacific Shenzhen paid the indemnity of CNY 2,566,080 to Sinochem. China Pacific Shenzhen also paid the inspection fee of CNY 44,432 to CCIC Panyu. On May 1, 2006, this court, upon the request of the defendant, executed preservation of evidence on the Slops Removal Service Report, Oil Record Book and the Ullage Table of “Silva” when it was anchoring at Qingdao Beihai Shipyard. It also ascertained the fact that the foreign exchange rate between USD and CNY publicized by People’s Bank of China was 8.0911 on September 21, 2005. With respect to the disputes between the two parties over the facts of this case, the collegiate bench ascertains the following: I. With respect to the fact that “Silva ” provided Ullage Table to the inspection unit at the port of discharging The two plaintiffs claimed: “Silva” provided only the duplicate of Ullage Table, instead of the original one, to CIQ and the appraiser Marine Engineering, thus, it’s impossible to verify and ascertain its effect. The defendant claimed that the valid and original Ullage Table was on board the vessel all the time. The Inspection Report issued by Marine Engineering and the Letter of Protest issued by CIQ could just lead to the fact that “Silva” didn’t provide the original Ullage Table. The first page of the original Ullage Table preserved by this court on May 1, 2005 was with a stamp “BUREAU VERITIES” and the writings “AT RIJEKA, ON THE 13th MAY 1999”, which coincided with the record by Marine Engineering that “The Ullage Table was acknowledged by BUREAU VERITIES in 1999”. Comparison showed that data in this Ullage Table corresponded with those in the Vessel Ullage Report and ROB Report issued by CIQ and Marine Engineering. The collegiate bench unanimously hold as follows: although “Silva” provided only the duplicate Ullage Table instead of the original one to CIQ and the appraiser of Marine Engineering, yet it could be ascertained that the duplicate agreed with the original. Though the two plaintiffs raised doubt to the validity of the Ullage Table, they did not provide proof to support their view. So, the Ullage Table should be considered valid at the moment of discharge. II. With respect to the quantity of cargo shortage The defendant claimed: For no measurements had been made along side the vessel when discharging, the computation could be that deduct the volume of the remaining at the bottom of the tank from the cargo volume before discharge to get the delivery volume, and use the delivery volume to compute the weight of cargo in shortage and get the answer is 385.692 MT. The two plaintiffs argued that the defendant as the carrier did not provide the original Ullage Table at the port of discharging, the inspection result based on the duplicate of Ullage Table in the hands of CIQ and Marine Engineering could not be the proof of the delivery quantity in this case. According to the computation result of on the weight of cargo transferred to the barges, the cargo weight Sinochem received from 75 barges in a total amount of 74,052.503 MT, 1240.497 MT less than the figure recorded in the B/L. The collegiate bench reaches the consent that: although the defendant as the carrier provided only the duplicate of the Ullage Table, yet the duplicate one agreed with the original one, so the computation result, basing on the duplicate, by the CIQ and Marine Engineering could be considered the proof of fact in this case. Only for the reason that the Ullage Table provided by the defendant was a duplicate could not deny the computation result of weight by CIQ and Marine Engineering. Weight Certificate No. GD2005/PY233-6 issued by CCIC Guangdong Company can only prove the weight of cargo on board the 75 barges, but cannot prove that this installment of cargo was the whole cargo transferred from “Silva” of the voyage in question. The responsibility of the carrier with respect to non-containerized goods covers the period during which the carrier is in charge of the goods, starting from the time of loading of the goods onto the ship until the time the goods are discharged therefrom. In this case, the barges in discharge were appointed by the plaintiff Sinochem, after the cargo was discharged onto the barges, it was no longer under the control of the carrier, that is, it was not within the period of the carrier’s responsibility. Thus, the plaintiffs’ argument about calculating the quantity of cargo shortage on basis of the weight measured from the barges was not established. Marine Engineering was the inspection unit under the appointment of the court and with the consent of the plaintiffs and the defendant. Marine Engineering adopted the calculation method that the cargo volume before discharge minus the volume of the remaining at the bottom of the tank is the delivery volume. Such calculation method in calculating the weight of cargo in shortage would be more reasonable. Thus, it could ascertain the total shortage weight of cargo in question was 385.692 MT. The collegiate bench unanimously holds as follows: This case is a dispute over foreign-related contract of carriage of goods by sea, which is within the scope of dispute over maritime contracts, thus shall be under the jurisdiction of the maritime courts. This court has the jurisdiction over this case for the destination of the voyage of “Silva” in question is within the power scope of this court. Both the plaintiffs and the defendant opined that the laws of P. R. China shall be applicable to the dispute in this case; in accordance with Article 296 of Maritime Code of the P. R. C., the law of the P.R.C. shall be applied to govern the settlement of substantive dispute of this case. The plaintiff Sinochem was the consignee and the defendant MELINDA was the carrier. According to Article 46 of Maritime Code of the P. R. C., during the period the carrier is in charge of the goods, the carrier shall be liable for the loss of or damage to the goods. Shortage did occur during the period the carrier was in charge of the goods, thus the defendant MELINDA shall compensate to Sinochem for the loss arising from the cargo shortage. The plaintiff China Pacific Shenzhen was the insurer of the carriage of goods by sea in question. It is stipulated in Article 252 of Maritime Code of the P. R. C.: Where the loss of or damage to the subject matter insured within the insurance coverage is caused by a third person, the right of the insured to demand compensation from the third person shall be subrogated to his insurer from the time the indemnity is paid. China Pacific paid Sinochem the indemnity in CNY 2,566,080, thus the former got the subrogation right and could claim compensation against MELINDA by exercising the right of subrogation, the right Sinochem had on MELINDA, up to the amount of the insurance indemnity. During the period the carrier is in charge of the goods, the carrier shall be liable for the loss of or damage to the goods. The total amount of cargo in shortage occurred during the period the carrier is in chare of the cargo is 385.692 MT. The defendant’s argument that the carrier has exoneration from the liability where the cargo shortage is within 0.5% of the total amount is without the lawful proof, thus is not supported. But there was 206.61 m3 of solid matter remained at the bottom of the tank, the inspection report before loading showed that the tank was clean and dry. The Sales Contract allows the existence of water and deposit, which did not exceed 0.5% of the total volume, in the cargo. Thus, it could be ascertained that the solid sediment after discharge was made up from the deposit in the cargo, which was caused by the nature of the cargo, thus should be deducted from the quantity of cargo in shortage. Because the density of this potion of matter is hard to measure, considering that the density of the deposit must be larger than that of the cargo oil, the weight of this potion of matter could be considered 195.867 MT with the calculation on the density of cargo oil of 0.948 g / cm3. In conclusion, the defendant shall be liable for 189.825 MT of cargo shortage. The plaintiff Sinochem paid the cargo on the basis of CIF price of USD 343.64 /ton. At that account, the total value of cargo in shortage is USD 65,231.463. The defendant pointed out that because the plaintiff Sinochem was not the first hand buyer of the cargo in question, it could not calculate the loss on the payable price by Sinochem. This point is not established. According to the foreign exchange rate between USD and CNY of 8.0911 on September 21, 2005, when is the completion of discharging the cargo on board “Silva” of the voyage in question, the defendant shall be liable for the part of loss in CNY 527,794.29. It is stipulated in Article 54 of Maritime Code of the P. R. C.: 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. Thus the two plaintiffs’ demand for compensation of the loss of tariff and VAT and other taxes from the defendant shall not be approved. Inspection fee was a sum of business expenditure paid by China Pacific Shenzhen for ascertaining the amount of indemnity, instead of payment of insurance indemnity, thus it’s beyond the scope of subrogation. Weight Certificate issued by CCIC Guangdong Company is not the proof to establish to cargo shortage in question, the plaintiff China Pacific Shenzhen’s request for compensation for inspection fee is not supported. Because of the cargo shortage occurring in the carriage, the plaintiffs’ application for arresting “Silva” in question was to exercise their legitimate rights, thus the fee thereof shall be borne by the defendant MELINDA. The request of the two plaintiffs that the MELINDA should bear the application fee and the execution fee for arresting the ship shall be supported. The investigation fee in CNY 2000 was advanced by Sinochem is the expenditure of the two plaintiffs’ obligation of bearing the burden of proof, so it shall be borne by Sinochem. In conclusion, the defendant shall be liable for the cargo shortage in a total amount of CNY 527,794.29. Because such amount does not exceed China Pacific Shenzhen’s payment of insurance indemnity, the defendant shall compensate to China Pacific Shenzhen and the interest thereof, the counting of interest started from December 19, 2005, when China Pacific Shenzhen paid the insurance indemnity, to the date of payment as specified by this Judgment, on a basis of loan interest rate issued by the People’s Bank of China in the instant period. Sinochem’s request for compensation shall not be approved. Above all, pursuant to Article 46 and Article 252 of Maritime Code of the P. R. C. as well as the first paragraph of Article 45 of Insurance Law of the P. R. C. the Judgment is hereby given as follows: 1. The defendant MELINDA shall compensate to the plaintiff China Pacific Shenzhen in amount of CNY 527,794.29 and its interest (calculating from December 19, 2005 to the date of payment as specified by this Judgment, on a basis of loan interest rate issued by the People’s Bank of China in the instant period); 2. Other litigation requests of the plaintiff China Pacific Shenzhen shall be rejected; 3. Litigation request of the Sinochem shall be rejected; The application fee for arresting the ship before litigation in CNY 5000 and the execution fee in CNY30,000 shall be undertaken by the defendant MELINDA. The investigation fee in CNY 2000 shall be jointly undertaken by the plaintiff China Pacific Shenzhen and Sinochem. Among the entertainment fee in CNY 31,660 and other litigation fee in CNY 300, in an aggregated amount of CNY31,960, CNY 28,064 thereof shall be jointly borne by the two plaintiffs China Pacific Shenzhen and Sinochem, CNY 3896 thereof shall be borne by the defendant MELINDA. The above litigation fees have been advanced by the plaintiff Sinochem, the defendant shall pay the part resting on it to the plaintiff Sinochem, this court will not check and return. The above monetary obligations should be fulfilled within 10 days from the date this judgment takes effect. If not satisfied with this judgment, the plaintiff China Pacific Shenzhen and Sinochem can within 15 days upon service of this judgment, the defendant MELINDA can within 30 days upon service of this judgment, lodge appeal to the Higher People’s Court of Guangdong Province by filling with this court the Statement of Appeal with copies according to the numbers of the opposing parties. Judge: Wu Zili Acting Judge: Huang Xiwu Acting Judge: Fang Jianhua Guangzhou Maritime Court (stamp) Date: August 14, 2006 This copy is proved to be identical with the original after checking. Secretary: Wang Fei The translation is provided by Huang & Huang CO.

GUANGZHOU MARITIME COURT OF THE PEOPLE’S REPUBLIC OF CHINA Civil Judgment (2004) GHFCZ No.312 Plaintiff : Henan Cereals Oils and Foodstuffs Import and Export (Group) Co., Ltd. Domicile : 23, Jingqi Road, Zhengzhou, Henan Province, P. R. China Legal Rep. : Yu Huiqing, Chairman of the Board Agent ad litem : Li Hongji, Attorney at Commerce & Finance Law Offices Agent ad litem : Zhang Wei, Attorney at Commerce & Finance Law Offices Defendant : Saint Vincent Shipping Inc. Domicile : RCM Building, 1418 Marcelino Street, Ermita, Philippines Legal Rep. : Edwin M. Cristobal, General Manager and Director of the Company Agent ad litem : Chen Xiangyong, Attorney at Wang Jing & Co., Law Firm Agent ad litem : Zhong Cheng, Attorney at Wang Jing & Co. Law Firm Defendant : Noble Europe Limited Domicile : 1/F., 18 Buckingham Gate London SWIE 6LB, United Kingdom Legal Rep. : Nigel Alexander Herdman, Director Agent ad litem : Yang Wengui, Attorney at Hai Tong & Partners Law Firm Agent ad litem : Tong Mei, Attorney at Hai Tong & Partners Law Firm Defendant : Noble Grain Pte Limited Domicile : 600 North Bridge Road, #10-08, Parkview Square, 188778 Singapore Legal Rep. : Mahesh Asrani, Director Agent ad litem : Yang Wengui, Attorney at Hai Tong & Partners Law Firm Agent ad litem : Tong Mei, Attorney at Hai Tong & Partners Law Firm : Defendant : Noble Chartering Limited Domicile : 18th Floor, MassMutual Tower, 38 Gloucester Road, Hong Kong Legal Rep. : Banga Harindarpal Singh, Director Agent ad litem : Yang Wengui, Attorney at Hai Tong & Partners Law Firm Agent ad litem : Tong Mei, Attorney at Hai Tong & Partners Law Firm With regard to disputes over the contract of carriage of cargo by sea between the Plaintiff, Henan Cereals Oils and Foodstuffs Import and Export (Group) Co., Ltd. (“Henan Cereals Oils”), and the Defendant, Saint Vincent Shipping Inc. (“Saint Vincent”), the Plaintiff brought a lawsuit before this Court on 7 September 2004 and superadded Noble Europe Limited (“Noble Europe”) as the joint Defendant. This Court accepted the case on 20 September 2004, and formed a collegial panel in accordance with laws, of which, Judge Feng Ziming acted as the Presiding Judge, Judge Gong Jie and Acting Judge Zhang Kexiong attended the deliberation. On 8 March 2005, the Plaintiff superadded Noble Grain Pte Limited (“Noble Grain”) and Noble Chartering Limited (“Noble Chartering”) as joint Defendants. Within the period of adducing the bill of defence, the Defendants, Saint Vincent and Noble Europe, both filed objections to the Court’s jurisdiction over the case. Through examination, the Court made rulings on 13 January 2005, dismissing the jurisdiction dissension raised by the two Defendants. The four Defendants dissatisfied with the rulings and filed appeals to the Higher People’s Court of Guangdong Province. On 15 March 2006, the Higher People’s Court of Guangdong Province dismissed the Defendants’ appeals, and sustained the rulings entered by this Court. Personnel relocation was made to the collegial panel on 13 April 2006, as a result of which, Judge Wu Zili acted as the Presiding Judge, while Acting Judge Huang Xiwu and Acting Judge Fang Jianhua attended the deliberation on this case. Later, due to the resignation of Fang Jianhua, the collegial panel was adjusted to consist of the Presiding Judge Wu Zili, Judge Song Weili, and Acting Judge Huang Xiwu. The Court convened public hearings on this case from 22 May to 25 May 2007 and from 27 August to 28 August 2007. Li Hongji and Zhang Wei acting for the Plaintiff; Chen Xiangyong, the agent ad litem of Saint Vincent; Yang Wengui and Tong Mei, the agents ad litem of Noble Europe, Noble Grain and Noble Chartering attended the court hearings. This case has now been closed. The Plaintiff asserted as follows: the Plaintiff concluded two contracts for international sales of cargo (No.NC070586 and No.NC070316-B) with Noble Grain on 25 February 2004, in which it was agreed that the Plaintiff would purchase 20,000tons and 35,000tons of Brazilian soyabeans respectively from Noble Grain. The cargo would be shipped between 1 April and 25 April 2004, and the port of destination was Chiwan, Shenzhen. On 17 April 2004, Noble Grain delivered the cargo to M/V “SEAFARER” owned by Saint Vincent for carriage. After investigation, it was found that Saint Vincent was the actual carrier and Noble Europe was the carrier. After the cargo were shipped onboard the vessel, the agent of M/V “SEAFARER” issued two clean bills of lading, specifying that the quantity of the cargo was 22,000tons and 37,725.734tons respectively, totaling 59,725.734tons. Later, the Plaintiff acquired these two bills of lading by negotiating the Letter of Credit. Noble Grain sent notices to the Plaintiff on 18 April 2004 and 12 May 2004, informing the Plaintiff that the aforesaid 59,725.734tons of soya beans was estimated to arrive at the port of discharging (namely