Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2003) GHFCZ No.430 (2004) GHFCZ No.57 Plaintiff (Defendant in the Counterclaim) : Golden Palm Maritime S.A. Domicile : Edificio Comosa, Ave., Samuel Lewis, Y Manuel Maria Icaza, Panama City, Republic of Panama Legal Rep. : Noboru Fujimaki, Director/General Manager Agent ad litem : Chen Xiangyong, Attorney at Wang Jing & Co. Law Firm Agent ad litem : Chen Xin, Attorney at Wang Jing & Co. Law Firm Defendant (Plaintiff in the Counterclaim) : Guangdong Sun Font Shipping Co., Ltd. Domicile : Shunfeng Mountain, Daliang, Shunde District, Foshan, Guangdong, P. R. China Legal Rep. : Luo Houning, General Manager Agent ad litem : Chen Haojie, Attorney at Guangdong Everwin Law Office Agent ad litem : Zhuang Dongxiao, Attorney at Guangdong Everwin Law Office With regard to the case filed by the Plaintiff, Golden Palm Maritime S.A. against the Defendant Guangdong Sun Font Shipping Co., Ltd. for disputes over damages arising from ships’ collision, the Court accepted the case on 14 October 2003, and formed a collegial panel in accordance with law, of which, Judge Wu Zili served as the presiding judge, and Judge Qin Weiguo and Judge Ni Xuewei participated in the deliberation. The Defendant lodged a counterclaim within the period of evidence adduction. The Court accepted the counterclaim on 23 February 2004, and decided to consolidate the two actions. On 13 April 2004, Chen Xiangyong, the agent ad litem of the Plaintiff (the Defendant in the Counterclaim), submitted to the Court the Confirmation on Completion of Evidence Production, in which, it confirmed that evidence had been produced except the evaluation conclusion on the repair period and repair costs of M/V “Hui Yang”. Chen Haojie, the agent ad litem of the Defendant (the Plaintiff in the Counterclaim), also submitted to the Court the Confirmation on Completion of Evidence Production, in which, it confirmed that evidence had been produced. The Court called upon the aforesaid parties to exchange evidence before trial respectively on 13 April 2004 and 22 July 2004, and conducted public hearings on the consolidated case on 22 and 23 July 2004. Chen Xiangyong, the agent ad litem of the Plaintiff (the Defendant in the Counterclaim), and Chen Haojie and Zhuang Dongxiao, the agent ad litem of the Defendant (the Plaintiff in the Counterclaim), appeared before the Court to participate in the proceedings. On 22 September 2005, the parties were notified by the Court that due to the retirement of Judge Qin Weiguo, the collegial panel was altered to consist of Wu Zili, Deng Yufeng and Ni Xuwei, of which, Wu Zili served as the presiding judge. The said agents ad litem did not request for a new trial. This consolidated case has now been finalized. The Plaintiff (the Defendant in the Counterclaim) alleged as follows: M/V “Nissho 1” is owned by the Plaintiff, and operated and managed by Nissho Shipping Co., Ltd. (hereinafter referred as “Nissho”). On 17 December 2001, M/V “Nissho 1”, laden with 4,200 tons of bitumen, sailed from Japan to Fuzhou, China. At 1510hrs on 21 December, the bow of M/V “Hui Yang” owned by the Defendant contacted M/V “Nissho 1” in way of the starboard cargo hold No.5, causing a V-shape crevasse of 5 meters long longitudinally and 8 meters depth vertically and other damages to M/V “Nissho 1”. As a result, the bitumen loaded within the said cargo hold of M/V “Nissho 1” leaked out into the waters of Minjiangkou, and the vessel got aground. After the collision, People’s Insurance Company of China, Guangdong Branch (now known as “PICC Property and Casualty Co., Ltd., Guangdong Branch”, and hereinafter referred to as “PICC Guangdong”), on behalf of the Defendant, provided to the Plaintiff a letter of undertaking in the amount of USD1,630,000 (unless otherwise especially stated, the currency stated below is RMB). The Plaintiff entrusted Shanghai Salvage Co., Fuzhou Station and other units to conduct probing survey for the damaged crevasse of M/V “Nissho 1” under water, clean mud inside the cargo hold and leaking bitumen, carry out temporary patching for the underwater crevasse and remove underwater bitumen in Minjiangkou. The collision accident was completely attributed to the fault of M/V “Hui Yang”. As a result, the Plaintiff sustained the loss in the amount of USD 1,482,925.53, and the litigation costs incurred from the collision accident. Therefore the Plaintiff requested the Court to order the Defendant to compensate the Plaintiff for the loss in the amount of USD1,482,925.53 plus the interest (counted from the date of 21 December 2011 to the date of actual payment as 5% of annual interest rate), and to bear the litigation costs and other legal fees arising from this case. The Plaintiff (the Defendant in the Counterclaim) provided the following evidential materials within the period of evidence adduction: 1. Adjustment report of collision claims; 2. Underwater diving survey report in regard to damages to M/V “Nissho 1” as well as the invoice and payment voucher thereof; 3. Agreement on temporary patching of M/V “Nissho 1”, and completion form as well as the invoice, receipt and payment voucher in respect of the patching; 4. Agency fee for underwater patching of M/V “Nissho 1”; 5. Agreement on temporary repair of M/V “Nissho 1”, and completion form as well as the invoice, receipt and payment voucher in respect of the repair; 6. Agreement on temporary repair of damaged cabins of M/V “Nissho 1”, and completion form as well as the invoice, receipt and payment voucher in respect of the repair; 7. Invoice of the costs of superintendence on the repair of M/V “Nissho 1” in Mawei Shipyard Co., Ltd. (hereinafter referred to as “Mawei Shipyard”), and daily working records; 8. Costs of cleaning of cargo holds and daily working records, as well as the payment voucher thereof; 9. Costs of superintendence on miscellaneous work during the temporary repair, and daily working records; 10. Invoice of the costs and transportation fees in respect of the patching metal; 11. Invoice of the rental of floating crane for temporary repair works; 12, Invoice of the classification survey fee of Nippon Kaiji Kyokai; 13, Invoice of the costs of pilotage and shifting, and the operation log; 14. Invoice of the cost of salvage and salvage superintendence by tug boat, and operation log; 15. Pollution prevention-Invoice of the costs of oil fences, and operation log; 16. Pollution prevention-Receipt of the hire of small barges used to remove bitumen; 17. Invoice of the costs of survey and survey superintendence; 18. List of hired vehicles; 19. Invoices of the air ticket fees by the Owner’s superintendent; 20. Invoices and bills of hotel accommodation; 21. Communication charges; 22. Invoice of agency fee; 23. Invoice of costs of engineers and fire engines for fire watch; 24. Boarder clearance expenses incurred at Hong Kong and Shenzhen for the Owner’s superintendent; 25. Invoice of port charges for M/V “Nissho 1” at Makiyama, Japan for permanent repair ; 26. Permanent repair costs of M/V “Nissho 1”; 27. Travel expenses and superintendence fees of the Owner’s superintendent in China and Makiyama, Japan; 28. Costs of superintendence on permanent repair carried out by Nissho Shipping Co., Ltd. on half of the Owner in Makiyama, Japan; 29. Invoice of survey fees for M/V “Nissho 1” in Makiyama, Japan; 30. Breakdown of loss of hire and bunker of M/V “Nissho 1”; 31. Salvage fee of M/V “Nissho 1” at Mingjiangkou; 32. Invoice of costs of traffic boats, the certificate of hire, and the statement of expenses thereof; 33. Invoice of charges for removal of underwater bitumen; 34. Statement of facts; 35. Sketch maps of ship’s collision and grounding; 36. Statement of the Master, Second