Chiwan Port) on 24 May 2004. However, M/V “SEAFARER” did not arrive at the discharging port until 29 June, due to her frequent stopover and unreasonable deviation during the voyage. The quality of the cargo deteriorated due to the long-time carriage, which thus gave rise to a huge cargo loss. As a result of the aforesaid ship’s delay, the Plaintiff breached contracts with their clients, and had to assume the liability arising therefrom. Meanwhile, the delay of the arrival of the cargo also gave rise to a loss incurred by price difference, and the losses sustained by the Plaintiff and the end user, such as the transportation fees, warehousing fees, and financial costs. The losses sustained by the Plaintiff and the end user were verified to be in the amount of about RMB53,800,000 (unless otherwise stated, the currency referred hereunder is RMB). Under the present case, Noble Europe, Noble Grain, and Noble Chartering shall be deemed as an inseparable whole and jointly undertake the carrier’s liability. Saint Vincent was the actual carrier in the case, and therefore should be jointly and severally liable for the loss incurred therefrom. The Plaintiff, as the holder of the bills of lading, brought this suit on the ground of the contractual relationship established by the Contract of Carriage of Cargo by Sea evidenced by the bills of lading, and had standing to claim compensation against the carriers and the actual carrier. The Plaintiff requested the Court to order as follows: Noble Europe, Noble Grain and Noble Chartering should jointly assume the carrier’s liabilities, and compensate the Plaintiff for the losses in the amount of RMB53,800,000, and bear all the preservation fees and litigation costs; Saint Vincent shall be jointly and severally liable for the aforesaid losses. The Plaintiff submitted the following evidence to support their arguments: 1. Letter of Confirmation sent by Noble Grain, proving that Shantou Zhongxing Grease Co., Ltd. (“Shantou Zhongxing”) was the buyer and the actual user of 55,000tons of South American soya beans; 2. Sales Contract No. NC070316, proving that Shantou Zhongxing was the buyer and the actual user; 3. Letter of Guarantee received by Noble Grain, proving that Shantou Zhongxing was the buyer and the actual user; 4. Letter sent by Shantou Zhongxing to Noble Grain, proving that the Plaintiff was the import agent; 5. Letter sent by the Plaintiff to Shantou Zhongxing, proving that the Plaintiff was the import agent; 6. Supplementary Agency Agreement for Import of Soya beans, proving that the Plaintiff was the import agent; 7. Sales Contract No.NC070316-B, and Sales Contract No.NC070586, proving that the Plaintiff, acting as the import agent of Shantou Zhongxing, concluded contracts with the seller, and that Noble Grain knew Shantou Zhongxing was the actual user and the end user of such 55,000tons of South American soya beans; 8. Letter regarding the conditions of the vessel, proving that M/V “SEAFARER” was the vessel carrying 55,000tons of South American soybeans; Noble Grain sent letters to Shantou Zhongxing and the Plaintiff, evidencing that it knew Shantou Zhongxing was the end user while the Plaintiff was the import agent; 9. Charter Party, proving that the Noble Europe concluded, in the name of the carrier, such charter party with Noble Grain; 10. Bs/L No.1&2, proving that if without contradiction to other evidential materials, Noble Grain, as the issuer of the bills of lading, may be deemed as the carrier; 11. Two Shipment Notices, proving that M/V “SEAFARER” was estimated to arrive at Chiwan Port, China on 24 May 2004; 12. Two Commercial Invoices, proving that the average unit price of soya beans was USD420.48/ton; 13. Letter of Pricing sent by Shantou Zhongxing, proving that Shantou Zhongxing fixed the price of soya beans, which showed Shantou Zhongxing was the end user and Noble Grain was aware of such fact; 14. Letter regarding the chartering of M/V “SEAFARER” by Noble Chartering, proving that Noble Chartering was the charterer and the carrier in the present case; 15. Instructions given by Noble Chartering, proving that on 21 May 2004, M/V “SEAFARER” had already berthed off Singapore and under normal circumstances she certainly could have arrived at Chiwan Port on 24 May 2004; 16. Instructions given by Noble Chartering, proving that Noble Chartering and M/V “SEAFARER” deliberately stayed off Singapore for 2 days; 17. Estimated Arrival Notice issued by the Master of M/V “SEAFARER”, proving that even though the vessel stayed off Singapore for 4 days without any reasonable reasons, the vessel could still arrive at the discharging port on 29 May; 18. Notice of Arrival issued by the Master of M/V “SEAFARER”, proving that M/V “SEAFARER” was in good conditions in all aspects and would arrive at the discharging port on 29 May; 19. Notice of Arrival issued by Shenzhen United International Shipping Agency Co., Ltd. (“SUNISCO”), proving that the shipping agent informed Shantou Zhongxing that the vessel was estimated to arrive at Chiwan Port at 1800hrs on 29 May; 20. Letter sent by SUNISCO to the Master, proving that M/V “SEAFARER” was under normal sailing condition on 28 May; 21. Instructions given by Noble Chartering, proving that Noble Chartering and M/V “SEAFARER” maliciously delayed the voyage and should be held liable for the losses arising from the delay in delivering the cargo; 22. Notice issued by SUNISCO, proving that SUNISCO made up an excuse and in fact it was because of the mechanical breakdown that Noble Chartering instructed M/V “SEAFARER” to proceed to and stay at Hong Kong OPL; 23. Letter sent by the Plaintiff and Shantou Zhongxing jointly to Noble Grain, proving that the Plaintiff and Shantou Zhongxing, as the buyer and the end user of the cargo, had no idea about the voyage conditions of M/V “SEAFARER”, and Noble Grain failed to perform its obligation of notification; 24. Deck Logs, proving that no mechanical breakdown was found in M/V “SEAFARER” during her whole voyage and the vessel could certainly have arrived at Chiwan on 24 May 2004, namely the estimated time of arrival, but Noble Chartering instructed the vessel to berth off Singapore from 21 to 25 May (namely 4 days) and later instructed the vessel to stay off Hong Kong waters for nearly one month, i.e. from 29 May to 25 June. The vessel set sail to LAMMA, Hong Kong on 26 June, but she berthed at LAMMA for one month, to wait for the charterer’s instruction. The vessel berthed at Chiwan Port on 21 July. Noble Chartering and Saint Vincent deliberately violated the provisions of the Maritime Code of the P. R. China, and stayed at sea for an unreasonable long time with the malicious intention to delay in arriving at the discharging port. Therefore Noble Chartering and Saint Vincent should indemnify the buyer and the end user for all the losses arising therefrom; 25. Letter from Noble Grain, proving that M/V “SEAFARER” did not arrive at Chiwan port until 21 July 2004; 26. Payment Certificate of Import Duties, proving that the after-tax unit price of soya beans was RMB4,050/ton; 27. Weight Survey Certificate, proving that 107.434tons of the cargo were short-landed, and calculated as per the price of RMB4,050/ton, the loss incurred therefrom totaled RMB435,107.70; 28. Damaged Cargo Inspection Certificate issued by Shekou CIQ, proving that 268.627tons of soya beans were damaged, and calculated as per the price of RMB4,050/ton, the loss incurred therefrom totaled RMB1,087,939.35. The inspection fee was RMB34,556. The prolonged storage of soya beans in the cargo holds and the insufficient ventilation also resulted in serious deterioration of the quality of soya beans and a relatively low oil production rate; 29. Letter of Protest issued by Shenzhen Chiwan Wharf Holdings Limited (“Chiwan Wharf Limited”), proving that M/V “SEAFARER” arrived at Chiwan Port on 21 July 2004, which was two months late than the due day. Due to the insufficient ventilation and the high temperature in summer, soya beans were damaged completely, as a result of which, the quality became deteriorated, the production cost increased and the oil production rate became lower; 30. Survey Report issued by Shantou CNAL, proving that due to the prolonged voyage, the quality of soya beans became deteriorated. As the main index of the quality of soya beans, acid value determines the oil production rate and the production cost. Acid value of soya beans at issue was relatively high and as a result the oil production rate thereof was low, which caused substantial loss to the end user; 31. Letter of Complaint from Clients, proving that the deterioration of soya beans carried by M/V “SEAFARER” resulted in the poor quality of soya bean meals; 32. Contract and Invoice in support of Loss of Warehousing Costs, proving that due to the malicious delay in arrival at the discharging port, the warehousing cost paid by Shantou Zhongxing increased by RMB948,696.53; 33. Contract, Payment Voucher, and Receipt in support of the Payment of Liquidated damages resulted from breach of contract, proving that due to the malicious delay in arrival at the discharging port, Shantou Zhongxing had to pay liquidated damages resulted from breach of contract, equivalent to RMB18,709,000; 34. Contract and Invoice in support of Loss of Transportation Costs, proving that due to the delay of M/V “SEAFARER” and the increase of transportation charge, the transportation costs of soya beans increased, giving rise to a loss of transportation costs in the amount of RMB1,251,500; 35. Proof of loss from low oil production rate: production of soya beans carried onboard M/V “SEAFARER”, proving that the ship’s delay resulted in the poor quality of Brazilian soya beans, and a low oil production rate (only 17.64%, lower than the oil content of 20.35% tested at the port of loading). The production of soya bean oil decreased by 1,603.38tons, giving rise to a loss of RMB10,347,140; 36. Proof of Loss incurred from increase of production cost: the price of raw materials and auxiliary materials, consumption of soya bean under normal production, consumption of Brazilian soya beans at issue, and material collection list, proving that due to the ship’s delay, the production cost for Brazilian soya beans increased by RMB231,951; 37. Proof of Loss incurred from the differences of sales prices of soya bean oil and soya bean meals: the price of soya bean meals and soya bean oil from 4 June to 4 July 2004, and the actual sales contracts and invoices of soya bean meals and soya bean oil, proving that the loss incurred from the price differences of soya bean meals and soya bean oil produced from soya beans totaled RMB21,465,372.33; 38. Statement of Production concerning Brazilian soya beans at issue formulated by Shantou Zhongxing, proving that the ship’s delay resulted in the poor quality of Brazilian soya beans, and a low oil production rate (only 17.64%, lower than the oil content of 20.35% tested at the port of loading). The production of soya bean oil decreased by 1,603tons, giving rise to a loss of RMB10,347,140; 39 Urgent Report of Change of Quality of Soya beans carried by M/V “SEAFARER” during Storage , proving that because soya beans at issue had been stored in the cargo holds for such a long time and the temperature within the cargo holds was too high, the natural property of soya beans distinctly changed and their quality became deteriorated; 40. Repayment Agreement, proving that because M/V “SEAFARER” maliciously delayed her arrival, Shantou Zhongxing (namely the actual user) suffered from a great loss in the amount of over RMB50,000,000, as a result of which Shantou Zhongxing was unable to reimburse the Plaintiff for the advance payment made by the Plaintiff, equivalent to over RMB56,000,000; 41. Chart of Price Trend of Soya Beans from 2004 to 2005, proving that the price of soya beans kept decreasing since July 2004, as a result of which, the price of the relevant products, such as the salad oil and soya bean meals, also decreased; 42. Price List of Salad Oil and Price List of Soya Bean Meals, proving that the price of salad oil and that of soya bean meals from June to July 2004 in Guangdong respectively was RMB6470/ton and RMB2890/ton; 43. Brief Introduction to Alfalaval Company and its Guarantee on the products, proving that the equipment of Shantou Zhongxing was at a leading level in the world and the low extraction rate of the salad oil was closely related to the deterioration of soya beans; 44. Introduction for the relationship between the acid value and the free fat acid in the book Chemical Nature of Fat Acid and Oil, proving that loss of oil would increase by 2% for each increase of acid value. The acid value of soya beans at issue was rather high, giving rise to a low extraction rate of salad oil; 45. Quarantine Permit for the Entry Animals and Plants No.PB00041315, proving that the Plaintiff applied for and collected the Permit; 46. Letter in which the Plaintiff and Shantou Zhongxing requested Noble Grain to provide the Safety Certificate, and the Notice on the Acquirement of the Safety Certificate by Noble Grain, proving that Noble Grain did not acquire the Safety Certificate necessary for the imported genetically modified soya beans until 25 June 2004, and that was the reason why it requested M/V “SEAFARER” to keep drifting and staying at sea; 47. Letter in which PICC Property and Casualty Company Limited, Shantou Branch (“Shantou PICC”) asked for the information of the voyage route, proving that according to common practice and general understanding, M/V “SEAFARER” should have arrived at Chiwan port before 31 May 2004; 48. Notification of Inspection and Quarantine Treatment No.470100104024804, Certificate issued by SGS at the loading port, proving that the carrier issued clean Bs/L and the cargo should not have contained any sorghum halepense and sorghum almum parodi; however, when the cargo arrived at the discharging port, some sorghum halepense and sorghum almum parodi were found mixed with soya beans at issue. As a result, the time was delayed, the expenses increased and the cargo could not be resold, which caused loss to the Plaintiff. The carrier should be liable for the said loss sustained by the Plaintiff; 49. Civil Judgment numbered (2003) GHFCZ No.377 rendered by Guangzhou Maritime Court, proving that the carrier should be held liable for the loss resulted from soya beans mixed with sorghum halepense and sorghum almum parody; 50. Proof of L/C Payment, proving that the opening bank had already performed the obligation of payment; 51. Application for Appraisal, proving that the Plaintiff requested for an appraisal on the relationship between the extraction rate of soybean salad oil and the acid value of soya beans; 52. Application for ordering the Defendant to adduce evidence, proving that the Plaintiff requested Noble Grain to submit documents in support of Noble Grain’s receipt of L/C payment; 53. Letter sent by Noble Grain to the Plaintiff on 14 May 2004, proving that Noble Grain considered the cargo could arrive at the discharging port as scheduled; 54. Statement of Facts on Discharging Cargo from M/V “SEAFARER”, this evidence was supplementary to Evidence No.32 submitted by the Plaintiff; The Defendant, Saint Vincent, contended as follows: 1. According to the terms and conditions under the Charter Party as incorporated into the bill of lading, and the legal opinions presented by the attorney from Britain, English law and Hague Rules shall apply to the case; 2. The Plaintiff was the import agent of the cargo at issue, rather than the actual consignee of the cargo, and therefore the Plaintiff was not qualified to claim compensation under the case. Furthermore, the evidence submitted by Henan Cereals Oils showed that most of the losses and fees were paid and collected by Shantou Zhongxing, whilst the Plaintiff did not suffer from any actual loss; 3. According to the Charter Party, Noble Chartering, Noble Europe, and Noble Grain should be deemed as a whole, or the representative or agent of each other. Therefore they should be deemed as the shipper (the seller of the cargo) and the final voyage charterer; 4. Saint Vincent, as the actual carrier, had properly and carefully take care and store the cargo during the whole voyage, and did not deviate during the whole voyage; 5. Saint Vincent should not be held liable for any delay loss claimed by the Plaintiff. The present case does not involve any delay in delivering the cargo. Saint Vincent had performed its obligation to reasonably dispatch the vessel. The stopover of M/V “SEAFARER” at Hong Kong and in Singapore was caused by the instructions from the charterer. However, the more important reason for ship’s delay was the failure of Noble Grain and the Plaintiff in acquiring necessary documents for importing the cargo, such as the Inspection Certificate, the GMO Safety Certificate and the GMO Label and the trade disputes arising between the Plaintiff and Noble Grain. Furthermore, red beans being found in the cargo during the process of discharging had caused the further delay of M/V “SEAFARER” at Chiwan port. Therefore Saint Vincent should not be held liable. Saint Vincent requested the Court to dismiss the claims filed by the Plaintiff against Saint Vincent. Saint Vincent submitted the following evidence to support their arguments: 1. Bills of Lading (2 copies) and Charter Party, proving the legal relationship between the parties involved in the case and the laws applicable to the case; 2. Mate’s Receipt, proving that