Officer and Seamen of M/V “Nissho 1”; 37. Inquiry record of marine traffic accident investigation carried out by Fuzhou Maritime Safety Administration of the People’s Republic of China (hereinafter referred to as “Fuzhou MSA”); 38. Nautical chart of the waters where the collision accident occurred; 39. Tide Table of Mingjiangkou; 40. Ship’s particulars, certificates, logbooks, engine logbooks, telegraph records of bridge and engine room, graphical record of the parameters of the turning circle, crew list and certificates of competency of the crew of M/V “Nissho 1”; 41. Underwater diving survey report issued by Shanghai Salvage Co., in regard to damages to M/V “Nissho 1”; 42. Agreement on temporary patching of M/V “Nissho 1”; 43. Notice issued by Fuzhou MSA, requesting M/V “Nissho 1” to carry out the emergency plan and pollution-prevention measures as quickly as possible; 44. Bills of lading and manifests of M/V “Nissho 1”; 45. Photos relating to damages to M/V “Nissho 1”; 46. Evaluation Report for repair of M/V “Nissho 1”; 47. Contract for removal of underwater bitumen, report of completion of removal, and acceptance report thereof; 48. Copy of the preliminary investigation report issued by Fuzhou MSA in respect of the collision accident between M/V “Nissho 1” and M/V “Hui Yang”; 49. Port regulations of Fuzhou port. On 13 April 2004, the Plaintiff filed an application to the Court, requesting the Court to appoint a competent surveyor to evaluate the reasonable repair costs and time for the repair of damages to M/V “Hui Yang” caused by the collision accident according to the list of ship’s repair costs applicable in China as well as the scope and extent of damages determined by China Classification Society. The Court approved such application and appointed China Classification Society Industrial Corp., Guangzhou Branch to carry out the aforesaid evaluation. On 18 June 2004, China Classification Society Industrial Corp., Guangzhou Branch issued the Evaluation Report for the Repair of M/V “Hui Yang”. The Plaintiff paid the evaluation fee in sum of RMB6, 000. The Defendant (the Plaintiff in the Counterclaim) pleaded the defence and raised a counterclaim as follows: I. M/V “Hui Yang” was seaworthy in the voyage involved in the collision accident and was properly manned in accordance with the requirements of the Minimum Safe Manning Certificate. In the course of navigation, the watch officer maintained a proper lookout in accordance with the provisions of the International Regulations for Preventing Collisions at Sea 1972 (hereinafter referred to as “the COLREGs”), kept M/V “Hui Yang” navigating at a safe speed along the outbound channel, and complied with the rules relating to watchkeeping, and the relevant laws and regulations and port regulations. Thus M/V “Hui Yang” did not contribute any fault to the development of a close-quarters situation between the two vessels, and had adopted proper measures when the collision accident became unavoidable. In view of the foregoing, M/V “Hui Yang” was not at fault for the collision accident and should not be liable for the damages thereof. II. After the collision, Fuzhou MSA carried out an investigation and issued an Investigation Report. It is specified in the Investigation Report that in respect of the accident M/V “Nissho 1” has the following faults: 1. Negligence of Lookout. M/V “Nissho 1” failed to make timely report of her movement, and turned to starboard without making appropriate signals. Thus the outbound vessel was not aware of the intention of M/V “Nissho 1”in time, and the two vessels in question could not properly coordinate with each other in the course of avoiding collision. Such negligence violated the provisions of the Ru1es of the Ministry of Communication of the People’s Republic of China on Coastal Harbour Signals and Rule 5 of the COLREGs. 2. Improper Timing to Turn around. The full load draft of M/V “Nissho 1” is only 6.19 meters so that she can enter the port without taking the tide. However, M/V “Nissho 1” proceeded hastily into the outbound channel knowing there were some deep draft vessels departing from the port by taking the tide. She endangered the navigation of other vessels and failed to apply good seamanship, which violated the provisions of Rule 8 of the COLREGs. 3. Failure in Complying with the Regulations on Navigation in Narrow Channels. M/V “Nissho 1” suddenly turned to sail along the outbound channel without letting M/V “Hui Yang” realize her intention, which endangered the safe navigation of outbound vessels and caused the development of a close-quarters situation. Therefore, M/V “Nissho 1” violated Rule 9 of the COLREGs. In summary, M/V “Nissho 1” turned around in an improper timing and failed to comply with the Regulations on Navigation in Narrow Channels, which constituted the main cause of this collision accident. Therefore, M/V “Nissho 1” shall bear the main responsibility for the accident. III. After the accident, the Plaintiff and the Defendant respectively entrusted survey companies to investigate damages to their vessels caused by the collision accident. According to the Survey Report of M/V “Nissho 1” issued by Guang Dong Maritime Engineering Consulting & Survey Co., Ltd., the cost of permanent repair was estimated to be USD100, 000 on the basis of the local price standard, the cost of temporary repair was about USD40, 000, and the cost of cleaning up tank No.5 and outer shell of tanktop was estimated respectively to be USD100,000 and USD10,000. The time for cleaning up and temporary repair was estimated respectively to be 15 working days and 7 working days. The aforesaid costs of cleaning up totally amounted to USD250,000. However, the repair costs claimed by the Plaintiff in the Statement of Complaint reached USD700,000. Such huge cost was due to the Plaintiff’s failure in repairing the vessel in the nearest place available as required by law. Therefore, the Defendant shall not be held liable for the aggravated part of the losses incurred from the Plaintiff’s fault. IV. After the accident, the Defendant entrusted Guang Dong Maritime Engineering Consulting & Survey Co., Ltd. to carry out a survey on M/V “Hui Yang”. Guang Dong Maritime Engineering Consulting & Survey Co., Ltd. issued a Survey Report and suggested permanent repair to M/V “Hui Yang”. M/V “Hui Yang” suffered the loss in sum of RMB3,019,197.25 due to the collision accident, including the costs arising from unloading the goods carried onboard M/V “Hui Yang” before entering into the dock for repair. The Defendant requested the Court to dismiss the claims raised by the Plaintiff, and filed a counterclaim requesting the Court to order the Plaintiff to compensate the Defendant for the loss and survey costs in sum of RMB3,019,197.25 plus the interests thereof (computed from the date when the expenses were incurred to the date when all the expenses are paid as per the loan interest rate published by the People’s Bank of China at the corresponding period), and order the Plaintiff to bear the litigation costs arising from the case. The Defendant (the Plaintiff in the Counterclaim) submitted the following evidence within the period of adducing evidence: 1. Certificate of vessel’s survey, certificates of seafearers, minimum safe manning certificate, logbooks, and telegraph record of M/V “Hui Yang”; 2. Marine traffic accident report issued by the master of M/V “Hui Yang”; 3. Nautical chart; 4. Notice of Fuzhou MSA on Printing and Issuing the Investigation Report of the Collision between M/V “Nissho 1” and M/V “Hui Yang”; 5. Survey report of M/V “Hui Yang” as well as the invoice thereof; 6.Final statement and certificate of telegraphic transfer for temporary repair of M/V “Hui Yang”; 7. Contract of