the cargo received onboard were in apparent good order and condition, with the clause of “Unknown”, and the cargo were shipped by 11 different shippers; 3. Manifest, Stowage Plan, proving the stowage conditions of the cargo; 4. Ship’s Particulars, Certificate of Vessel Registry, International Tonnage Certificate, Cargo Ship Safety Construction Certificate, Cargo Ship Safety Equipment Certificate, Record of Equipment, Minimum Safe Manning Certificate, International Load Line Certificate, Document of Compliance, Crew List, Certificates of Competency of Crews, proving that Saint Vincent had exercised due diligence to make the ship seaworthy, properly man the ship, and make the holds fit for carriage of the cargo before and at the beginning of the voyage; 5. Detail Record of Shipboard Maintenance (Deck), proving that Saint Vincent had exercised due diligence to make the ship seaworthy, and make the holds fit for carriage of the cargo; 6. Deck Logbooks (from 15 March to 11 August 2004), proving the water-tight of all the cargo holds and the main course of the voyage; 7. Inspection Reports for Cargo Holds (7 copies), proving that the inspection reports issued by the Ministry of Agriculture of Brazil, Intertek Caleb Brett, Saybolt/Concremat, Control Union World Group, SGS, Schutter do Brasil and BSI respectively all indicated that the cargo holds were fit for carriage of the cargo; 8. Loading Plan, proving that Saint Vinvent had properly and carefully stored the cargo; 9. Statement of Facts at Paranagua (loading), proving the whole process of loading, and that Saint Vincent had properly and carefully loaded the cargo; 10. Sea Protest issued by Master against the loading figures, proving that there was a difference of 322.014tons between the B/L figure and the draft survey figure, and Saint Vincent should not be held liable for the cargo shortage; 11. Fumigation Notice and Fumigation Certificate, proving that according to the Fumigation Notice and the Fumigation Certificate, the vessel could not carry out ventilation within 10 days after the date of fumigation, nor could the bilge be sounded; 12. Temperature and Cargo Ventilation Logbook, proving that the vessel had carried out ventilation according to the dew point during the voyage, and no abnormal change of temperature in the cargo holds had been found, and that Saint Vincent had properly and carefully carried, kept and cared for the cargo; 13. Hold Bilge Sounding Logbook, proving that the bilge of the cargo holds had been kept dry and waterless, and that Saint Vincent had properly and carefully carried, kept and cared for the cargo; 14. Statement of Fact of M/V “SEAFARER” (Discharging) (2 copies), proving the whole process of discharging. Saint Vincent had properly and carefully discharged the cargo. The discharging operations were delayed due to selection of red soya beans, which caused damage to the cargo; 15. Telex sent by the sub-charterer to the Master on 1 March 2004, proving that on 1 March 2004, the sub-charterer Swissmarine Services S.A. of Geneva (“Swissmarine”) informed the Master that the vessel had been chartered to Noble Chartering and would be delivered to Noble Chartering when passing Cape Passero; 16. Telex sent by Noble Chartering to the Master on 2 March 2004, proving that Noble Chartering was the voyage charterer under the voyage at dispute, and that on 2 March 2004 Noble Chartering gave voyage instructions to the Master, requesting the vessel to proceed to Parangua for loading soya beans; 17. Telex sent by the Master to Noble Chartering on 3 March 2004, proving that at 1900hrs on 1 March 2004 the vessel was delivered to Noble Chartering when passing Cape Passero; 18. Telex sent by Noble Chartering to the Master on 8 April 2004, proving that Noble Chartering instructed the Master to authorize Noble Grain to issue bills of lading at Singapore; 19. Telex sent by Noble Chartering to the Master on 9 April 2004, proving that on 9 April 2004 Noble Chartering instructed the Master to sail according to the meteorological route provided by Applied Weather Technology Inc.; 20. Letter of Authorization issued by the Master on 11 April 2004, proving that on 11 April 2004, the Master, according to the instruction given by Noble Chartering, authorized the charterer or the charterer’s agent to issue Bs/L on his behalf pursuant to the Charter Party; 21. Telex sent by Noble Chartering to the Master on 27 April 2004, proving that on 27 April 2004, Noble Chartering informed the vessel that the discharging port had been changed from Shanghai Port to Chiwan Port, and the vessel was instructed to proceed to Singapore for bunkering; 22. Telex sent by Noble Chartering to the Master on 10 May 2004, proving that on 10 May 2004, Noble Chartering against instructed the vessel to proceed to Singapore for bunkering; 23. Telex sent by Noble Chartering to the Master on 10 May 2004, proving that on 10 May 2004, Noble Chartering informed the Master that the surveyor appointed by the charterer would embark the vessel to collect the samples of the cargo when the vessel was bunkering at Singapore; 24. Application for Port Entry of International Sailing Ships, proving that on 8 May 2004, the port entry application filed by M/V “SEAFARER” was approved; 25. Deck Logbook of M/V “SEAFARER” dated 21 May 2004, proving that on 21 May 2004 the surveyor appointed by the charterer had embarked the vessel to collect cargo samples at Singapore; 26. Telexes (2 copies) sent by Noble Chartering to the Master at 0719hrs and 1203hrs respectively on 21 May 2004, proving that on 21 May 2004, Noble Chartering instructed the vessel to drift off Singapore to wait for further voyage instruction; 27. Telex sent by the Master to Noble Chartering on 22 May 2004, proving that as instructed by Noble Chartering, the vessel arrived at Singapore for bunkering and proceeded to the designated area for drifting; 28. Telex sent by Noble Chartering to the Master on 25 May 2004, proving that on 25 May 2004 Noble Chartering instructed the vessel to proceed to the discharging port, namely Chiwan Port; 29. Telex sent by Noble Chartering to the Master on 28 May 2004, proving that on 28 May 2004, Noble Chartering requested the vessel to proceed to Hong Kong OPL, and to wait for further instructions; 30. Telex sent by the Master to Noble Chartering on 29 May 2004, proving that at 1418hrs on 29 May 2004, the vessel arrived at Hong Kong OPL; 31. Telex sent by the Master to the agent of Noble Chartering at the discharging port on 29 May 2004, proving that at 1418hrs on 29 May 2004, the vessel arrived at Hong Kong OPL, and submitted the Notice of Readiness for Discharging; 32. Telex sent by the agent of Noble Chartering in Hong Kong to the Master on 30 May 2004, proving that on 30 May 2004, the agent of Noble Chartering requested the vessel to keep waiting for instructions from Noble Chartering; 33. Telex sent by the Master to Noble Chartering on 31 May 2004, proving that on 31 May 2004, the Master requested Noble Chartering to inform him of the intention/reason for the vessel’s anchoring at Hong Kong OPL and how long the vessel had to stay there; 34. Telex sent by the Master to Noble Chartering on 1 June 2004, proving that on 1 June 2006, the Master requested Noble Chartering to inform him of the intention/reason for the vessel’s anchoring at Hong Kong OPL and how long the vessel had to stay there, and that the Master requested Noble Chartering to arrange the berth as soon as possible, since the vessel would be delivered and crewmembers would be changed after discharging the cargo at Chiwan Port; 35. Application Form of Entry Quarantine, proving that on 1 June 2004, the application for entry quarantine for M/V “SEAFARER” was approved; 36. Telex sent by Noble Chartering to the Master at 0156hrs on 2 June 2004, proving that at 0156hrs on 2 June 2004, Noble Chartering informed the Master that they were still waiting for the instructions of the cargo charterer; 37. Telex sent by Noble Chartering to the Master at 0323hrs on 2 June 2004, proving that at 0323hrs on 2 June 2004, Noble Chartering informed the Master again that before the cargo charterer solved its problems, the vessel must keep waiting at Hong Kong OPL; 38. Telex sent by Noble Chartering to the Master on 14 June 2004, together with Evidence No.24 & 35, proving that on 14 June 2004, the charterer did not obtained the import license for the cargo. Since the charterer did not obtain the import license, Noble Chartering could not give voyage instructions to the vessel; 39. Telex sent by the Master to Noble Chartering on 17 June 2004, proving that on 17 June 2004, the Master requested Noble Chartering to provide the intention and schedule of berthing; 40. Telex sent by the Master to Noble Chartering on 21 June 2004, proving that on 21 June 2004, the Master again requested Noble Chartering to provide the intention and schedule of berthing; 41. Telex sent by Noble Chartering to the Master on 25 June 2004, proving that on 25 June 2004, the charter solved its problems, and the vessel could follow the instructions from the agent of Noble Chartering; 42. Telex sent by the agent of Noble Chartering to the Master on 25 June 2004, proving that on 25 June 2004, the agent of Noble Chartering instructed the vessel to proceed to the southeast of Lamma Anchorage, Hong Kong; 43. Telex sent by the Master to Noble Chartering on 26 June 2004, proving that at 1543hrs on 26 June 2004, the vessel arrived at the southeast of Lamma Anchorage; 44. Telex sent by Noble Chartering to the Master on 29 June 2004, proving that on 29 June 2004, Noble Chartering instructed the Master to tender to the agent the NOR according to the time when the vessel anchored at the southeast of Lamma Anchorage; 45. Notice of Readiness, proving that on 21 July 2004, the Master, as instructed, tendered the NOR, stating that M/V “SEAFARER” arrived at SE Lamma on 26 June, and was ready for discharging; 46. Telex sent by the agent of Noble Chartering to the Master on 1 July 2004, proving that on 1 July 2004, the agent of Noble Chartering, namely SUNISCO, instructed the vessel to proceed to Urmston Road Anchorage for CIQ inspection and quarantine as well as sampling; 47. Deck Logbook of M.V. “SEAFARER” dated 2 July 2004, proving that on 2 July 2004 CIQ inspected, quarantined and sampled the cargo at Urmston Road Anchorage; 48. Summary of Meeting held among four parties concerning the discharging of cargo carried by M/V “SEAFARER”, proving that on 9 July 2004, the Plaintiff reached an agreement with Noble Grain and Chiwan Shipping Foodstuff Wharf Co., Ltd. on the discharging of soya beans and the pick-up of soya beans treated with seed coated agent; 49. Agreement on Entry for Berth & Pick-up of Soya Beans of M/V “SEAFARER”, proving that on 19 July 2004, Noble Grain and Chiwan Wharf Limited reached an agreement on Entry for Berth & Pick-up of Soya Beans; 50. Telex sent by the agent of Noble Chartering to the Master on 20 July 2004, proving that the agent of Noble Chartering, namely SUNISCO, did not instruct the vessel to berth at Chiwan Port until 20 July 2004; 51. Sea Protest submitted by the Master on 21 July 2004, proving that the Master declared that the vessel encountered a bad weather when sailing according to the meteorological route as instructed by Applied Weather Technology Inc., and the Master noted his protest against the damage to the cargo caused by the bad weather; 64. Letter of Protest sent by the Master to Noble Chartering and the relevant parities on 22 July 2004, proving that the Master declared the vessel and the owner were not liable for any cargo loss; 53. Statement of Master of M/V “SEAFARER”, proving the whole course of the voyage at issue and the relevant facts. The Owner had exercised due diligence to load, transfer, stow, carry, take care, and discharge the cargo; 54. Statement of Chief Officer of M/V “SEAFARER”, proving the whole course of the voyage at issue and the relevant facts. The owner had exercised due diligence to load, transfer, stow, carry, take care, and discharge the cargo; 55. Statement of Facts of Chief Engineer, proving that during the voyage, bunkers were not heated whenever the vessel received bunkers or bunkers were transferred; 56. Inspection Report issued by Guangzhou Balance Cargo Control & Survey Ltd., proving that the total loss of soya beans was in the amount of US$37056.90, and the direct causes of such damage were the inherent defect of the cargo and that part of the cargo had been wetted before loading. The prolonged voyage and discharging were the external conditions for the damage to soya beans, which accelerated the mould/caking/discoloration of soya beans. The mildew damage to soya beans under both ends of the central joint of two hatches of each cargo hold was probably caused by the water ingress under the bad weather, and such loss incurred was obvious and limited. Evidence No.56 also proved the facts relating to the quarantine and discharging of soya beans at Chiwan Port; 57. Survey Report on M/V “SEAFARER” Voyage No.30 issued by Shanghai Double Hope Insurance Surveyors & Adjusters Co. Ltd.(“Double Hope”), proving that Saint Vincent had exercised due diligence to make the vessel seaworthy, cargo-worthy before and at the beginning of the voyage. Saint Vincent had exercised due diligence to load, take care of the cargo with proper ventilation. The cargo became wet due to the bad weather, but such wetted cargo were very limited and partial. The pick-up of “red soya beans” delayed the discharging operations, and aggravated the damages. The caked soya beans contained a high proportion of residual impurities and foreign substances; 58. Inspection Report issued by CWA International Ltd. on Heat Damage to Brazilian Soyabeans carried onboard M/V “SEAFARER”, proving that deterioration of soyabeans mainly resulted from the prolonged voyage and the delay in discharging. The cargo holds were fit for carriage of the cargo, and the vessel had carried out proper ventilation. Soyabeans at the time of loading were not of good quality. The cargo got wet because of the bad weather, but such damage was limited to a small area and the wet-damaged beans were discharged separately. “Red beans” were found during discharging operations, which further delayed the discharging operations and aggravated the damage; 59. Reports (2 copies) issued by the Price Certification Center of Guangdong Provincial Price Bureau, proving the market price of Brazilian soyabeans in Shenzhen from February to December 2004; 60. Analysis on Route of M/V “SEAFARER” from Paranagua, Brazil to Chiwan, China issued by Professor Wang Jianping from the Navigation College of Dalian Maritime University, proving that the route involved in the case was geographically direct and customary, economic and safe, without any deviation; 61. Letter of Re-declaration on Regulations of Management on Quarantine Licenses for Imported Plants and Animals, proving that on 28 May 2003, AQSIQ re-declared that import units should fulfill formalities for approval of quarantine and obtain Quarantine Licenses for Imported Plants and Animals before signing a sales contract; 62. Letter of Re-declaration on Regulations of Management on Quarantine Licenses for Imported Plants and Animals, proving that on 31 July 2003, AQSIQ declared again that the import units should fulfill formalities for approval of quarantine and obtain Quarantine Licenses for Imported Plants and Animals before signing a sales contract; 63. Warning Circular Regarding Brazilian Soya Beans mixed with Soya Beans treated with Seed Coated Agent (GZJDH [2004] No. 332), proving that Brazilian soya beans exported to China by Noble Grain were mixed with soya beans treated with seed coated agent; since 10 May 2004, Noble Grain had been suspended to export Brazilian soya beans to China; with respect to soya beans shipped en route, those in compliance with the requirements of inspection and quarantine for entry could be allowed to enter into China; 64. Announcement No.73 Issued by AQSIQ, proving that on 16 June 2004, AQSIQ notified that import units or agents should handle formalities of approval according to the relevant provisions for the approval on quarantine of imported plants and animals before signing a sales contract; 65. Announcement No.76 Issued by the AQSIQ, proving that on 23 June 2004, the AQSIQ resumed Noble Grain’s qualification of exporting Brazilian soya beans to China. With respect to those soybeans shipped en route before 11th June 2004, if soya beans were mixed with soybeans treated with seed coating agent, soya beans treated with seed coated agent should be picked up and disposed of before discharging. Soya beans would not be allowed to enter into China until they were found in compliance with the relevant requirements of China; 66. Notice of Inspection and Quarantine Treatment, proving that on 6 July 2004, Shekou CIQ issued a notice of inspection and quarantine treatment for soya beans at issue; soya beans were mixed with soya beans treated with seed coated agent; soya beans violated laws and regulations, and should be picked out before discharging, and the Brazilian soya beans could be allowed to enter into China after requirements of entry inspection and quarantine were met; 67. Document (She Jian Ban [2004] No.62) issued by Shekou CIQ, proving that on 16 July 2004, Shekou CIQ requested that soya beans treated with seed coated agent should be picked out before discharging, and the Brazilian soya beans could be allowed to enter into China after requirements of entry inspection and quarantine were met. Since soya beans treated with seed coated agent were required to be picked out, the period of discharging would prolong to around 29 days, much longer than the normal discharging period(around one week); 68. Judgment of the “Hellenic Dolphin” case, proving that under the English laws, the owner may defend herself against the cargo damage based on the exemptions; 69. Judgment of the “Mata K” case, proving that under the English laws, the Clause of “Unknown” under the bill of lading shall be recognized; 70. Judgment of the “Atlas” case, proving that under the English laws, the Clause of “Unknown” under the bill of lading shall be recognized; 71. Judgment of the “Giannis NK” case, proving that under the English laws, “red soya beans” were prohibited from import into China, as a result of which, the vessel and the cargo were delayed, and the “red soya beans” constituted dangerous cargo. It is absolute that the shipper should be held liable for the dangerous cargo. In any event should the shipper be liable for the demurrage of the vessel caused by such dangerous cargo; 72. Legal Opinion issued by the UK-based law firm Clyde & Co., demonstrating that English law and Hague Rules shall apply to the present case. The relevant voyage instructions given by Noble Chartering to the Master shall be deemed as the voyage instructions given by Noble Chartering on behalf of or as the agent of Noble Grain. The stopover of the vessel during the voyage did not violate the bills of lading. The owner was entitled to defend by invoking the arguments of “quarantine restrictions”, “the act of the shipper and the owner of the cargo”, “the nature and the inherent defect of the cargo”, and any other causes arising without the actual fault or privity of the carrier. The Owner shall not be held liable for the loss arising from the differences of market prices of soya bean meals and salad oil; 73. Websites of Noble Group, Noble Chartering, Noble Grain and Noble Europe, proving that Noble Chartering, Noble Europe and Europe Grain are subsidiaries of Noble Group, and their respective business scope were the specialized divisions of the business within Noble Group, so they should be deemed as a whole or mutual representatives or agents; 74. Opinions on Oil production rate and Processing Costs of Soya beans Carried onboard M/V “SEAFARER” issued by the Cereals Quality Supervision and Test Center, Ministry of Agriculture of P. R. China (“CQSTC”), proving that oil production rate of 17.64% as alleged by the Plaintiff was wrong. The actual oil production rate of the soya beans carried onboard M/V “SEAFARER” should be 18.99%. The actual oil production (rate) of the soya beans carried by M/V “SEAFARER” was within the normal range. It was improper for the Plaintiff to calculate the processing costs of soya beans carried onboard M/V “SEAFARER” by taking reference to the processing costs of Brazilian soya beans in 2002. The production economic technical indexes of Brazilian soya beans in 2004 were normal and the production costs did not increase; 75. Statistical Figures provided by National Grain & Oils Information Center of P. R. China, proving that the prices at Huangpu port cited from http://fao.com.cn by the Plaintiff were not qualified and accurate. From 4 June 2004 to 4 July 2004, the average market prices of soya bean meals and salad oil in Shantou were RMB2,832.38/ton and RMB6,347.62/ton respectively; 76. Industry & Commercial Registration Information of Shantou Zhongxing, proving that in 2006, Shantou Zhongxing did not complete annual inspection; 77. Supplementary Report to the Inspection Report on Soya beans Carried by M/V “SEAFARE” issued by Guangzhou Balance Cargo Control & Survey Ltd., proving that after the berth of M/V “SEAFARER”, no sorghum halepense and sorghum almum parodi, or their grass seeds had been found on the surface of the cargo. During the whole discharging process, no sorghum halepense and sorghum almum parody had been found mixed with the cargo. Shekou CIQ requested to carry out inspection and quarantine treatment and supervision on red soya beans, rather than on sorghum halepense and sorghum almum parodi; 78. Supplementary Expert’s Opinion on Soyabean Cargo Carried by M/V “Seafarer” issued by the Cereals Quality Supervision and Test Center, Ministry of Agriculture of P. R. China (CQSTC), proving that the purpose to conduct inspection and quarantine on sorghum halepense and sorghum almum parodi was to prevent them from spreading and dispersing so as to ensure the safety of the agriculture and the animal husbandry of China. It was not because that they might affect the quality and the production costs of soya beans. A small amount of sorghum halepense and sorghum almum parody mixed into the soya beans would not affect the quality of the extracted oil and the costs. No sorghum halepense and sorghum almum parody were found during the process of inspecting the samples of soya beans. The relationship between free fatty acid and acid value was not always invariable, and the processing of soya beans was closely related to the raw materials, techniques, auxiliary materials and equipment. The content of free fatty acid contained by different soya beans varied. The Defendants, Noble Europe, Noble Grain, and Noble Chartering (“Three Noble Companies”), defended as follows: 1. In accordance with Article 145 of the General Principles of the Civil Law of the People’s Republic of China, and Article 269 of the Maritime Code of the People’s Republic of China, the parties to a contract involving foreign elements may choose the law applicable to the settlement of their contractual disputes. The bills of lading involved in the case specifically stated that “All the terms and conditions, liabilities and exceptions of the Charter Party, including the law and arbitration clause, as prescribed on the obverse side of the B/L, are herewith incorporated into the B/L”. Meanwhile, under English law, the validity of the terms and conditions contained in the B/L is recognized. English laws shall apply to the present case; 2. None of the Three Noble Companies was the carrier. Three Noble Companies are independent legal persons reregistered in difference countries. Noble Grain was the shipper stated in the bills of lading. It was Noble Chartering Inc. that concluded the Charter Party with Noble Grain. Noble Chartering Inc. chartered M/V “SEAFARER” and then sublet the vessel to Noble Grain. Noble Chartering Limited was the agent of Noble Chartering Inc., in charge of giving voyage instructions on the operations of the vessel. Noble Europe was mistakenly written into the Charter Party, and in fact Noble Europe was irrelevant to the present case; 3. The Plaintiff was not entitled to bring a lawsuit, as they were merely the import agent of Shantou Zhongxing, and the losses arising therefrom were sustained by Shantou Zhongxing. Therefore the Plaintiff did not have direct interests with the present case, and was not qualified to be the Plaintiff of this case; 4. The Plaintiff’s assertions of delay in delivery and unreasonable deviation were not tenable. The bills of lading did not specify the time for cargo delivery, and thus the late arrival of the vessel at the discharging port could not constitute a delay in cargo delivery. M/V “SEAFARER” stay at the anchorages of Singapore and Hong Kong was due to the requirements of quarantine. The passage route of the vessel was geographical customary and no unreasonable deviation existed in the case; 5. Three Noble Companies should not be held liable for the loss of or damage to the cargo alleged by the Plaintiff. The carrier shall not be held liable for the cargo loss or cargo damage as alleged by the Plaintiff. On 10 May 2004, AQSIQ issued an announcement to prohibit the suppliers, including the shipper Noble Grain, from importing soya beans from Brazil to China. The Plaintiff and Shantou Zhongxing informed Noble Grain that they could not continue to perform the sales contracts, and requested Noble Grain to extend the payment of the L/C. The Plaintiff did not provide the import permit license to Noble Grain until 17 June. Noble Grain submitted the documentations specified in the L/C relating to 20,000tons of the cargo on 8 May, but the Plaintiff and Shantou Zhongxing requested the opening bank not to effect the payment on the ground that the said documentations submitted by Noble Grain were not in compliance with the requirements of the L/C. As a result, Noble Grain had to instruct, through Noble Chartering Inc., the vessel to stay at Hong Kong and Singapore, to wait for the Plaintiff to handle the import procedures and for the competent authority to approve the cargo carried onboard M/V “SEAFARER” to enter into China. M/V “SEAFARER”’s stopover at Singapore and Hong Kong was caused by the quarantine restriction and the failure of the Plaintiff in acquiring the import permit license. Therefore the carrier shall not be held liable; 6. A small amount of the cargo became mildewed due to the bad weather during the voyage, and the carrier shall not be held liable. 100tons of the cargo were short-landed, which was within the scope of trade allowance at 0.5% . Therefore, the carrier shall not be held liable; 7. The Plaintiff did not suffer from any actual loss, and the losses claimed by the Plaintiff were actually sustained by Shantou Zhongxing. In accordance with the Maritime Code of the People’s Republic of China, the liquidated damages and the losses arising from reduction of production, depreciation and expenses should be borne by the carrier, and the aforesaid losses were irrelevant to the case. Three Noble Companies submitted the following evidence to support their defence: 1. Legal Opinions (2 copies) issued by the British attorneys, proving that English laws shall apply to the case. Under the English laws, the Plaintiff did not have standing to bring suit, and none of the Three Noble Companies was the carrier; 2. TCT Charter Party dated 1 March 2004, Voyage Charter Party dated 1 March 2004, Invoices of freight, proving that Noble Chartering Inc. chartered M/V “SEAFARER” from Swissmarine Services S.A. of Geneva on a TCT basis for a voyage of carrying cargo from South America to Far East, and then Noble Chartering Inc. sublet the vessel to Noble Grain on a voyage basis for carrying the cargo involved in this case and charged Noble Grain the freight under the Voyage C/P; 3. Letter of Authorization issued by the Master of M/V “SEAFARER”, proving that Master of M/V “SEAFARER” authorized the charterer to issue on his behalf the bills of lading with respect to the voyage involved in this case; 4. Correspondences among the Plaintiff, Shantou Zhongxing and Noble Grain relating to the conclusion of the sales contracts for the cargo involved in this case: Confirmation of Trade, Sales Contract, Confirmation Letter relating to Shantou Zhongxing’s authorization to the Plaintiff for importing cargo on its behalf, proving that as entrusted by Shantou Zhongxing, the Plaintiff concluded the sales contract with Noble Grain for importing the cargo involved in this case. The consignee of the cargo at issue was Shantou Zhongxing, and the Plaintiff was not entitled to bring this suit; 5. Warning Circular in respect of the imported Brazilian soya beans treated with seed coated agent issued by AQSIQ on 10 May 2004, Letters sent by the Plaintiff and Shantou Zhongxing to Noble Grain in respect of quarantine restrictions, Announcement issued by AQSIQ on 23 June 2004 for releasing the quarantine restrictions, proving that due to quarantine restrictions and the failure of the consignee in completing the import procedures, M/V “SEAFARER” could not proceed to the port of discharging; 6. Letters among Noble Grain, the Plaintiff, Shanzhou Zhongxing and Banks regarding the L/C payment: Letter sent by Noble Grain to the Plainitff for urging the Plaintiff to pay the L/C, Letters between Noble Grain and the opening bank, Bank of China, Letters written by the opening bank as forwarded by Standard Chartered Bank, proving that during the period of quarantine restrictions, the Plaintiff refused to effect the payment of the cargo under the L/C; 7. Certificates issued at the port of loading, Certificate of Quality, Certificate of Origin, Phytosanitary Certificate, Chemical Residues Certificate, Non-wooden Packing Certificate, Inspection Certificate for Cargo Holds before loading, Notification of Inspection and Quarantine Treatment, proving that a small quantity of “red soya beans” found during the discharging operations resulted from the inherent defect of the cargo, and such finding finally resulted in the delay of discharge; 8. Statement of Situations, proving that Noble Chartering was the agent of Noble Chartering Inc.. Noble Europe was not engaged in the carriage of the cargo at issue; Noble Europe was mistakenly written as the Owner of M/V “SEAFARER” in the Charter Party; 9. Analysis Report on the route of M/V “SEAFARER”, proving that the route of this voyage of M/V “SEFARER” was a geographically direct and customary route, without any unreasonable deviation; 10. ASQIQ Announcement (2004) No.58, ASQIQ Announcement (2004) No.61, and ASQIQ Announcement (2004) No.71, proving that after issuing the Warning Circular on 10 May 2004 which prohibited three suppliers including Noble Grain from exporting Brazil soya beans to China, the ASQIQ issued the Announcement No.58, No.61 and No.71, extending the number of the suppliers who were suspended from exporting Brazil soya beans to China to 23. Due to the quarantine restrictions, the vessel and the cargo at issue were prohibited from entering into China; 11. ASQIQ Announcement (2004) No.73, proving that after announcing the quarantine restrictions, the ASQIQ issued the Announcement No.73 on 16 June 2004, restating and emphasizing that the necessary procedures for examination and approval of animals and plants quarantine shall be handled in accordance with the relevant laws and regulations. The Quarantine Permit for the Entry Animals and Plants was necessary when handling the inspection and quarantine procedure and the import procedure. The imported GMO products shall be equipped with the Examination and Approval Document for Identification of Agricultural GMO. Due to the quarantine restrictions, the vessel and the cargo at issue were prohibited from entering into China; 12. Letters sent by the Plaintiff and Shantou Zhongxing to Noble Grain on 15, 17 19 and 28 May 2004, proving that since the cargo at issue were prohibited from entering into China due to quarantine restrictions, Shantou Zhongxing refused to pay for the cargo covered the L/C. The Plaintiff and Shantou Zhongxing did not require Noble Grain to obtain the GMO Certificate until the ASQIQ issued the “Warning Circular ” relating to the quarantine restrictions, but it was impossible for Noble Grain to apply for the GMO Certificate due to such quarantine restrictions; 13. Quarantine Permit for Entry Animals and Plants relating to other two consignments of soya beans carried onboard M/V “SEAFARER”, proving that the Permit should specify the date of issuance. The Permit became effective on the date of the vessel’s entry, but it is possible that the Permit was issued after the vessel had entered into China; 14. Letter concerning refusal to pay for the L/C sent by the Plaintiff to the Bank of China, Henan Branch on 26 May 2004, and Notice of Payment /Non-payment sent by the Plaintiff to the Bank of China, Henan Branch on 14 June 2004, proving that during the period of quarantine restrictions, the Plaintiff claimed a discrepancy in the documents and instructed the opening bank to refuse to effect the payment. The Plaintiff did not agree to make the payment until 14 June 2004; 15. Notice for Payment against Documents specified under L/C issued by the Bank of Communications, Zhengzhou Branch, and Letters of the Bank of Communications, Zhengzhou Branch in respect of the payment against documents under the L/C covering the cargo at issue, proving that the opening bank of the Plaintiff, namely the Bank of Communications, Zhengzhou Branch, received the documents specified in the L/C on 8 May, and received the modified documents on 21 May. Although the Bank of Communications, Zhengzhou Branch received inquires from Noble Grain for many times, it still refused to accept the documents. The Plaintiff did not instruct the Bank of Communications, Zhengzhou Branch to accept the L/C until 23 June 2004; 16. Civil Judgment numbered (2005) GHFCZ No.211 rendered by Guangzhou Maritime Court, proving that the following information concerning the carriage of M/V “Oriental Queen” was collected: from 16 April to 21 April, M/V “Oriental Queen” was loaded with the Brazilian soya beans; the water content of the soya bean was 12.7% at the time of loading, which was higher than the water content (12.57%) of soya beans carried by M/V “SEAFARER”; M/V “Oriental Queen” arrived at Zhanjiang on 16 August, began discharging on 18 August, and completed discharging on 30 August; after a long carriage period (namely 119 days), the cargo did not suffer from any obvious damage. The aforesaid facts proved that the water content of soya beans would not cause any effect on the safe carriage of the cargo. No casual relationship existed between the long carriage period and the cargo damage; 17. Certificate of Incorporation, proving that Noble Chartering Inc. and Noble Europe were independent legal persons registered in different countries; 18. Guide