repair of M/V “Hui Yang” and the project sheet of Wenwan Ship Repair Yard in Lianjiang town, Fujian province (hereinafter referred to as “Wenwan Ship Repair Yard”); 8. Contract of unloading of M/V “Hui Yang”, and invoice of the charges for survey, agency, tug’s service, pilotage and forced discharge as well as the losses sustained by the MSA and fishermen involved in the accident; 9. Certificate of telegraphic transfer of the China Merchants Bank (receipt); 10. Time charter party; 11. Vouchers and invoice of travel expenses; 12. Survey report of M/V “Nissho 1” issued by Guang Dong Maritime Engineering Consulting & Survey Co., Ltd. and the charges thereof. The Plaintiff (the Defendant in the Counterclaim) raised the following defence: I. The Defendant claimed for losses in sum of RMB3,019,197.25 without providing any detailed breakdown thereof. In addition, even calculating as per the evidence submitted by the Defendant, we still could not come to such result; 2. Although Fuzhou MSA issued an Investigation Report in respect of the accident, according to the judicial practice of maritime courts, investigation reports issued by Maritime Administrative Authorities are not necessarily adopted by the maritime courts. The Defendant requested the Court to determine the facts and ascertain the liabilities by taking full consideration of the evidence submitted by both parties. Through trial, it is ascertained as follows: i. Shi’s Conditions and Manning of M/V “Nissho 1” and M/V “Hui Yang” 1. M/V “Nissho 1” and the Crew Pursuant to the Certificate of Registry of M/V “Nissho 1”, the vessel was built by Murakami Hide Shipbuilding Co., Ltd. (hereiafter referred as to “Murakami Hide”) on 17 June 1997 and was registered with the Panama Merchant Marine Registry. M/V “Nissho 1” is an asphalt tanker owned by the Plaintiff, with the overall length of 97.18meters, breadth of 17.8meters, depth of 8.5meters, gross tonnage of 3,964, net tonnage of 1,190, and main engine power of 3,600h.p. On 26 August 1997, Nippon Kaiji kyokai issued the Classification Certificate to M/V “Nissho 1”. At the time of the accident, M/V “Nissho” was manned with 16 Philippine seamen holding valid certificates of competency issued by the competent Philippine authority; the vessel was properly manned in accordance with the requirements of the minimum safe manning, and these seamen were all healthy. M/V “Nissho 1” held legal and valid technical certificates. As regards the Ship Management Agreement concluded between the Plaintiff and Nissho on 1 June 1997 as submitted by the Plaintiff, the Defendant admitted this Agreement. The Ship Management Agreement provided that: the Plaintiff entrusts Nissho to manage M/V “Nissho 1”; Nissho is responsible for issues relating to technical management, insurance, accounting and supply, but not responsible for issues relating to the crew management, freight, chartering, sales and purchase of the vessel, bunker and vessel’s operation. Part II of the Agreement defined the terms contained therein. Technical management was defined to include: providing competent personnel to supervise the maintenance and performance of the vessel; arranging and supervising vessel’s entering into the dry dock as well as the repair; altering and maintaining the vessel in conditions required by the shipowner; ship’s manager is entitled to make necessary payment so as to ensure the vessel complies with the requirements set forth in the laws of the flag state and the navigational areas, and all the requirements and suggestions provided by the classification society. Accounting management was defined to include: establishing an accounting system as required by the shipowner; providing accounting services and submitting relevant report and records on a periodically basis; keeping record of all necessary or appropriate expenses having been settled between the parties, as well as the time thereof. Chartering Management meaned: ship’s manager should provide chartering service according to the instructions of the shipowner, including but not limited to, looking for and negotiating the use of the vessel, concluding (including performing) charter parties or other contracts relating to the use of the vessel. The chartering management clause shall apply when ship’s manager is in charge of the vessel’s chartering. The Agreement also provided that: all the costs and expenses paid by ship’s manager on behalf of the shipowner in accordance with the provisions contained therein shall be deemed as the debt owned by the shipowner to the bank account designated in the Agreement; However, the shipowner shall, in any case, pay for such debt upon the request by ship’s manger; ship’s manager is entitled to transfer any of his/her obligations to another party without prior consent of the shipowner; ship’s manager shall deal with and settle all the claims arising out of the management, and notify the shipowner of any claim or dispute involving a third party that arises or may arise; ship’s manager shall, as per the instructions of the shipowner, file or defend a lawsuit with regard to the acts relating to the issues he/she is entrusted in the Agreement. Appendix B to the Agreement is ship’s name and particulars of M/V “Nissho 1”. 2. M/V “Hui Yang” and the Crew M/V “Hui Yang” is a steel general cargo ship owned by the Defendant, with the overall length of 148.66meters, breath of 20.4meters, depth of 12.4meters, gross tonnage of 10,234, net tonnage of 6,174, and main engine power of 3,600kw. The vessel was built on 15 October 1977. At the time of the accident, the vessel was manned with 28 Chinese seamen holding valid certificates of competency issued by the Maritime Safety Administration of the People’s Republic of China; the vessel was properly manned in accordance with the requirements set forth in the minimum safety manning certificate, and these seamen were all in good healthy condition. In addition, M/V “Hui Yang” held legal and valid technical certificates. ii. Investigation Report issued by Fuzhou MSA The Plaintiff submitted a copy of the Preliminary Investigation Report in respect of the Collision Accident between M/V “Nissho 1” and M/V “Hui Yang” issued by Fuzhou MSA, whilst the Defendant submitted the original copy of the Notice of Fuzhou MSA on Printing and Issuing the Investigation Report of the Collision between M/V “Nissho 1” and M/V “Hui Yang” (hereinafter referred to as “the Investigation Report”). The Collegial Panel holds that: without the original document, the authenticity of the copy submitted by the Plaintiff can not be verified; the Defendant submitted the original copy of the Investigation Report, of which, the Plaintiff was not in denial; therefore, the Investigation Report submitted by the Defendant should be adopted. The Defendant had no objection to the Investigation Report. The Plaintiff raised objection to the part of “Cause Analysis”, as well as the date of built of M/V “Nissho 1” and the time of collision specified therein, by contending that M/V “Nissho 1” was actually built in June 1997, rather than in 1996; the collision occurred at 1512hrs on 21 December 2001 rather than at 15101/2hrs on 21 December 2001. The Defendant had no objection to the remaining parts of the Investigation Report. Therefore, the collegial panel hereby ascertains the indisputable facts. iii. Weather and Sea Conditions at the Time of the Accident At post meridiem on 21 December 2001, in the accident waters: fair to cloudy, good visibility, northeast wind of 4 degree, around high slack tide, flood current at the speed of 1knot. iv. Facts concerning the Collision Accident On 21 December 2001, M/V “Hui Yang” was loaded with 12,600tons of river sand at Qingzhou container terminal of Fuzhou port, with fore draft of 9.2meters and after draft of 9.3meters. At 1250hrs, the pilot embarked the vessel and commenced pilotage to Shanghai port. At 1455hrs, the vessel, when passing Jinpai Men, noticed two cargo vessels in the pilot anchorage, of which, the closer one, namely M/V “Wondrous”, with her heading towards east, anchored at the position of 26°07'52"N 119°37'58" E, and the other one was M/V “Nissho 1” heading to the northeast. At 1503hrs, when M/V “Hui Yang” was passing by Mazu Yin light buoy, M/V “Wondrous” was 0.7nms away from M/V “Hui Yang”, at about 5° on the starboard bow of M/V “Hui Yang”. At 1505hrs, after the pilot disembarked the vessel, M/V “Hui Yang” stopped engine and altered her course from 103° to 105°. At 150 hrs, M/V “Hui Yang” proceeded dead slow ahead. At 1508hrs, M/V “Hui Yang” passed on the port side (north) of M/V “Wondrous”. At that time, M/V “Nissho 1” was about 0.38nms away from the bow of M/V “Hui Yang”. In order to avoid M/V “Nissho 1”, the master of M/V “Hui Yang” ordered the vessel to go starboard 10, starboard 20, and hard-a-starboard; M/V “Hui Yang” stop engine at 1509hrs; at 1510hrs, the vessel went full astern, but they failed to stop M/V “Hui Yang” immediately by reason of her great inertia and stopping distance. At about 15101/2hrs, M/V “Hui Yang” collided into the middle of the starboard side of M/V “Nissho 1” nearly at a right angle, at that time M/V “Hui Yang” was at the course of 142°, and finally stopped at 1511hrs. At 15111/4hrs, M/V “Hui Yang” went dead slow ahead in order to minimize water ingress into the crevasse. At 1516hrs, upon the request of the pilot of M/V “Nissho 1”, M/V “Hui Yang” stopped engine. At 1520hrs, M/V “Hui Yang” was pushed to the shallow by the tide and got aground there. M/V “Nissho 1” also got aground. On 17 December 2001, M/V “Nissho 1”, laden with 4,200tons of bitumen, departed from Water Island, Japan. At 0215hrs on 21 December, she arrived at Baita pilot anchorage of Fuzhou port, waiting for entry with fore draft of 5.28meters and after draft of 16.19meters. M/V “Nissho 1” anchored at the position of 26°07'48"N 119°37'17"E. At 1450hrs, the pilot embarked the vessel. At 1452hrs, M/V “Nissho 1” started to heave up anchor. At 1500hrs, anchor was clear away, and the vessel’s bow was heading to 086°. At 1502hrs, in order to keep out of the way of the outbound vessel M/V “Heng Shunfa 18”, M/V “Nissho 1” headed to the light buoy of Yundou Kou and adjusted her position. After the outbound vessel M/V “Heng Shunfa 18” passed on the starboard side of M/V “Nissho 1”, the pilot of M/V “Nissho 1” observed M/V “Hui Yang” went slow ahead and the pilot boat was approaching M/V “Hui Yang” to pick up the pilot, and therefore instructed M/V “Nissho 1” to turn to starboard. At 1508hrs, M/V “Nissho 1” altered her course to 277° and changed her speed from half slow ahead to full ahead. At that time, M/V “Hui Yang” just passed M/V “Wondrous”, and started to turn to starboard. The pilot of M/V “Nissho 1” mistakenly believed that M/V “Hui Yang” took the aforesaid measures so as to avoid the Xifengshi reef in the north of the channel, and therefore decided to turn to port so as to sail to the south of the channel and to keep out of the way by passing from the south of M/V “Wondrous”. The pilot later immediately observed that M/V “Hui Yang” alter her course to starboard substantially and rushed towards M/V “Nissho 1”. In order to avoid collision, at 1509hrs, the pilot ordered M/V “Nissho 1” to make port 10, port 20 till hard-a-port; at 15093/4hrs, M/V “Nissho 1” stopped engine; at 15101/4hrs, the vessel went full astern. At about15101/2hrs, the bow of M/V “Hui Yang” collided into the starboard cargo hold No.5 of M/V “Nissho 1” nearly at right angle. At that time, M/V “Nissho 1” was at the course of 243°. At 1512hrs, M/V “Nissho 1” stopped engine. With regard to the time of collision between the aforesaid vessels, it was recorded to be at 1512hrs in the logbooks of M/V “Nissho 1” and at 1510hrs in the engine logbooks thereof, whilst 15101/2hrs was recorded in the logbooks of M/V “Hui Yang”. The Collegial Panel holds that the difference between the times as respectively claimed by the parties is about 1.5minutes, which will not affect the calculation of losses caused by the accident as well as the liabilities thereof. The time of the accident may be determined in accordance with the time ascertained by Fuzhou MSA, that is, 15101/2hrs on 21 December 2001. v. Cause Analysis and Apportionment of Liabilities made by Fuzhou MSA in Respect of the Collision Accident Fuzhou MSA determined the following causes to have caused the collision accident in the Investigation Report: 1. M/V “Hui Yang” (1) Failure in Maintaining a Proper Lookout. M/V “Hui Yang” observed the vessels in the pilot anchorage immediately after she passed by Jinpai Men. The master of M/V “Hui Yang” was not sufficiently aware of the movement of M/V “Nissho 1”, and still failed to keep VHF 16 clear and to communicate with M/V “Nissho 1” on avoidance, as a result of which, he was unable to make a full appraisal of the situation and the risk. M/V “Hui Yang” violated the provisions of Rule 5 of the COLREGs. (2) Failure in Applying Good Seamenship and Taking Proper avoiding Measures under a Close-quarters Situation. The master failed to apply good seamanship according to the common practice of seamen. When departing from the port, he did not request to spare anchor, and failed to take proper measures to control the vessel under a close-quarters situation. It was against the provisions of Rule 2 and Rule 8 of the COLREGs for M/V “Hui Yang” to substantially alter her course to starboard when there were no sufficient waters in her starboard side. (3) Failure in Taking Due Regard to Make a Departure from the Rules under an Immediate Danger. The master merely insisted on turning to starboard, and failed to take due regard to all dangers of navigation and collision and to any special circumstances, including the limitations of the vessels involved which may make a departure from these Rules necessary to avoid immediate danger. M/V “Hui Yang” violated the provision of Rule 2 of the COLREGs. 2. M/V “Nissho 1” (1) Negligence of Lookout. M/V “Nissho 1” failed to make timely report of her movement, and turned to starboard without making appropriate signals. Thus the outbound vessel was not aware of the intention of M/V “Nissho 1”in time, and the two vessels in question could not properly coordinate with each other in the course of avoiding collision. Such negligence violated the provisions of the Ru1es of the Ministry of Communication of the People’s Republic of China on Coastal Harbour Signals and Rule 5 of the COLREGs. (2) Improper Timing to Turn around. The full load draft of M/V “Nissho 1” is only 6.19 meters so that she can enter the port without taking the tide. However, M/V “Nissho 1” proceeded hastily into the outbound channel knowing there were some deep draft vessels departing from the port by taking the tide. She endangered the navigation of other vessels and failed to apply good seamanship, which violated the provisions of Rule 8 of the COLREGs. (3) Failure in Complying with the Regulations on Navigation in Narrow Channels. M/V “Nissho 1” suddenly turned to sail along the outbound channel without letting M/V “Hui Yang” realize her intention, which endangered the safe navigation of outbound vessels and caused the development of a close-quarters situation. Therefore, M/V “Nissho 1” violated Rule 9 of the COLREGs. Fuzhou MSA ascertained that: M/V “Nissho 1” turned around in an improper timing and failed to comply with the regulations on navigation in narrow channels, which was the main cause of this collision accident; M/V “Hui