to Port Entry, proving that LAMMA Anchorage was the waiting anchorage for M/V“SEAFARER” to wait for entering Chiwan Port, and M/V“SEAFARER”’ stay at LAMMA Anchorage waiting for entry shall be regarded as normal sailing; 19. Letter of Authorization, proving that Noble Chartering was the agent of Noble Chartering Inc.; 20. Legal Opinions presented by Holman Fenwick & Willan, proving that under the English laws, the seller who fails to obtain the payment for cargo shall be entitled to dispose of the cargo, and if the buyer refuses to pay for the cargo, the seller shall be entitled to take the cargo and refuse to deliver the cargo to the buyer; 21. Letter written by Sunning Shipping Ltd., proving that LAMMA Anchorage in Hong Kong was the waiting anchorage for the bulk carriers to proceed to Shekou, Chiwan, and Mawan; 22. the Import Permit for Cargo at issue faxed by the Plaintiff to Noble Grain on 17 June 2004, proving that the Plaintiff did not provide the import permit to Noble Grain until 17 June 2004; 23. Statement made by Li Yijuan from ASQIQ, and Notice on Failure to Obtain Approval on Application of the Permit, proving that in April 2004, soya beans treated with seed coated agent were found in the imported soya beans in Xiamen, and from 30 April the ASQIQ suspended giving import permits of Brazilian Soya beans to four suppliers, including Noble Grain; 24. Opinions presented by Holman Fenwick & Willan, proving that under the English laws, if the consignee does not instruct the vessel to proceed to the discharging anchorage after the vessel submits the NOR, then the consignee is not entitled to claim any compensation against the carrier for the loss arising therefrom; 25. Civil Judgment numbered (2003) GHFCZ No.257 rendered by Guangzhou Maritime Court, proving that if the bill of lading issued on behalf of the Master did not specify the carrier, the registered owner shall be deemed as the carrier; 26. Meeting Summary between Chinese government and Brazilian government, proving that on 21 June 2004, Chinese government and Brazilian government carried out negotiation on the issue that soya beans exported from Brazil into China were found mixed with red soya beans. On 9 August 2004, the Plaintiff filed an application to the Court, requesting for pretrial evidence preservation of the logbooks of M/V “SEAFARER” from 15 April to 30 June 2004. On 10 August, the Courter rendered the Civil Ruling numbered (2004) GHFBZ No.41-2, granting permission on such application. The Plaintiff paid to the Court the application fee in the amount of RMB5,000 and the enforcement fee in the amount of RMB20,000. On the same day, the Court copied the logbooks of M/V “SEAFARER” from 15 April to 30 June 2004. On 1 June 2006, Saint Vincent filed an application to the Court, requesting the Court to collect evidence from Shekou CIQ, the ASQIQ, and the Technology Education Department of the Ministry of Agriculture, which was permitted by the Court. Saint Vincent paid to the Court the evidence collection fee in the amount of RMB15,000. The Court collected the following evidential materials: 1. Quarantine Permit for the Entry Animals and Plants No.PB00041315; 2. Application Form of Quarantine Permit for the Entry Animals and Plants; 3. Agricultural GMO Safety Certificate (Import) (NJAJZ(2004)No.0907); 4. Examination and Approval Document for Identification of Agricultural GMO (NJBJZ(2004) No.0777); 5. Notice of Inspection and Quarantine Treatment No.470100104024804; 6. Application for Inspection of Entry Cargo No.470100104024804; 7. Letter of Authorization for Inspection Application; 8. Investigation Record dated 29 June 2006 of Lian Qing from the Agricultural GMO Safety Management Office of the Ministry of Agriculture. On 22 August 2006, Saint Vincent filed an application to the Court, requesting the Court to collect evidence from Chiwan Wharf Limited, and China International Economic and Trade Arbitration Commission, which was permitted by the Court. Saint Vincent paid to the Court the evidence collection fee in the amount of RMB25,000. The Court collected the following evidential materials: 1. Agreement on the Pick up of Soya beans after M/V “SEAFARER”’s Entry into Port for Berth; 2. Warehouse Storage Fee for M/V “SEAFARER” (04V02269, Shantou Zhongxing); 3. Delivery Order; 4. Statement made by Shenzhen Chiwan Wharf Holdings Limited; 5. Letter of Reply numbered (2006)ZGMZJZ No.008558 issued by the CIETAC. On 23 November 2006, Three Noble Companies filed an application to the Court, requesting the Court to collect evidence from the Bank of China, Zhengzhou Branch, the Bank of Communications, Zhengzhou Branch, the Yellow River Notary Office of Henan Province, which was permitted by the Court. Three Noble Companies paid to the Court the evidence collection fee in the amount of RMB20,000. The Court collected the following evidential materials from the Yellow River Notary Office of Henan Province: 1. Enforceable Notarial Certificate of Creditor’s Right numbered (2006)YZJZ No.10; 2. Repayment Agreement No.25COFIE0042; 3. Agency Agreement for Import of Soya beans No.24COFIE0011; 4. Supplementary Agreement No.24COFIE0038; 5. Supplementary Agreement No.24COFIE0071; 6. Supplementary Agreement No.24COFIE0027; 7. Mortgage Contract No.25COFIE0029; 8. Supplementary Agreement No.25COFIE0043. The Court collected the following evidential materials from the Bank of China, Zhengzhou Branch: 1. Application for Irrevocable Letter of Credit No.LC5300122/04; 2. Examination and Approval Document for Identification of Agricultural GMO (NJBJZ(2004) No.0777); 3. Agricultural GMO Safety Certificate (Import) (NJAJZ(2004)No.0074); 4. Sales Contract No.NC070316-B; 5. Correspondences between the Bank of China, Zhengzhou Branch and the Plaintiff: Notice on Discrepancy of L/C, Notice of Modification to L/C, and Notice on Acceptance/refusal of L/C etc. The Court collected the following evidential materials from the Bank of Communications, Zhengzhou Branch：1. Agency Agreement for Import of Soya beans No.24COFIE0011; 2. Sales Contract No.NC070316-B; 3. Notice dated 31 March 2004 sent by the Plaintiff to Noble Grain; 4. Materials relating to Application of the Plaintiff for Establishment of L/C; 5. Notice on Payment against Documents specified under L/C; 6. L/C for Importation, Payment Collection/Acceptance Form; 7. Correspondences between the Bank of China, Zhengzhou Branch and the Plaintiff; 8. Commercial Invoice No.N327/04; 9. Bills of Lading; 10. Non-wooden Packing Certificate, Fumigation Certificate, Sanitary Certificate, Weight Certificate, Quality Certificate, Certificate of Origin, Certificate of Chemical Residues, Cargo Hold Inspection Certificate as issued by SGS; 11. Notice of Shipment. The Court, according to the application filed by Saint Vincent, notified the following persons to appear in court to accept cross-examination: Professor Wang Jianping, from the Navigation College of Dalian Maritime University; Researcher Wang Bujun, from the Cereals Quality Supervision and Test Center, Ministry of Agriculture of P. R. China; Attorney Derek Hodgson, from Clyde & Co. Law Firm; Adjuster Lin Wenkai, from Guangzhou Balance Cargo Control & Survey Ltd. The Court, according to the application filed by Three Noble Companies, notified the following persons to appear in court to accept cross-examination: Mr. Benjamin John Wilkes from Noble Grain, and Attorney Henry Dunlop, from Holman Fenwick & Willan, Hong Kong Office. The following facts are ascertained by the Court through trial: I. Facts relating to the Sale and Payment of the Cargo On 25 February 2004, Noble Grain (as the Seller) concluded the Sales Contract No.NC070316 with Shantou Zhongxing (as the Buyer), agreeing that: the Buyer would purchase 55,000tons of South American soya beans from the Seller (±10%, at Seller’s option), with the payment terms of Letter of Credit; The date of Shipment would be from 1 April 2004 to 25 April 2004; the price was 162 cent/Bushel + Contract Price of Soya beans dated May 2004 at Chicago Board of Trade; the port of destination was Chiwan, Guangdong, P. R. China. On 5 March, Shantou Zhongxing notified Noble Grain that Shantou Zhongxing entrusted the Plaintiff to import 55,000tons of South American soya beans (±10%) under the Sales Contract No.NC070316. On 25 March, the Plaintiff and Noble Grain concluded two Sales Contracts No.NC070316-B and NC070586. The quantity of the cargo under the Sales Contract No.NC070316-B was 35,000tons, and the quantity of the cargo under the Sales Contract No.NC070586 was 20,000tons. The other terms and conditions of these two contracts were the same. On 31 March, the Plaintiff notified Shantou Zhongxing that the Sales Contract No.NC070316 had been separated into two Sales Contracts No.NC070316-B and No.NC070586, in which, it was agreed as follows: the maximum moisture content of soya beans was 14%; the maximum heat damaged kernels was 5%; the basic content of foreign materials was 1%, at the maximum of 2%; the content of split kernels was 20%, at the maximum of 25%; the basic content of other-color kernels was 2%, at the maximum of 5%; the oil content was 18.5% basically; the protein content was 34% basically, at the minimum of 33.5%. On 31 March 2004, the Plaintiff opened with the Bank of China, Henan Branch an irrevocable letter of credit No.LC5300122/04 in the amount of US$15,638,000 for 35,000tons of South American soya beans. On 27 April, the Plaintiff notified the bank to modify the unit price of the cargo covered by the aforesaid L/C to US$406.16/ton, and the amount of the payment for the said cargo to US$14,215,600. On 12 May, the Plaintiff notified the Bank of China, Henan Branch to modify the unit price of the cargo covered by the aforesaid L/C to US$402.94/ton, and the amount of the payment for the said cargo to US$14,102,900. On 14 June, the Plaintiff sent an Acceptance Notice to the Bank of China, Henan Branch, agreeing to effect the payment in the amount of USD15,201,207.26 for the cargo covered by the aforesaid L/C. On 18 June, the Bank of China, Henan Branch effected the payment specified under the said L/C. On 31 March 2004, the Plaintiff opened an usance letter of credit No.LCZP808200410048 in the amount of UD$9,011,200 for 20,000tons (±10%) of South American soya beans with the Bank of Communications, Zhengzhou Branch. On 18 June, the Bank of Communications, Zhengzhou Branch, notified the negotiating bank (namely Soctete General Bank, Singapore Branch) to effect the payment for the cargo at issue. On 31 June, the Plaintiff sent a Notice for Payment against Documents specified under L/C to the Bank of Communications, Zhengzhou Branch, agreeing to accept the L/C and effect the payment for 22,000tons of soya beans covered by the aforesaid L/C, in the amount of USD9,912,320. On 29 April, Noble Grain issued two commercial invoices to the Plaintiff, specifying that: the total price of 22,000tons of soya beans under the Sales Contract No.NC070586 was US$9,912,320, and the unit price thereof was US$450.56/ton, CFRFO Chiwan China; the total price of 37,725.734tons of soya beans under the Sales Contract No.NC070316-B was US$15,201,207.26, and the unit price was US$402.94/ton, CFRFO Chiwan China. II. Facts relating to the Chartering of M/V “SEAFARER” M/V “SEAFARER” was a bulk carrier with steel hull. The vessel was of 38,818 gross tonnage, 25,182 net tonnage. The flag state of M/V “SEAFARER” was Philippines, and the port of registry was Manila. The vessel was owned by Saint Vincent. On 1 March 2004, Swissmarine Services S.A. of Geneva, as the disponent owner of M/V “SEAFARER” entered into a time charter party with the charterer Noble Chartering Inc. in London, agreeing that Swissmarine would let M/V “SEAFARER” to Noble Chartering Inc. at the rate of USD49,000/day, and the period would be one voyage. On the same day, Noble Europe, as the owner of M/V“SEAFARER” entered into a voyage charter party with the charterer Noble Grain, in which it was agreed that: vessel: M/V “SEAFARER”; expected ready to load on or about 16 March 2004; loading port(s): 1 safe port of Brazil; discharging port(s): 1/2 safe berth 1 safe port in PRC, intention Chiwan; demurrage: at the rate of USD35,000 per day; the Master was to sign Bills of Lading as presented; Bills of Lading would show the name of the carrier and would be signed either by the Master or by a named agent for or on behalf of the Master, in which case the said agent shall indicate his own name and the name of the Master when signing the Bills of Lading; if the Master delegated the signing of the Bills of Lading to an agent, he shall give him authority to do so in writing, copy of which is to be furnished to Charterers; Charter Party shall be covered by English laws. The Plaintiff contended during the trial that Shantou Zhongxing obtained the said voyage charter party from Noble Grain for the purpose of settling the demurrage at the discharging port. The owner of M/V “SEAFARER” specified in such voyage charterer party was Noble Europe. Three Noble Companies alleged as follows: it was Noble Chartering Inc., rather than Noble Europe, that concluded the voyage charter party with Noble Grain on 1 March 2004. Noble Europe was mistakenly written as the owner of M/V “SEAFARER” under the said voyage charter party. Three Noble Companies submitted to the Court the affidavit made by Benjam John Wilkes, the manager of the ship’s chartering department of Noble Resources Pte. Ltd. Benjam John Wilkes also appeared in court to testify, stating as follows: Noble Chartering Limited was the agent of Noble Chartering Inc., while Noble Chartering Inc. was the time charterer and responsible for ship’s chartering under Noble Group; Noble Grain was the voyage charterer; it was common for Noble Europe to be mistakenly written as another company under Noble Group. The Plaintiff contended during the evidence examination that the owner specified in the voyage charter party provided by Noble Grain to the Plaintiff was Noble Europe, rather than Noble Chartering Inc. Noble Europe being written as the owner was a special arrangement for a special trade. Therefore, the Plaintiff disagreed with the defence made by Three Noble Companies. Saint Vincent asserted that since Three Noble Companies and Noble Chartering Inc. were subsidiaries of Noble Group, they shall be deemed as a whole or the agent of each other, and they were the shipper and the final voyage charterer in the present case. Three Noble Companies adduced the invoice issued by Noble Chartering Inc. to Noble Grain for collecting freight under the said voyage charter party. Three Noble Companies provided a Letter of Authorization issued by Noble Chartering Inc. on 6 July 1994, in which Noble Chartering Limited was authorized to act on behalf of Noble Chartering Inc. to negotiate and approve the issues relating to the ship’s chartering, and to perform the voyage charter party. III. Facts relating to Shipment of Cargo and Issuing of Bills of Lading On 11 April 2004, Victorio C. Gregana, namely the Master of M/V “SEAFARER”, issued a letter of authorization, in which the charterer or the agent of the charterer was authorized to issue on behalf of the Master any bills of lading but always in strict conformity with the current effective charter party. From 13 April to 17 April, 59,752.734tons of soyabeans were loaded onboard M/V “SEAFARER” owned by Saint Vincent at Paranagua, Brazil. On 17 April, Noble Grain, acting as the agent of the Master of M/V “SEAFARER”, issued two original order bills of lading No.1 & 2 for the said cargo. The B/L No.1 specified 22,000tons of soyabeans clean on board, and the B/L No.2 specified 37,725.734tons of soyabeans clean on board. It was specified as follows in these two bills of lading: Shipper: Noble Grain; Consignee: to order; Notify Party: the Plaintiff; Port of Loading: Paranagua, Brazil; Port of Discharging: Chiwan, Shenzhen, China; Vessel: M/V “SEAFARER”; Freight prepaid as per Charter Party dated 1 March 2004; Weight, measure, quality, quantity, condition, contents and value unknown. It was stated on the heading of the bills of lading that “to be used with charter parties”. It was stated on the reverse side of the two bills of lading that all terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated. These two bills of lading were endorsed by Noble Grain (namely the shipper stated on the front of the Bs/L) to the Plaintiff. Before loading, the surveyor from the Ministry of Agriculture of Brazil embarked the vessel to inspect the conditions of the cargo holds, and issued the Certificate of Fitness for the Carriage of Cargo. The surveyors from Intertek Caleb Bret Company, SGS, Control Union World Group Company, and Saybolt/concremat Company, as entrusted by the owner, the charterers and the shipper, embarked the vessel to inspect the conditions of the cargo holds, and respectively issued the Cargo Hold Inspection Certificates, showing that before loading the cargo holds were clean and dry, and fit for the carriage of soya beans at issue. SGS carried out quality inspection, chemical residues inspection and plant inspection on soya beans after completion of loading. On 17 April, SGS issued the Quality Certificate, Certificate of Origin, Phytosanitary Certificate, Chemical Residues Certificate, and Non-wooden Packing Certificate. The Quality Certificate stated that the quality of the soya beans loaded onboard the vessel was as follows: moisture content: 12.57%, damaged kernels: 5.75%, heat damaged kernels: 0.97%, foreign materials: 0.95%, splits: 9.88%, other-color kernels: 0, oil content: 20.35%, and protein: 35.36%. IV. Facts relating to the Voyage of M/V “SEAFARTER” At 1612hrs on 18 April, M/V “SEAFARER” departed from Paranagua and sailed towards east, bound for Shanghai, China by passing through South Atlantic Ocean and the south part of Indian Ocean. The route was instructed by Noble Chartering and provided by Applied Weather Technology Inc. From 21 April to 10 May, M/V “SEAFARER” encountered bad weather, with the wind reaching the force 7-8. The sea and swell hit over the deck and the hatch covers of all the cargo holds. The vessel pitched heavily. Due to the bad weather, the vessel could not ventilate the cargo holds until 13 May. On 27 April, the Master of M/V “SEAFARER” received a telex from Noble Chartering Limited, in which the Master was informed that the discharging port was Chiwan, rather than Shanghai and was instructed to proceed to Singapore for bunkering. On 10 Mary, Noble Charting Limited again instructed the vessel to proceed to Singapore for bunkering. On 20 May, M/V “SEAFARER” arrived at Singapore. At 0400hrs on 21 May, the vessel completed bunkering. On the same day, when the vessel was anchoring at the anchorage in Singapore, the surveyor from SGS appointed by Noble Grain embarked the vessel to collect samples of the cargo carried on board. On the same day, Noble Charting Limited instructed the vessel to drift off Singapore and wait for further instructions. On 25 May, Noble Chartering Limited instructed the vessel to proceed to Chiwan. On 28 May, Noble Chartering Limited instructed the vessel to anchor off Hong Kong and wait for further instructions. At 1418hrs on 29 May, the vessel arrived at Hong Kong outer anchorage, and the Master notified Noble Chartering Limited and the agent of Noble Chartering at the discharging port, namely SUNISCO, that the NOR had been tendered. The vessel kept anchoring at Hong Kong outer anchorage, waiting for voyage instructions from Noble Chartering. From 29 May to 25 June, M/V “SEAFARER” kept anchoring at Hong Kong outer anchorage, waiting for instructions. On 25 June, M/V “SEAFARER” proceeded to Hong Kong Lamma Anchorage, waiting for instructions. On 26 June, the vessel set sail and proceeded to Chiwan, and the Master issued the Discharging NOR to SUNISCO. On 21 July, the vessel weighed anchor and berthed alongside Berth No.7 of Chiwan Port. As retained by Saint Vincent, Professor Wang Jianping, from the Navigation College of Dalian Maritime University, issued on 20 September 2005 the Analysis on the Route of M/V “SEAFARER” from Paranagua, Brazil to Chiwan, China, stating that the route of M/V “SEAFARER” was geographically direct and customary, economic and safe, and therefore M/V “SEAFARER” did not commit any deviation. V. Facts relating to Quarantine Restrictions On 19 March 2004, the Plaintiff submitted to Guangdong CIQ the Application Form of the Quarantine Permit for Entry Animals and Plants. On 7 April, after examination, Guangdong CIQ agreed to report the Plaintiff’s application to the AQSIQ for approval. On 8 May, the AQSIQ issued to the Plaintiff the Quarantine Permit for Entry Animals and Plants No.PB00041315. On the same day, M/V “SEAFARER”’s application for entry was approved, and the vessel was estimated to arrive at the discharging port on 25 May. On 10 May, the AQSIQ issued to all the CIQ departments the Warning Circular Regarding Brazilian Soya Beans mixed with Soya Beans treated with Seed Coated Agent (GZJDH [2004] No. 332) (“the Warning Circular”), informing that four suppliers, including Noble Grain, were suspended to export Brazilian soyabeans to China and with respect to soya beans shipped en route, those in compliance with the requirements of inspection and quarantine for entry could be allowed to enter into China. The AQSIQ issued Announcements No.58, 61 & 71 on 22 May, 17 June, and 21 June respectively, emphasizing that “with respect to soyabeans shipped en route before the release of this Announcement, those in compliance with the requirements of inspection and quarantine for entry could be allowed to enter into China”. On 28 May, the Plaintiff sent a letter to Noble Grain, requesting Noble Grain to provide the Agricultural GMO Safety Certificate (Import) issued by the Ministry of Agriculture of the People’s Republic of China. On 17 June, the Plaintiff faxed the Quarantine Permit for Entry Animals and Plants to Noble Grain. On 18 June, the Plaintiff acquired the Examination and Approval Document for Identification of Agricultural GMO (NJBJZ(2004) No.0777) from the Ministry of Agriculture. On 25 June, Noble Grain acquired the Agricultural GMO Safety Certificate (Import) (NJAJZ(2004)No.0907 issued by the Ministry of Agriculture on 18 June. On June 23, the AQSIQ issued Announcement No.76, ordering as follows: the suppliers listed in the Warning Circular (including Noble Grain) resumed qualification of exporting Brazilian soya beans to China; with respect to those soybeans shipped en route before 11th June 2004, if soya beans were mixed with soybeans treated with seed coating agent, soya beans treated with seed coated agent should be picked up and disposed of before discharging, and soya beans would not be allowed to enter into China until they were found in compliance with the relevant requirements of China; all the costs arising from the pick up and disposal of soya beans treated with seed coated agent shall be borne by suppliers; otherwise soya beans would be returned to the loading port. On 1 July, Noble Grain reported the cargo to Shekou CIQ for inspection. On 2 July, M/V “SEAFARER” arrived at the quarantine anchorage of Chiwan, and Shekou CIQ embarked the vessel and collected the samples of the cargo at issue. On 6 July, Shekou CIQ issued the Inspection and Quarantine Treatment Notice, saying that: when carrying out inspection and quarantine, Shekou CIQ found soya beans (GMO) carried onboard M/V “SEAFARER” mixed with soya beans treated with seed coated agent; soya beans treated with seed coated agent shall be picked up and disposed of before discharging. Soya beans would not be allowed to enter into China until they were found in compliance with the relevant inspection and quarantine requirements; soya beans treated with seed coated agent shall be burnt; the costs arising from picking up soya beans treated with seed coated agent shall be borne by Noble Grain. On 8 July, Noble Grain and the Plaintiff concluded the Supplementary Agreement to the Sales Contract No.NC070316-B and NC070586, agreeing that all the costs arising from disposing and picking up red beans shall be borne by Noble Grain. On 9 July, the Summary of the Meeting among Four Parties was entered into among Noble Grain, the Plaintiff, Chiwan Shipping Foodstuff Wharf Co., Ltd., and SUNISCO, according to which, Noble Grain was responsible for picking up and disposing of red beans, and the costs incurred therefrom shall be borne by Noble Grain, while the normal discharging fees shall be borne by the Plaintiff. On 16 July, Shekou CIQ sent to Noble Grain the Notice regarding the Implementation of the Plan for Supervision, the Pick-up, and Disposal of Red Beans Carried onboard M/V “SEAFARER”, requesting Noble Grain to strictly observe the relevant provisions. On 19 July, Shekou CIQ sent a notice to the Plaintiff, saying that sorghum halepense and sorghum almum parodi were found mixed with soya beans carried onboard M/V “SEAFARER”, which shall be disposed of through quarantine treatment. Shantou Zhongxing paid the quarantine treatment fee in the amount of RMB207,872. VI. Facts relating to Discharging On 19 July, Noble Grain signed the Agreement on Ship’s Entry for Berth and Pick-up of Red Beans with Chiwan Foodstuff Wharf Co., Ltd. On 22 July, M/V “SEAFARER” commenced to discharge the cargo. On 28 July, the vessel shifted to the inner anchorage of Chiwan, waiting for a berth. On 31 July, the vessel berthed at Berth No.2 of Chiwan Port, and resumed discharging. At 1540hrs on 12 August, the discharge completed. On 21 July, the cargo within the cargo hold No.3 & 5 were found mouldy and caked, and the cargo loaded within other cargo holds were also found damaged. On 23 July, Chiwan Wharf Limited issued a Letter of Protest, proving that the cargo stored in cargo hold No.3 & 5 were found mouldy and caked during discharging operations. VII. Facts relating to Cargo Damage and Cargo Shortage On 23 July, Shekou CIQ carried out an assessment on the damage to the cargo carried onboard M/V “SEAFARER”. From 23 July to 12 August 2004, Shekou CIQ carried out inspections on the damage to the cargo in holds. On 9 December, Shekou CIQ issued a Damaged Cargo Inspection Certificate, specifying that: 2,305.74tons of soyabeans had been generally damaged, with the depreciation rate of 10%, converted into 230.574tons; 94.01tons of soya beans had been seriously damaged, with the depreciation rate of 30%, converted into 28.203tons; 9.85tons of soya beans became mouldy due to moisture, with the depreciation rate of 100%, converted into 9.85tons. The quantity of the aforesaid damaged soya beans totaled 268.627tons. Shekou CIQ considered the damage to the cargo were caused by the following reasons: 1. 9.85tons of mouldy soya beans were caused by the ingress of seawater from the gap of the hatch covers when the vessel encountered bad weather en route, and such damage occurred before discharging; 258.777tons of heat damaged soya beans were caused by the prolonged storage of soya beans within the cargo holds and the insufficient ventilation into the holds (due to the structure of cargo holds and the storage conditions, the heat produced by metabolism of soya beans could not give out if without sufficient ventilation), and such damage occurred before discharging. As specified in the Damaged Cargo Inspection Certificate, the inspection fee was RMB34,556. As entrusted by Saint Vincent, Guangzhou Balance Cargo Control and Survey Ltd. carried out inspections on damage to soya beans respectively from 21 July to 12 August, and on 21 August, 22 August and 26 August 2004. On 18 August 2005, Guangzhou Balance Cargo Control and Survey Ltd. issued a Survey Report No.B04HTBRT2071, stating that: there were 2,409.60tons of damaged soya beans at maximum, including 2,399.75tons of heat damaged soya beans, with net loss of 78.28tons, and 9.85tons of mouldy soya beans, which was not eatable. The total loss of the damaged soya beans was in the amount of US$37,056.90. The direct causes of such damage were as follows: the cargo had inherent defects; some cargo had been wetted before loading; the mouldy soya beans under both ends of the central joint of two hatches of each cargo hold were probably caused by the water ingress from the hatch cover. The prolonged voyage and discharging were the external conditions for the damage to soya beans, which accelerated the mould/caking/discoloration of soya beans. As appointed by Saint Vincent and the P & I Club of M/V “SEAFARER”, Double Hope arranged surveyors to embark the vessel when the vessel was berthing at Berth No.7 of Chiwan Port on 24 July 2004 and the following dates to carry out inspections on the conditions of soya beans in bulk loaded onboard the vessel. On 20 November, Double Hope issued the Survey Report No.DHSA-M-(04)070, specifying as follows: part of the wet damaged cargo had probably been caused by water ingress by way of joints in the covers or around coaming due to the vessel’s encountering of more than two weeks of heavy weather; however, a localized area of cargo damaged by water would have no effect on the entire cargo stow; other damage to the cargo were caused by the long-time storage onboard the vessel and the delay in discharging due to the search for red beans. The Plaintiff raised no objection to the survey report issued by Double Hope, but Three Noble Companies raised an objection to the analyses on the causes of the accident stated in the said survey report. On 17 August, Shekou CIQ issued the Weight Inspection Certificate, which stated that: according to the drafts before and after the discharge and the weight of hull material, based on the Vessel Displacement Table provided by the ship interest, and through necessary correction, the weight of the cargo loaded onboard M/V “SEAFARER” was 59,618.30tons. VIII. Losses claimed by the Plaintiff 1. Loss of Shortage The actual quantity of the cargo discharged was 59,618.30tons as specified in the Weight Inspection Certificate issued by Shekou CIQ, which was 107.434tons less than the total quantity of the cargo covered by the Bs/L No.1 & 2. The Plaintiff contended that the loss of the cargo short-landed was RMB435,107.70 calculated as per the after-tax price of soya beans at RMB4,050/ton. Saint Vincent contended as follows: in accordance with Article 2 of the Hague-Visby Rules, the loss of or damage to the cargo shall not include the duties; in accordance with Article 55 of the Maritime Code of the People’s Republic of China, the loss of or damage to the cargo shall be calculated on the basis of CIF price; the quantity of the cargo discharged was measured by Shekou CIQ by means of weight by draft, and pursuant to Article 3 of the Rules for the Weight Survey of Import and Export Commodities-Weight by Draft, the allowable error of draft survey is 0.5%; the loss of cargo shortage alleged by the Plaintiff was within 0.5% error of draft survey, and therefore the carrier shall not be held liable for the said cargo shortage. Three Noble Companies contended that the Plaintiff’s assertion of calculating the loss as per the after-tax unit price of soya beans did not comply with the provisions of Article 55 of the Maritime Code of the People’s Republic of China, and the loss thereof shall be calculated as per CIF price. 2. Loss of Damaged Cargo The quantity of the damaged cargo as stated in the Damaged Cargo Inspection Certificate issued by Shekou CIQ was 268.627tons. The Plaintiff contended that the loss incurred therefrom totaled RMB1,087,939.35 calculated as per the after-tax price of RMB4,050/ton. Saint Vincent and Three Noble Companies raised the defence same as mention above, asserting that the loss shall be calculated as per CIF price. Saint Vincent further contended that except 9.85tons of mouldy soya beans, other damage to the cargo was caused by the inherent defect of the cargo, the prolong voyage and the prolong discharging, for which the carrier shall not be held liable. 3. Loss of Inspection Fees On 24 December 2004, Shantou Zhongxing paid through Guangdong Development Bank to Chiwan Wharf Limited the amount of RMB34,556, as the “Inspection Fee on Damaged Cargo loaded onboard M/V “SEAFARER”. The Plaintiff alleged that it was the port authority, rather than the Plaintiff, that requested for the inspection on the damaged cargo, and that upon request by Shekou CIQ, Shantou Zhongxing paid the inspection fee to Chiwan Wharf Limited. Saint Vincent contended Shekou CIQ was not the payee of the said inspection fee and it could not be proven that such fee had already been paid to Shekou CIQ. Saint Vincent requested the Court not to admit such inspection fee in the sum of RMB34,556. 4. Loss resulted from the Increase of Warehousing Fee The Plaintiff asserted as follows: M/V “SEAFARER” did not arrive at the port of discharging until 12 July 2004, nearly at the same time with M/V “HUA FENG”, another ship carrying soya beans of Shantou Zhongxing; Shantou Zhongxing had to pick up the cargo carried by M/V “HUA FENG” first and put them into production, whilst the cargo carried by M/V “SEAFARER” were stored at Chiwan Wharf for another two months, giving rise to the warehouse storage fee in the sum of RMB948,696.53. In order to support its claim, the Plaintiff submitted the following evidential materials: Lump Sum Contract of Loading, Discharging, storing and Transshipping Soya Beans concluded between Shantou Zhongxing and Chiwan Shipping Foodstuff Wharf Co., Ltd. on 25 April 2003; Warehouse Storage Fee for M/V “SEAFARER” (04V02269,Shantou Zhongxing), and 12 invoices. Saint Vincent contended as follows: in accordance with Article 55 of the Maritime Code of the People’s Republic of China, the loss of or damage to the cargo shall be calculated on the basis of CIF price, not inclusive of the loss incurred from the increase of the warehouse fee alleged by the Plaintiff. Even if the loss incurred from the increase of the warehouse fee did exist, such loss was caused by the failure of the Plaintiff and Noble Grain to timely acquire the inspection and quarantine permit for the cargo, and it was impossible for Saint Vincent to foresee such loss. Therefore, Saint Vincent shall not be held liable for such loss. Three Noble Companies contended as follows: the warehouse fee alleged by the Plaintiff was not true, and the documents submitted by the Plaintiff in support of such warehouse fee did not comply with the evidence collected by the Court. Even though the increased warehouse fee did exist, such fee shall be paid by Shantou Zhongxing. No casual relationship existed between the damage to the cargo at issue and such fee. Therefore, the carrier shall not be held liable. 