Yang” failed to apply good seamanship, take proper avoiding measures and to take due regard to make a departure from the Rules under a close-quarters situation, which was the indirect cause of this collision accident. Therefore, M/V “Nissho 1” shall take major responsibility and M/V “Hui Yang” shall take secondary responsibility with regard to this collision accident. vi. Facts concerning the Loss Sustained by M/V “Nissho 1” The Plaintiff entrusted Asai & Ichikawa Average Adjusters (hereinafter referred to as “Asai & Ichikawa”) to carry out the adjustment with regard to the losses sustained by M/V “Nissho 1” due to this collision accident. According to the evidential materials provided by the Plaintiff, Asai & Ichikawa Average Adjusters issued a Claim Report. Pursuant to the Claim Report, the losses sustained by M/V “Nissho 1” due to this collision accident were in the amount of USD1,482,925.53. The evidential materials supporting the losses sustained by M/V “Nissho 1” as provided by the Chinese lawyers of the Plaintiff were attached to the aforesaid Claim Report. The said Claim Report was notarized and certified. The Defendant raised objection to the Claim Report, contending that some of the evidential materials attached thereto were generated in China and as a result the Japanese notary public had no way and no power to certify the authenticity of these evidential materials. The Collegial Panel holds that: the adjustment carried out by Asai & Ichikawa Average Adjusters with regard to the losses sustained by M/V “Nissho 1” due to this collision accident was based on the evidential materials provided by the Chinese lawyers of the Plaintiff which are not necessarily adopted by this Court, and therefore the adjustment result specified in the Claim Report is not necessarily taken as the ground for the Plaintiff to claim compensation; instead, it is admissible only after being ascertained by this Court through court hearing. 1. Salvage Fees paid by M/V “Nissho 1” On the day of the accident, Fuzhou Marine Search and Rescue Center organized M/V “Hu Jiu 1” of Fuzhou Salvage Station of Shanghai Salvage Co. under the Ministry of Transportation (hereinafter refrred to as “Fuzhou Station”) to carry out salvage on the vessels involved in the accident. The Plaintiff provided the Completion Form of M/V “Hu Jiu 1” and the original invoice of the salvage fees, proving that M/V “Nissho 1” had paid the salvage fees in the amount of RMB18,000 incurred on 3 April 2002. The Defendant had no objection to the aforesaid facts. The Court ascertains the Plaintiff’s payment of salvage fees in the amount of RMB18,000 since the Defendant confirmed and admitted the aforesaid evidence provided by the Plaintiff. 2. Costs of Underwater Diving Survey for M/V “Nissho 1” On 23 December 2001, Nissho, namely the ship’s manager of the Plaintiff, entrusted Shanghai Salvage Co., to carry out an underwater diving survey to investigate damages to the hull of M/V “Nissho 1” and the conditions of her grounding. Shanghai Salvage Co., Xiamen Station issued a Survey Report, specifying as follows: 1. Large-area breakage was found in way of Fr. No.52 to No.60 of the starboard side of M/V “Nissho 1”. The widest part of the breakage on the main deck was located in way of Fr. No.52 and No.60, with the overall length of 5meters. At about 1000hrs on 23 December 2001, the breakage located in the water line at 4.5meters was about 2.14meters, and about 1.25meters at 3meters, below which, other breakages were covered by the bitumen condensate leaking out from the cargo hold, with the size of about 8-10 cubic meters; 2. Bitumen was found consistently leaking out from the breakage, and the bitumen condensate covered around the breakage; 3. The breakage on fore was torn steel plate with sharp edges scrolling outwards, and the breakage on aft was torn steel plate pushed inwards at angles forming lots of creasing. The angle protruded outwards with the length of about 3-5meters, which made it unsuitable for plugging up the breakage from the outside of the cargo hold; 4. The divers investigated the propeller, rudder and tail shaft and found there were some fishing net and rope twining in the shield of the tail shaft. Apart from the aforesaid conditions, nothing abnormal was observed at that time. The hull bottom was about 2.5 meters away from the bottom of the sea; 5. The sea bottom on the starboard side of the hull bottom was hard sand, and on the port side thereof, besides hard sand, piles of irregular stones were found time after time and extended to the hull bottom; 6. As per the investigation on the conditions of grounding on 23 December, fore and aft abeam, transversing flows including rising tide transversing the starboard side and falling tide transversing the port side; 7. At high water time on 23, another investigation was carried out and found the position of the vessel grounded shifted. The sea bottom on the port side of the hull bottom was still hard sand. The broken stones originally found at low water time were gone. The hull bottom located 7meters in front of the navigation bridge separated from the sea bottom. Nissho paid the costs of underwater diving survey in the amount of USD6,000 via the Bank of Tokyo-Mitsubishi, Ltd., to the beneficiary designed by Shanghai Salvage Co., namely Shen Hua Shipping Co., Ltd (hereinafter referred to as “Shen Hua”). Shanghai Salvage Co., issued an invoice to Nissho as regards such costs. In order to prove the aforesaid facts, the Plaintiff provided the copies of the Survey Report, invoices as well as payment vouchers. The Defendant denied the copies provided by the Plaintiff at the time of evidence discovery on the ground that without the originals, such evidence could not be verified. The Collegial Panel holds that: according to the logbooks of M/V “Nissho 1” to which both parties had no objection, some divers arrived at M/V “Nissho 1” at 0925hrs on 23 December 2001 and started to carry out diving survey on the underwater damaged hull of M/V “Nissho 1”; Although the evidence supporting the aforesaid facts as provided by the Plaintiff was the copies of the originals, the facts so proved by these evidential materials were identical with those specified in the aforesaid logbooks. Therefore, the Court ascertains the costs of underwater diving survey for M/V “Nissho 1” as claimed by the Plaintiff in the amount of USD6, 000. 3. Cost of Patching to the Underwater Hull Plate of M/V “Nissho 1” On 27 December 2001, Nissho and Shanghai Salvage Co., entered into an Agreement on Temporary Patching of M/V “Nissho 1”, agreeing that Shanghai Salvage Co., would carry out temporary patching of the underwater breakage of M/V “Nissho 1” caused by the ship collision, to the extent that one water pump was sufficient to control water ingress occurred in the cargo hold so that M/V “Nissho 1” could unload the goods and proceed to the dockyard for repair. The lump sum amount in respect of temporary patching was USD120,000, of which, 60% should be paid upon the execution of the Agreement, and the remaining 40% should be paid within 2 days after the completion of temporary patching. Shanghai Salvage Co., issued to Nissho on 27 December 2001 and 11 January 2002 respectively the invoices of the temporary patching costs in the amount of USD72,000 and USD48,000. On 10 January 2002, the representative of Shanghai Salvage Co. concluded a Certificate of Completion of Temporary Patching with the master of M/V “Nissho 1”. Nissho paid via the Bank of Tokyo-Mitsubishi, Ltd., to Shen Hua the temporary patching costs in the amount of USD72,000 and USD48, 000 which amounted to USD 120,000 on 28 December 2001 and 15 January 2002 respectively. In order to prove the aforesaid facts, the Plaintiff provided the copies of the Agreement on Temporary Patching of M/V “Nissho 1” and the Certificate of Completion of Temporary Patching, invoices and payment vouchers thereof. The Defendant denied the copies provided by the Plaintiff at the time of evidence discovery on the ground that without the originals, such evidence could not be verified. The Collegial Panel holds that: according to the logbooks of M/V “Nissho 1”, some divers arrived at M/V “Nissho 1” at 1604hrs on 28 December 2001 and started to carry out diving survey on the underwater damaged hull of M/V “Nissho 1”; Although the evidence supporting the aforesaid facts as provided by the Plaintiff was the copies of the originals, the facts so proved by these evidential materials were identical with those specified in the aforesaid logbooks. Therefore, the Court ascertains the costs of patching to the underwater hull plate of M/V “Nissho 1” as claimed by the Plaintiff in the amount of USD120, 000. 