5. Loss of liquidated damages The Plaintiff contended as follows: in May, Shantou Zhongxing, according to its normal production schedule, concluded salad oil sales contracts and soya bean meals sales contracts with other parties, but due to the delay of M/V “SEAFARER” in arriving at the discharging port, Shantou Zhongxing could not perform these sales contracts, and paid RMB18,709,000 of liquidated damages to other parties, namely the liquidated damages in the amount of RMB12,406,000 for 11 soya bean meals sales contracts, and the liquidated damages in the amount of RMB6,303,000 for 5 soya bean meals sales contracts; it could be seen from the salad oil sales contracts and soya bean meals sales contracts submitted by the Plaintiff that: these contracts were signed from 20 May to 21May 2004, and on 1 June 2004, and the agreed delivery time was from 1 June to 10 June; if Shantou Zhongxing failed to deliver the cargo within the agreed period, the failure of Shantou Zhongxing in delivering the cargo within 3 days after the expiry of the agreed period, would constitute a material breach, as result of which, the breaching party shall pay 10% of the payment as the liquidated damages. Saint Vincent contended as follows: Shantou Zhongxing knew M/V “SEAFARER” could not arrive at the discharging port on 24 May, but still concluded salad oil sales contracts and soya bean meals sales contracts from 20 May to 21May 2004, and on 1 June 2004, agreeing to deliver the cargo within 10 days, which constituted an intention to aggravate the loss; even if the loss of liquidated damages alleged by the Plaintiff did exist, such loss was caused by the failure of the Plaintiff and Noble Grain to timely acquire the inspection and quarantine permit for the cargo, and it was impossible for Saint Vincent to foresee such loss. Therefore, Saint Vincent shall not be held liable for such loss. Three Noble Companies contended as follows: the warehouse fee alleged by the Plaintiff was not true; even if such loss did exist, it was attributed to the act of Shantou Zhongxing of signing the contracts with third parties under the circumstance that it knew those contracts could not be performed. Therefore the carrier shall not be held liable. 6. Loss of Transportation Costs The Plaintiff contended as follows: Shantou Zhongxing had concluded a long-term cargo transportation agreement with a transportation company. From 1 March 2004 to 30 June 2004, the transportation costs were relatively low. Due to the increase of the oil price, the transportation costs increased since 1 July 2004. As a result of the delay of M/V “SEAFARER” in arriving at the discharging port, the transportation costs for soya bean meals processed from the cargo at issue increased, which caused the loss of transportation costs to Shantou Zhongxing, in the sum of RMB1,251,500. The Plaintiff submitted the following evidential materials: the cargo transportation agreement concluded between Shantou Zhongxing and Chenghai Long Du Transportation Company on 1 July 2003; the cargo transportation agreement concluded between Shantou Zhongxing and Xiajiang Long Du Transportation Company in July 2004; car transportation price list, and invoices for transportation costs etc. Saint Vincent asserted that the loss of transportation costs alleged by the Plaintiff were irrelevant to the case. The evidence provided by the Plaintiff could not prove that the transportation costs were relevant to the soya bean meals processed from the cargo, and that a casual relationship existed between such costs and the prolong voyage of M/V “SEAFARER”. Saint Vincent requested the Court not to admit such costs. Three Noble Companies contended that a casual relationship did not exist between the loss of transportation costs alleged by the Plaintiff and the delay of M/V “SEAFARER” in discharging. In addition, it was in lack of evidence to prove the transportation costs were related to the soya beans loaded onboard M/V “SEAFARER”. Besides, such loss could not be foreseen by the carrier. Such loss claimed by the Plaintiff was legally and factually groundless. 7. Loss resulted from the Decrease of Oil Extraction Rate The Plaintiff asserted that the oil extraction rate of the cargo was only 17.64% due to the delay of M/V “SEAFARER” in arrival, lower than the oil content of 20.35% tested at the port of loading. The cargo at issue only produced 10.470tons of soya bean oil, with the reduction of 1,603.38tons of soya bean oil. Based on the average price of RMB6,453.33/ton, the loss arising from the reduction of soya bean oil was RMB10,347,140. In order to support its claim, the Plaintiff submitted the Production of Brazilian Soya Beans, the Comparison of Production Economic Technical Indexes between Brazilian Soya Beans carried by M/V “SEAFARER” and Brazilian Soya Beans in 2002, the Form of Increase of Production Cost, and the Statement of Daily Production of Shantou Zhongxing. Saint Vincent contended that according to the Opinions on Oil Extraction Rate and Processing Costs of Soya beans Carried by M/V “SEAFARER” issued by Researcher Wang Bujun from the CQSTC, the actual oil extraction rate of soya beans carried on board M/V “SEAFARER” was 18.99%. Taken into consideration the use rate, oil extraction efficiency, and purifying rate of soya beans, and oil extraction skills, quality of auxiliary materials, control and management skills of the oil processing factory, the actual oil extraction output of soya beans carried by M/V “SEAFARER” was within the normal scope. Furthermore, Saint Vincent had delivered in accordance with the Bs/L the cargo in apparent good condition. Shantou Zhongxing processed the soya beans during the period of 1 to 3 months after discharging. The loss resulted from the decrease of oil extraction rate occurred after expiry of the period of carrier’s responsibilities. Three Noble Companies contended that the loss resulted from the decrease of oil extraction rate as alleged by the Plaintiff did not exist. The Plaintiff did not submit evidence to prove the soya beans put into production by Shantou Zhongxing were those carried by M/V “SEAFARER”. Even if the soya beans put into production by Shantou Zhongxing were the cargo, according to the Opinions on Oil Extraction Rate and Processing Costs of Soya beans Carried by M/V “SEAFARER” issued by Researcher Wang Bujun from the CQSTC, the actual oil extraction output of soya beans carried by M/V “SEAFARER” was within the normal scope. Therefore, the carrier shall not be held liable. 8. Loss resulted from the Increase of Production Costs The Plaintiff asserted that due to the quality problems of the Brazilian soya beans at issue (such as the high acid value), more raw materials and auxiliary materials had been consumed for the production; compared with the production costs of Brazilian soya beans in 2002, the production costs of Brazilian soya beans at issue had increased RMB237,951. The Plaintiff submitted the following evidential materials to support its claim: the Production of Brazilian Soya Beans, the Comparison of Production Economic Technical Indexes between Brazilian Soya Beans carried by M/V “SEAFARER” and Brazilian Soya Beans in 2002; the Form of Increase of Production Cost; the Statement of Daily Production; Material Collection List and the Invoices for Purchase of Raw Materials and Auxiliary Materials. Saint Vincent contended that pursuant to the Opinions on Oil Production Rate and Processing Costs of Soya beans Carried by M/V “SEAFARER” issued by Researcher Wang Bujun from the CQSTC, the production economic technical indexes of soya beans carried by M/V “SEAFARER” provided by the Plaintiff (i.e. electricity consumption at oil production workshops, the consumption of carclazyte, alkali, diesel oil, and phosphoric acid at purifying workshops) were within the technical indexes of the clean production at the secondary standard, or normal, and the alleged increase of production costs did not exist. In addition, Saint Vincent had delivered in accordance with the Bs/L the cargo in apparent good condition. Shantou Zhongxing processed the soya beans at issue during the period of 1 to 3 months after discharging. The loss resulted from the increase of production costs alleged by the Plaintiff occurred after expiry of the period of carrier’s responsibilities, and such loss could not be foreseen by Saint Vincent. Three Noble Companies contended that it was in lack of evidence to prove the existence of the loss arising from the increase of production costs and the relevance of such loss and soya beans carried onboard M/V “SEAFARER”. Three Noble Companies requested the Court not to admit such loss. 9. Loss sustained by Shantou Zhongxing arising from Drop of Market Price The Plaintiff asserted that due to the late arrival of the vessel, at which time the sales price of soya bean meals and soya bean oil decreased coincidently, plus the quality of the finished products was affected by the poor quality of the soya beans carried by M/V “SEAFARER”, Shantou Zhongxing had to reduce the sales price of the finished products. As a result, the sales price of soya bean meals and that of soya bean oil were far lower than the average prices at the time of the normal arrival of M/V “SEAFARER”. Compared the average sales price from 4 June to 4 July 2004 of soya bean meals (namely RMB2,837.14) and soya bean oil (namely RMB6,453.33) at Huangpu Port as cited from http://fao.com.cn, with the actual sales price of soya bean meals and soya bean oil, the loss of soya bean meals arising from the difference of sales price was calculated to be RMB17,608,055.74, and the loss of soya bean oil arising from the difference of sales price was calculated to be RMB3,857,316.59, making the market loss totaling RMB21,465,372.33. In order to support its claim, the Plaintiff submitted the following evidential materials: the List of Prices of soya bean meals and salad oil from 4 June to 4 July 2004 cited from http://fao.com.cn; the Statement of Daily Price; Soya Bean Meals Sales Contracts; Invoices; Quality Inspection Report; Soya Bean Oil Sales Contracts and Invoices. Saint Vincent contended that the said alleged loss in the sum of RMB21,465,372.33 occurred after expiry of the responsibility period of Saint Vincent, and such loss was unforeseeable. The Statement of Daily Prices of Soya Bean Meals and Soya Bean Oil was cited from the internet, the authenticity and accuracy of which had not been certified. Furthermore, none of the 8 consignees of soya bean meals specified in the invoices submitted by the Plaintiff in support of its claim from loss of transportation costs was identical to one of the 9 buyers under the soya bean meals sales contracts. Saint Vincent requested the Court not to admit such loss. Three Noble Companies contended that the said alleged loss was irrelevant to the cargo carried onboard M/V “SEAFARER”. The prices cited from the Internet lacked of authenticity and accuracy. Such loss could not be foreseen by the carrier at time of concluding the contract of carriage of cargo by sea. Therefore, the carrier shall not be held liable for such loss. IX. Facts relating to Pretrial Arrest of M/V “SEAFARER” On 10 August 2004, the Plaintiff filed an application to this Court for the pretrial arrest of M/V “SEAFARER”, requesting the owner and/or the bareboat charterer to provide a security in the amount of RMB65,000,000. On the same day, the Court rendered a ruling, approving such application, and arrested M/V “SEAFARER” at Chiwan Port. On 20 August, China Reinsurance (Group) Corporation and the Britannia Steamship Insurance Association provided letters of security in amounts of US$2,500,000 and US$4,000,000 respectively to the Plaintiff. The Plaintiff accepted the said securities, and applied to the Court for release of M/V “SEAFARER”. The Plaintiff paid to the Court the application fee in the sum of RMB5,000 and the enforcement fee in the sum of RMB30,000. X. Facts relating to Application of Law The Plaintiff asserted that since the Bs/L did not specify the applicable law agreed by the parties, the applicable law to the case shall be determined in accordance with the principle of the closest connection. Both the discharging port of the cargo and the domicile of the Plaintiff (namely the holder of the Bs/L) in this case were in China. Therefore China was the country having the closest connection with the contract of carriage of the cargo by sea, and the laws of P. R. China shall apply to this case. Saint Vincent and Three Noble Companies contended that pursuant to the clause specified in the Bs/L of “…the Charter Party, dated overleaf, are herewith incorporated”, English law shall apply to the case. The collegial panel holds as follows: Nature of disputes involved in the case. The Plaintiff obtained the two original bills of lading by negotiating the L/C. The Plaintiff, based on these two original bills of lading, brought this lawsuit against the carriers Three Noble Companies and the actual carrier Saint Vincent, requesting the Court to order the four Defendants to be jointly and severally liable for all the losses resulted from the delay of the arrival of the cargo. Therefore, it is a case involving foreign elements and disputes over the contract of carriage of cargo by sea. Application of Law. Article 269 of the Maritime Code of the People’s Republic of China provides 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. Article 3 of the Rules of the Supreme People’s Court on the Relevant Issues concerning the Application of Law in the Trial of Civil or Commercial Cases involving Foreign Elements and Contract Disputes, the parties shall choose or modify in an explicit manner the law applicable to contract disputes. Although the two original Bs/L at issue stated “to be used with charter parties”, the Plaintiff’s acceptance of the Bs/L shall not be deemed as the Plaintiff’s implied consent to choose the applicable law specified in the charter party to govern the disputes arising from the contract of carriage of cargo by sea evidenced by the Bs/L. Saint Vincent and Three Noble Companies failed to prove the Plaintiff and the parties hereto had reach an agreement on the applicable law in an explicit manner. Therefore, in this case, the Plaintiff shall be deemed not having chosen the law applicable to the disputes arising from the contract of carriage of cargo by sea. Both the discharging port e and the domicile of the Plaintiff (namely the holder of the Bs/L) in this case are in China. Therefore China is the country having the closest connection with the contract of carriage of the cargo by sea, and the laws of P. R. China shall apply to this case. The assertion put forward by Saint Vincent and Three Noble Companies that English law shall apply to the case is factually and legally groundless, and therefore shall not be admitted. The Plaintiff’s title to sue. The Plaintiff opened in its name two documentary L/C for the cargo under two sales contracts, and effected the payment for the cargo covered by these two L/C. The two Bs/L were lawfully transferred to the Plaintiff via the bank. The Plaintiff, as the lawful holder of the two Bs/L, has entitlement to claim compensation against the carrier and the actual carrier. The assertion put forward by Saint Vincent and Three Noble Companies that the Plaintiff did not have title to sue is factually and legally groundless, and therefore shall not be admitted. The Identification of carrier. Pursuant to the Bs/L involved in the case, Noble Grain was the shipper of the cargo at issue, and acted as the agent of the Master of M/V “SEAFARER” to issue the Bs/L. Before Noble Grain issued the Bs/L, the Master of M/V “SEAFARER” issued a letter of authorization, authorizing the charterer or the agent of the charterer to issue on behalf of the Master any bills of lading but always in strict conformity with the current effective charter party. Before issuance of the Bs/L involved in the case, a contractual relationship established by the voyage charter party existed between the owner Noble Europe and the charter Noble Grain. Furthermore, the Bs/L stated “to be used with charter parties”. In light of the foregoing, Noble Grain shall be deemed having issued the Bs/L as the agent of the Master in accordance with the said voyage charter party. Article 72(2) of the Maritime Code of the People’s Republic of China provides the bill of lading may be signed by a person authorized by the carrier, and a bill of lading signed by the Master of the ship carrying the cargo is deemed to have been signed on behalf of the carrier. The Bs/L involved in the case shall be deemed to have been signed by the Master on behalf of the carrier. Before issuance of the Bs/L involved in the case, Noble Europe signed a voyage charter party with Noble Grain, in which Noble Europe was the owner and the Noble Grain was the charterer. In accordance with Section 1 of Chapter IV of the Maritime Code of the People’s Republic of China, a voyage charter party is one of the contracts of carriage of cargo by sea. Noble Europe was the carrier, and Noble Grain was the shipper. The Master issued the Bs/L on behalf of the carrier Noble Europe. Three Noble Companies asserted that Noble Europe had been mistakenly written as the owner in the said voyage charter party, and the owner in fact should be Noble Chartering Inc. Such assertion did not comply with the facts ascertained by the Court, and therefore shall not be admitted. Three Noble Companies contended that in accordance with English law, the carrier under the contract of carriage of cargo by sea in this case was Saint Vincent. As mentioned above, the Court has confirmed that the laws of P. R. China, rather than English law, shall apply to the substantive issues of this case. Therefore, the said assertion of Three Noble Companies lacked of supporting evidence, and shall not be admitted. Noble Europe, Noble Grain, and Noble Chartering are lawfully incorporated legal persons, independent from each other, and it is in lack of evidence to prove that Three Noble Companies were representatives of each other. Although during the voyage of M/V “SEAFARER” Noble Chartering Limited gave instructions to the vessel, such as instructing the vessel to bunker, anchor, wait for instructions, and berth, there is no evidence to prove that Noble Chartering Limited was the carrier signing the contract of carriage of cargo by sea with the shipper Noble Grain. Besides, the shipper Noble Grain also denied that Noble Chartering Limited was the carrier. Therefore, the assertion put forward by the Plaintiff and Saint Vincent that Noble Europe, Noble Grain and Noble Chartering shall be jointly deemed as the carrier is factually groundless, and shall not be admitted. The Plaintiff’s claims against the Defendants Noble Grain and Noble Chartering Limited are dismissed. The actual carrier. Saint Vincent, as the owner of M/V “SEAFARER”, employed crews, controlled the actual operations of the ship and actually performed the carriage of the cargo by sea. In accordance with Article 42(1) of the Maritime Code of the People’s Republic of China, Saint Vincent shall be the actual carrier of the cargo. The responsibilities of the carrier and the actual carrier: 1. Deviation. Article 49(1) of the Maritime Code of the People’s Republic of China provides that the carrier shall carry the cargo to the port of discharge on the agreed or customary or geographically direct route. In this case, there is no evidence to prove the shipper and the carrier or the actual carrier had agreed on a route. Three Noble Companies contended under the circumstance that the carrier and the shipper did not agree on the route, the route chosen by M/V “SEAFARER” was a customary or geographically direct route. The Analysis on the Route of M/V “SEAFARER” from Paranagua, Brazil to Chiwan, China issued by Professor Wang Jianping from the Navigation College of Dalian Maritime University as submitted by Saint Vincent specified that the route involved in the case was geographically direct and customary, economic and safe. The Plaintiff did not raise sufficient rebuttal opinions. Therefore, the export opinions provided by Saint Vincent shall be adopted. M/V “SEAFARER” carried the cargo at issue to the discharging port by taking a customary and geographically direct route, without any deviation. 