4. Agency Fees for Arranging the Temporary Patching of M/V “Nissho 1” The Plaintiff provided the invoices and payment vouchers issued by Oldendorff Shanghai Office, proving that Nissho paid to Oldendorff Shanghai Office the agency fees in the amount of USD6,000 for the underwater temporary patching of M/V “Nissho 1” carried out in Fuzhou from 31 December 2001 and 12 January 2002. The Plaintiff contended that as a foreign party, the Plaintiff was unfamiliar with the place where the accident took place, and therefore entrusted Oldendorff Shanghai Office that was rather familiar with the ship repairing market in Fu Jian Province and the East China region to arrange the repair of M/V “Nissho 1”. The Defendant put forward when examining evidence that the Plaintiff actually entrusted a foreign company as the agent rather than a Chinese shipping agency. The Collegial Panel holds that it is reasonable for the Plaintiff, as a foreign party, to entrust another party acting as an agent to arrange ship repairing yard for carrying out the temporary patching of M/V “Nissho 1” as soon as possible. Therefore, the agency fees incurred therefrom are reasonable and shall be ascertained. 5. Costs of Temporary Patching of M/V “Nissho 1” in Mawei shipyard On 9 January 2002, Nissho concluded with Mawei Shipyard an Agreement on Temporary Patching of M/V “Nissho 1”, agreeing that Mawei Shipyard was responsible for repairing the damaged frame of the hull plate and the damaged deck plate; the lump sum amount of repair was USD47,5000, and the repair period was 15 days. On 11 January, Nissho paid the aforesaid amount via the Bank of Tokyo-Mitsubishi, Ltd. On 19 January, Mawei Shipyard issued an invoice specifying the detailed information of repair of M/V “Nissho 1” as well as the repair costs in the amount of USD47,5000. On the same day, Mawei Shipyard issued to M/V “Nissho 1” a Completion Report in respect of the repair. The Master of M/V “Nissho 1” signed and confirmed the Completion Report. On 15 and 18 January, Mawei Shipyard issued a receipt of the repair costs respectively in the amount of USD24,000 and USD23, 5000. The Defendant raised objection to the aforesaid facts. The Collegial Panel holds that the aforesaid loss claimed by the Plaintiff is relevant to this collision accident. The Defendant raised objection to the aforesaid facts, but failed to give sufficient reasons and to provide rebuttal evidence. Therefore, the Court ascertains the costs of the temporary patching of M/V “Nissho 1” in sum of USD47,500 sustained by the Plaintiff. 6. Costs of Cleaning up Cargo Hold No.3 and No.5 and Cutting off the Damaged Steel Plate of Cargo Hold No. 5 of M/V “Nissho 1” carried out by Mawei Shipyard On 26 January 2002, Nissho concluded with Mawei Shipyard another contract, agreeing that Mawei Shipyard was responsible for cleaning up cargo hold No. 3 and No.5 and cutting off the damaged steel plate of cargo hold No. 5 of M/V “Nissho 1”; the lump sum amount was USD67,500, of which, 50% should be paid at the time of commencement of the repair, and the remaining 50% be paid upon completion of the repair; the repair period was 5 working days after the goods were discharged from M/V “Nissho 1”. On 28 January 2002, Nissho paid through the Bank of Tokyo-Mitsubishi, Ltd. the repair costs in sum of USD68,000 as agreed. On 31 January, Mawei Shipyard issued to M/V “Nissho 1” a Completion Form which was confirmed and signed by the master of M/V “Nissho 1”. On the same day, Mawei Shipyard issued an invoice specifying the costs incurred by the aforesaid repair project in sum of USD67,500, and also issued a receipt of such costs. The Defendant raised objection to the aforesaid facts. The Collegial Panel holds that the aforesaid loss claimed by the Plaintiff is relevant to this collision accident. The Defendant raised objection to the aforesaid facts, but failed to give sufficient reasons and to provide rebuttal evidence. Therefore, the Court ascertains the costs arising from the aforesaid repair project in the amount of USD67,500 sustained by M/V “Nissho 1”. 7. Management and Service Fees Charged by Leelloyds Marine Engineering Pte., Ltd. (hereinafter referred to as “Leelloyds”) On 5 February, Leelloyds issued three invoices to Nissho. The first invoice specified the fees arising from Leellyods’ dispatching of a team composed of one engineer, one managing personnel and one technical personnel to M/V “Nissho 1” from 29 December 2001 to 19 January 2002 when M/V “Nissho 1” was berthing at Mawei port, to coordinate and manage the salvage operation and temporary patching of the vessel, in the amount of SGD49,706.34. The second invoice specified the technical personnel service fees and personal insurance premium arising from Leellyods’ dispatching of one engineer to M/V “Nissho 1” from 20 January to 1 Febuary 2002 when M/V “Nissho 1” was berthing at Mawei port, to coordinate and manage the miscellaneous works carried out in the cargo hold No.3 and No.5, in the amount of SGD 9,224.25. The third invoice specified fees arising from Leellyods’ 24hour-continuous work so as to obtain a hot work permit for an emergency and Leellyods’ arranging of local workers, together with necessary tools, consumable materials, personal belongings and instruments etc., to M/V “Nissho 1” from 11 January to 13 January 2002 when M/V “Nissho 1” was berthing at Mawei port, for the purpose of cleaning up the specified place in the starboard cargo hold No.5 as well as the cargo hold No.3, in the amount of SGD15,020. The total amount of the aforesaid invoices was SGD73,905.59. On 28 March 2002, Nissho paid SGD 73,905.59 to Leellyods via the Bank of Tokyo-Mitsubishi, Ltd. The Defendant challenged the aforesaid fees and the payment thereof. The Collegial Panel holds that the aforesaid fees were resulted from salvage operations and temporary patching of M/V “Nissho 1”, and shall be ascertained. 8. Purchase Fees of Patching Materials for M/V “Nissho 1” On 27 February 2002, Mashin Shokai Limited issued an invoice specifying that the Plaintiff purchased the Belzona Molecular at the price of USD2,595, of which, material cost was in the amount of USD2,415, and transportation fees was in the amount of USD180. The Plaintiff claimed that such special materials had good mechanical strength and chemical stability and were used to patch the breakage of the cargo hold of M/V “Nissho 1”. The said fees were incurred on 25 March 2002. The Defendant contended that the Plaintiff should adduce relevant evidence to prove the necessity of such fees in respect of patching of M/V “Nissho 1”. The Collegial Panel holds that it is reasonable for the Plaintiff to carry out the patching operation towards the breakage of the cargo holds of M/V “Nissho 1” caused by the collision accident, and the fees incurred therefrom shall be ascertained. 9. Hire of Floating Crane used for Repair Works of M/V “Nissho 1” The Plaintiff provided a copy of the invoice dated 17 January 2002 issued by the mechanical and electrical installation team of Cangshan, Fuzhou City, specifying the hire of a floating crane used for repair works was in the amount of RMB56,000. The Plaintiff claimed that such cost was resulted from the floating crane used to carry out the temporary repair. The Defendant contended that the aforesaid evidence could not be verified without the originals, and therefore shall not be ascertained. The Collegial Panel holds that without the originals, the aforesaid evidence can not be verified, and therefore shall not be ascertained. 10. Classification Survey Fees paid by M/V “Nissho 1” On 31 January 202, Nippon Kaiji Kyokai (hereinafter referred to as “NKK”) issued to the Plaintiff an invoice in respect of the classification survey fees. According to this invoice, on 18 January, NKK completed the survey on damages to the hull of M/V “Nissho 1” at Fuzhou port, Fujian, China, and the classification survey fees incurred therefrom was in the amount of USD1,147 and was paid on 31 January 2002. The Defendant contented that NKK was not qualified to carry out ship’s survey in China, and thus the fees incurred therefrom were illegal and shall not be ascertained. The Collegial Panel holds that the ship’s classification indicates the technical conditions of the ship, evidencing her capability of undertaking a safe navigation. After the collision between M/V “Nissho1” and M/V “Hui Yang”, NKK carried out a classification survey on M/V “Nissho 1” so as to examine whether the vessel, M/V “Nissho 1”, approved by NKK was capable of safe navigation. Such classification survey complies with the shipping practice. Therefore, the fees resulted from the classification survey is reasonable, and shall be ascertained. 11. Costs of Shifting and Pilotage for Refloating M/V “Nissho 1” On 14 January 2002, Fuzhou port authority issued an invoice in respect of the costs of shifting and pilotage in the amount of RMB4,806. The said costs were paid on 14 January 2002. Pursuant to the two Pilotage Cards attached to the invoice, M/V “Nissho 1” carried out refloating and shifting operations on 27 December 2001. The Defendant contended that: according to the logbooks of M/V “Nissho 1” dated 27 December, M/V “Nissho 1” grounded after dropping her anchor due to fast tide flow and negligence of the master; the aforesaid costs were resulted from M/V “Nissho 1”’s grounding but not resulted from the collision accident; such costs belonged to a loss aggravated as a result of the grounding; therefore, such costs shall not be ascertained. The Collegial Panel holds that: according to the logbook of M/V “Nissho 1” dated 21 December, after the collision, M/V “Nissho 1” grounded at 1520hrs; according to the logbook dated 27 December, at 1240hrs M/V “Nissho 1” was dragging her anchor, and at 1243hrs the vessel grounded at the position of 26°08′24″N, 119°36'95"E. After the collision accident and before 27 December, M/V “Nissho 1” did not carry out any refloating operation. Therefore, the aforesaid costs were actually caused by the collision accident but not the negligence of the master, and shall be ascertained. 12. Hire of Tugs for Salvage of M/V “Nissho 1” On 1 March 2002, Fuzhou port authority issued 6 invoices for the payment dated 1 March 2002 of tug hire made by M/V “Nissho 1” in the amount of RMB389,376. According to the 27 Notices on the Charging Standard and Time for Tug Hire in Fuzhou Port as well as 26 Operation Sheet of Tug Service, Fuzhou port authority arranged tugs to salve, safeguard, escort and assist M/V “Nissho 1” in her departure from Mawei port at Minjiangkou. The Defendant contended that the aforesaid costs were resulted from using tugs to avoid dragging and there was no inevitable causal link between the said costs and the collision accident, and thus shall not be ascertained. The Plaintiff claimed that M/V “Nissho 1” was under a rather dangerous situation after collision, and the loss might be aggravated without salvage and safeguard by tugs. The Collegial Panel holds that: after the collision accident, M/V “Nissho 1” suffered severe damages to her hull; if bitumen carried onboard M/V “Nissho 1” leaked out from the vessel into the sea, it would contaminate the sea; it is reasonable for the Plaintiff to hire tugs to salve, safeguard, escort and assist M/V “Nissho 1” in her departure from Mawei port, in order to avoid aggravation of losses; therefore, the costs incurred therefrom shall be ascertained. 13. Costs arising from Deployment of Oil Fences paid by M/V “Nissho 1” On 21 December 2001, after the collision accident, oil fences were deployed around M/V “Nissho 1”, in order to prevent pollution and to avoid aggravation of loss. The costs incurred therefrom were RMB48,000 in total, of which, RMB45,000 was paid on 30 January 2002, and the remaining RMB3,000 was paid on 4 February 2002. The Plaintiff provided the operation form and the invoice of the aforesaid costs. The Defendant had no objection to the aforesaid facts. The Collegial Panel holds that the parties concerned had no objection to the aforesaid costs, and therefore such costs shall be ascertained. 14. Hire of Small Barge for Collecting Bitumen The Plaintiff claimed that after the collision, Fuzhou MSA dispatched small barges to stay around M/V “Nissho 1” for collecting the spilled bitumen. M/V “Nissho 1” paid RMB9,450 for hiring those small barges on 18 January 2002. The Plaintiff provided two receipts in support of the said payment. The Defendant contended that there was no evidence in support of the fact that the aforesaid costs were incurred due to requirement of Fuzhou MSA, and therefore the said costs shall not be ascertained. The Collegial Panel holds that: After the collision, the bitumen loaded onboard M/V “Nissho 1” spilled; it is reasonable for M/V “Nissho 1” to hire barges to collect the spilled bitumen so as to avoid and minimize the environmental pollution, and the costs incurred therefrom shall be ascertained. Although the Plaintiff only provided the payment receipts as evidence, such evidence does not affect the fact that the Plaintiff had paid the hire for those small barges. Therefore, the hire of the small barges in the amount of RMB9,450 as claimed by the Plaintiff shall be ascertained. 15. Fees of Environmental Monitoring and Appraisal paid by M/V “Nissho 1” The Plaintiff claimed that after the collision, upon requested by the competent authority, it performed appraisal and environmental monitoring for the bitumen loaded on board, and paid on 4 January 2002 the Environmental Monitoring fee in the sum of RMB460 and the appraisal fee in the sum of RMB1,660, which amounted to RMB2,120. The Plaintiff provided two documents in support of the aforesaid fees. The Defendant had no objection to the aforesaid facts. The Collegial Panel holds that the parties concerned had no objection to the aforesaid costs, and therefore such costs shall be ascertained. 16. Vehicle Hire paid by M/V “Nissho 1” to China Ocean Shipping Agency (Fuzhou) (Hereinafter referred to as “Penavico Fuzhou”) The Plaintiff claimed that after the collision, it hired some vehicles from Penavico Fuzhou in order to deal with the accident, and paid the hire in the sum of RMB14,100. The Plaintiff provided the copies of 48 lists of hired vehicles as evidence. The Defendant contended that the evidential materials in support of the aforesaid facts were all copies, instead of the invoices of the vehicle hire, and refused to recognize such vehicle hire. The Collegial Panel holds that: the evidential documents of the aforesaid vehicle hire are copies, and cannot be verified without the originals; the Plaintiff failed to provide the payment vouchers and the invoices thereof; therefore, the aforesaid vehicle hire shall not be ascertained. 