2. Delay in delivery. Article 50 of the Maritime Code of the People’s Republic of China provides that delay in delivery occurs when the cargo have not been delivered at the designated port of discharge within the time expressly agreed upon. In this case, the time of delivery of the cargo had not been expressly agreed. Therefore, delay in delivery did not exist in the case. The assertion of the Plaintiff that the carrier and the actual carrier committed a delay in delivery is factually groundless, and shall not be admitted. 3. Causes of the prolonged voyage and delay in discharge. The cargo at issue was Brazilian Soya beans, which are compulsively required by the laws of China to go through import inspection and quarantine. In accordance with the Regulations for Administration of Safety of Agricultural Genetically Modified Organism promulgated by the State Council, the Measures for Administration of Imported Agricultural Genetically Modified Organism promulgated by the Ministry of Agriculture, the Measures for Administration of Agricultural Genetically Modified Organism Identification promulgated by the Ministry of Agriculture, and the Measures for Administration of Inspection and Quarantine on Genetically Modified Products for Entry and Exit promulgated by the AQSIQ, before importing soya beans into China, the Quarantine Permit for Entry Animals and Plants (which shall be obtained by the domestic import enterprise from the AQSIQ), the Agricultural GMO Safety Certificate (which shall be obtained by the foreign exporter from the Ministry of Agriculture), the Examination and Approval for Identification of Organisms (which shall be obtained by the domestic import enterprise from the Ministry of Agriculture) shall be acquired in advance. When the cargo arrive at the port of destination, in order to complete the procedures of inspection and quarantine, the importer or the exporter must present the said three certificates to the competent authorities. Based on the facts ascertained by the Court, on 10 Mary, the AQSIQ issued the Warning Circular, informing that four suppliers, including Noble Grain, were suspended to export Brazilian soya beans to China and with respect to soya beans shipped en route, those in compliance with the requirements of inspection and quarantine for entry could be allowed to enter into China. On 23 June, the AQSIQ issued Announcement No.76, ordering as follows: the suppliers (including Noble Grain) resumed the qualification of exporting Brazilian soya beans to China; with respect to those soybeans shipped en route before 11 June 2004, if soya beans were mixed with soybeans treated with seed coating agent, soya beans treated with seed coated agent should be picked up and disposed of before discharging, and soya beans would not be allowed to enter into China until they were found in compliance with the relevant requirements of China; all the costs arising from the pick up and disposal of soya beans treated with seed coated agent shall be borne by suppliers; otherwise soya beans would be returned to the loading port. On 8 May, the AQSIQ issued to the Plaintiff the Quarantine Permit for Entry Animals and Plants No.PB00041315. On 17 June, the Plaintiff faxed the Quarantine Permit for Entry Animals and Plants to Noble Grain. On 18 June, the Ministry of Agriculture approved the Plaintiff’s application for the Examination and Approval Document for Identification of Agricultural GMO and the Agricultural GMO Safety Certificate (Import). On 25 June, Noble Grain acquired the Agricultural GMO Safety Certificate (Import). On 2 July, M/V “SEAFARER” arrived at the quarantine anchorage of Chiwan, and Shekou CIQ embarked the vessel and collected the cargo samples. Shekou CIQ found red beans mixed with soya beans onboard M/V “SEAFARER”. On 6 July, Shekou CIQ issued the Inspection and Quarantine Treatment Notice, requesting that: soya beans treated with seed coated agent shall be picked up and disposed of before discharging. Soya beans would not be allowed to enter into China until they were found in compliance with the relevant inspection and quarantine requirements; soya beans treated with seed coated agent shall be burnt; the costs arising from picking up soya beans treated with seed coated agent shall be borne by Noble Grain. The aforesaid facts show the direct causes of the prolonged voyage (namely 3 months plus 26 days), including the time for discharge, are the failure of the Plaintiff and Noble Grain to timely obtain the Quarantine Permit for Entry Animals and Plants, the Examination and Approval Document for Identification of Agricultural GMO and the Agricultural GMO Safety Certificate (Import), and the finding of red beans mixed in the cargo stow (such red beans must be picked up from soya beans before discharge so that soya beans could be allowed into China). The losses caused by the said reasons are trade disputes between the Plaintiff and Noble Grain, which shall be precluded from the substantive issues of this case that this Court should consider. 4. Liabilities of the carrier and the actual carrier. Article 55(1) of the Maritime Code of the People’s Republic of China provides that the amount of indemnity for the loss of the cargo shall be calculated on the basis of the actual value of the cargo so lost, while that for the damage to the cargo shall be calculated on the basis of the difference between the values of the cargo before and after the damage, or on the basis of the expenses for the repair. In this case, liability to be assumed by Noble Europe is the loss of and damage to the cargo. Article 63 of the Maritime Code of the People’s Republic of China provides that where both the carrier and the actual carrier are liable for compensation, they shall jointly and severally be liable within the scope of such liability. With regard to the loss of and damage to the cargo occurred during the period when the actual carrier Saint Vincent was in charge of the cargo, the actual carrier Saint Vincent and the carrier Noble Europe shall be jointly and severally liable. As to the loss resulted from the increase of warehousing fees, loss of liquidated damages, loss of transportation costs, loss resulted from the decrease of oil extraction rate, loss resulted from the increase of production costs, loss arising from dropping of market price claimed by the Plaintiff, they were all caused by the prolonged voyage and delay in discharge. The Plaintiff and Noble Grain shall based upon their sales contract to solve dispute over the said losses, for which the carrier and the actual carrier shall not be held liable. Compensation scope for cargo damage and cargo shortage 1. Cargo shortage. The actual quantity of the cargo discharged was 59,618.30tons as specified in the Weight Inspection Certificate issued by Shekou CIQ, which was 107.434tons less than the total quantity (namely 59,725.734tons) of the cargo covered by the two Bs/L. As the cargo shortage occurred during the period when Noble Europe was in charge of the cargo, Noble Europe and the actual carrier Saint Vincent shall be jointly and severally liable for this part of loss. The argument put forward by Saint Vincent that the carrier can rely on the trade allowance of 0.5% to have liability exemption is factually and legally groundless, and shall not be admitted. Article 55(2) of the Maritime Code of the People’s Republic of China provides that the actual value shall be the value of the cargo at the time of shipment plus insurance and freight. The Plaintiff effected the payment in the amount of USD15,201,207.26 for 37,725.734tons of the cargo covered by the L/C No.LC5300122/04, and the payment in the amount of USD9,912,320 for 22,000tons of the cargo covered by the L/C No.LCZP808200410048. The price of the cargo stated in the commercial invoices provided by Noble Grain are the same as the payment made by the Plaintiff. Therefore, the average price of soyabeans was USD420.48/ton. The actual value of soyabeans shall be calculated as per USD420.48/ton. The assertion by the Plaintiff that the actual value of the cargo shall be calculated as per after-tax price of RMB4,050/ton is legally groundless, and shall not be admitted. In summary, Noble Europe shall compensate the Plaintiff for the loss of cargo shortage in the sum of USD45,173.85, equivalent to RMB373,899.44 at the exchange rate of US$1=RMB8.2769 published by the People’s Bank of China on the date of completion of discharge of M/V “SEAFARER” (namely 12 August 2004). 2. Loss of Damaged Cargo. Pursuant to the survey report issued by Guangzhou Balance Cargo Control and Survey Ltd., there were 2,409.60tons of damaged soya beans at maximum, including 2,399.75tons of heat-damaged soya beans, with the net loss of 78.28tons, and 9.85tons of wet and mouldy soyabeans. The direct causes of such damage were as follows: the cargo had inherent defects; part of the cargo had been wetted before loading; the mouldy soya beans were probably caused by the water ingress from the hatch covers. The prolonged voyage and discharging were the external cause for the cargo damage, which accelerated the mould/caking/discoloration of soyabeans. Shekou CIQ issued a survey report on the conditions and causes of the cargo damage, specifying that: 9.85tons of wet and mouldy soya beans were caused by the ingress of seawater from the gap of the hatch covers when the vessel encountered bad weather en route, and such damage occurred before discharging; 258.777tons of heat-damaged soyabeans were caused by the prolonged storage of soyabeans in cargo holds and the insufficient ventilation to the holds, and such damage occurred before discharging. The said survey report issued by Shekou CIQ as submitted by the Plaintiff was issued by an independent third party in the first time. The Defendants did not point out any defect of the survey procedures and the grounds of findings therein. Therefore, the survey report issued by Shekou CIQ shall be adopted given there is no sufficient evidence produced by the Defendants to the contrary. 9.85tons of wet and mouldy soyabeans were caused by the ingress of seawater from the gap of the hatch covers which was attributed to the non-weathertightness of the cargo holds of M/V “SEAFARER”, and thus Noble Europe as the carrier shall be held liable. Noble Europe shall compensate the Plaintiff for the loss of 9.8tons of wet and mouldy soya beans, which is in amount of RMB34,280.67 calculated as per the unit cargo price at USD420.48/ton and the exchange rate of US$1=RMB8.2769 published by the People’s Bank of China on the date of completion of discharge of M/V “SEAFARER”. Heat Damage to the 258.777tons of soya beans were caused by the prolonged storage of cargo in holds and the insufficient ventilation into the holds. The collegial panel holds that heat damage shall partially be ascribed to the delay of the seller and the buyer (i.e. the Plaintiff and Noble Grain) in fulfilling the procedures for obtaining the required import documents for the cargo, and partially due to the improper care of the cargo by the carrier. Given it is difficult to apportion the loss ratio caused by the aforesaid two elements, the collegial panel on its discretion determines that Noble Europe shall undertake 50% of the loss of 258.777tons of heat-damaged soya beans. Noble Europe shall compensate the Plaintiff for 50% of the loss of 258.777tons of heat-damaged soya beans, equivalent to RMB450,307.03 calculated as per the unit cargo price at USD420.48/ton and exchange rate of US$1=RMB8.2769 published by the People’s Bank of China on the date of completion of discharge of M/V “SEAFARER”. Saint Vincent shall jointly and severally undertake the compensation liability on the part of Noble Europe. Inspection fees on damaged cargo. Based on the facts ascertained by the Court, the inspection on the damaged cargo was not applied by the Plaintiff, and the inspection fees arising therefrom, in the amount of RMB34,556, were paid by Shantou Zhongxing, rather than the Plaintiff. The Plaintiff did not sustain the loss of inspection fees. Therefore, the inspection fees claimed by the Plaintiff shall not be admissible. The fees incurred from the Plaintiff’s application for pretrial arrest of M/V “SEAFARER” and the evidence preservation shall be borne by the Plaintiff, Noble Europe and Saint Vincent in proportion to their respective liabilities determined. In summary, in accordance with Articles 46(1), 51, 55, 63 and 269 of the Maritime Code of the People’s Republic of China, it is adjudged as follows: 1. The Defendant Noble Europe Limited shall compensate the Plaintiff Henan Cereals Oils for the cargo loss in the amount of RMB858,487.14; 2. The Defendant Saint Vincent Shipping Inc. shall be jointly and severally liable for the cargo loss sustained by the Plaintiff in the amount of RMB858,487.14; 3. The claims lodged by the Plaintiff Henan Cereals Oils and Foodstuffs Import and Export (Group) Co., Ltd. against the Defendant Noble Grain Pte Limited and the Defendant Noble Chartering Limited shall be dismissed; 4. Other claims lodged by the Plaintiff Henan Cereals Oils and Foodstuffs Import and Export (Group) Co., Ltd. shall be dismissed. The litigation cost for this case is RMB279,210, of which, RMB274,755 shall be borne by the Plaintiff, and RMB4,455 shall be jointly and severally borne by the Defendant Noble Europe Limited and the Defendant Saint Vincent Shipping Inc. With respect to the fees in the amount of RMB60,000 incurred by the Plaintiff’s application for arrest of M/V “SEAFARER” prior to litigation and the evidence preservation, RMB59,043 shall be borne by the Plaintiff, and RMB957 shall be jointly and severally borne by the Defendant Noble Europe Limited and the Defendant Saint Vincent Shipping Inc. The litigation fees, and the fees incurred by the Plaintiff’s application for pretrial arrest of M/V “SEAFARER” and the evidence preservation have been prepaid by the Plaintiff, and this Court will not make any refund. The Defendant Noble Europe Limited and the Defendant Saint Vincent Shipping Inc. shall directly pay to the Plaintiff their proportions for such costs and expenses. The aforesaid payment obligation shall be fulfilled within 10 days upon the effectiveness of this Judgment. In case of any failure of payment within the period specified in this Judgment, the defaulting party shall pay double interest on the debt for the belated payment in accordance with Article 229 of the Civil Procedural Law of the People’s Republic of China. In the event of dissatisfaction with this Judgment, the Plaintiff may within 15 days, while the Defendants Noble Europe Limited and Saint Vincent Shipping Inc. may within 30 days upon the service of this Judgment, submit the Statement of Appeal to this Court, together with copies according to the numbers of the relevant parties to the case, for filing appeal to the Higher People’s Court of Guangdong Province. Presiding Judge Wu Zili Judge Song Weili Judge Huang Xiwu Guanghzou Maritime Court (Official Chop Affixed) 17 May 2011 Certified true copy of the original Court Clerk Zeng Huifen The translation is provided by Wang Jing & CO.