17. Costs of Air Tickets for the Owner’s Superintendent The Plaintiff claimed that after the collision, it dispatched Mr. KITAZAWA from Japan to Fuzhou, China via Shanghai by plane on 1 February 2002. The air tickets cost RMB2,821. The Plaintiff provided the copies of the air tickets as well as the special invoice for international airline for passenger’s transportation. The Defendant contented that M/V “Nissho 1” accepted repair in Japan at the beginning of 2002 and therefore the aforesaid costs were irrelevant to this case and shall not be ascertained. The Collegial Panel holds that: the Plaintiff failed to provide evidence in support of the connection between the said costs and this case, and therefore the said costs shall not be ascertained. 18. Costs of Hotel Accommodation paid by M/V “Nissho 1” for Dealing with the Collision Accident The Plaintiff claimed that in order to deal with the collision accident, it had paid the hotel accommodation fees in the sum of RMB1,512.60 for the relevant personnel respectively on 26 and 30 December 2001. It also provided two invoices and two breakdowns of the hotel guests’ consumption at Fuzhou Golden Resources International Hotel as evidence. The Defendant did not raise any objection to the aforesaid costs. This Court ascertained such cost over which there was no dispute between the parties. The Collegial Panel holds that the parties concerned had no objection to the aforesaid costs, and therefore such costs shall be ascertained. 19. Communication Charges paid by M/V “Nissho 1” for Dealing with the Collision Accident The Plaintiff claimed that it had paid the communication charges in the sum of RMB2,637.34 including, postage charges, telephone fee, and the cost of using the HF of the MSA as well as the cost of purchasing pre-paid phone card, etc. for dealing with this accident. The Defendant contended that the evidence provide by the Plaintiff in support of the aforesaid expenses were copies and thus refused to recognize the expenses. The Collegial Panel holds that: the evidential materials in support of the aforesaid costs are copies which cannot be verified without the originals and there is no any other evidence to support such expenses. Therefore, the aforesaid expenses shall not be ascertained. 20. Agency Fees paid by M/V “Nissho 1” to Penavico Fuzhou The Plaintiff claimed that it had paid the agency fees in the sum of RMB5,000 to Penavico Fuzhou for dealing with this collision accident. The said payment was made on 22 February 2002. The Defendant did not raise any objection to such agency fees. The Collegial Panel holds that the parties concerned had no objection to the aforesaid agency fees, and therefore such fees shall be ascertained. 21. Costs of the Operation of Technical Personnel and Fire Engine Fees paid by M/V “Nissho 1” to Fuzhou Port Mawei Group Co., Ltd. The Plaintiff claimed that it had paid RMB2,116 to Fuzhou Port Mawei Group Co., Ltd. for fire prevention at the time of discharging the goods, including the costs of operation of technical personnel in the sum of RMB1,316 and the costs of fire engine in the sum of RMB800. The Plaintiff also provided the invoice thereof. The Defendant contended that normal discharge operation did not require for fire engine, and such costs were reasonable and shall not be ascertained. The Collegial Panel holds that the aforesaid costs were resulted from the normal cargo discharging, which are irrelevant to the collision accident, and thus shall not be ascertained. 22. Costs incurred at Hong Kong for Assisting Owner’s Superintendent, Mr. Kitazawa, paid by M/V “Nissho 1” to Patt Manfield & Co., Ltd. The Plaintiff claimed that Nissho entrusted Patt Manfield & Co., Ltd. to assist owner’s superintendent, Mr. Kitazawa, in transferring at Hong Kong. The costs of transportation, communications, accommodation and Chinese visa were in the amount of HKD5,362, equivalent to USD687.44. The said costs were paid on 23 December 2001. The Plaintiff provided the following evidence: the inventories, bills as well as advice of payment for expenses incurred from 22 to 23 December 2001 issued by Patt Manfield & Co., Ltd. to Nissho; Letters sent by Loylaty Travel Service Co., Ltd. notifying Patt Manfield & Co., Ltd. to pay the air tacket for Mr. Kitazawa for the flight on 22 December 2001 from Shenzhen to Fuzhou in the sum of HKD980; Three long-distance bus tickets between Kowloon, Hong Kong and Shenzhen which cost HKD549; Receipt of visa charges in the sum of HKD250; Receipt of cost of battery charger in the sum of RMB50 and telephon rate in the sum of RMB33; Copies of threee pre-paid phone cards in the amount of HKD320. The Defendant refused to recognize the aforesaid costs by reason that the said costs were irrelevant to this case. The Collegial Panel holds that it is reasonable for the Plaintiff, as a foreign company, to dispatch managing personnel to the place of accident for dealing with the collision accident, and the costs of transportation, communication, accommodation as well as visa, etc. incurred therefrom shall be supported. Therefore, the aforesaid costs claimed by the Plaintiff shall be ascertained. 23. Costs resulted from Removal of Underwater Bitumen paid by M/V “Nissho 1” After the collision, part of the bitumen carried onboard M/V “Nissho 1” spilled and was deposited in the waters where the collision accident took place. In order to remove the underwater bitumen, Penavico Fuzhou concluded, on behalf of M/V “Nissho 1”, the Contract for Removal of Underwater Bitumen with Fuzhou Station on 7 February 2002, agreeing that: Penavico Fuzhou appointed Fuzhou Station to organize a diving operation team to conduct underwater search and removal of the spilled bitumen; Upon the completion of the salvage, regardless of whether the spilled bitumen was found or not, whether the quantum of the spilled bitumen was consistent with the short-landed quantity, Fuzhou Station shall submit to Penavico Fuzhou and Fuzhou MSA the written completion report in accordance with the relevant regulations attached with a drawing for detailed illustration; meanwhile, Fuzhou Station shall guarantee to obtain the recognition of Fuzhou MSA regarding the salvage and a certificate of acceptance inspection; the total charges for contracting the project were RMB350,000. Upon conclusion of this Contract, Fuzhou Station carried out underwater search and removal of the spilled bitumen on 18 February 2002. On 25 February, Fuzhou Station issued a completion report attached with a drawing for detailed illustration. On 12 April, Fuzhou MSA, Penavico Fuzhou and Fuzhou Station concluded the Acceptance Report for Project of Underwater Search and Removal of the Bitumen Spilled out of M/V “Nissho 1”. The Acceptance Report came to conclusion that: the diving operation team of Fuzhou Station completed the underwater search and removal of the bitumen spilled out of M/V “Nissho 1” within the specified period at the designated waters in accordance with the aforesaid Contract for Removal of Underwater Bitumen concluded with Penavico Fuzhou. However, there was still some bitumen which could not be found and removed. Therefore, it was determined as follows after discussion: 1. In accordance with the relevant provisions of the international conventions, Fuzhou MSA reserves the right to claim for recovery and compensation against the owner of M/V “Nissho 1” within 3 years after the collision accident with respect to pollution in the waters other than the accident waters as caused by the cargos; 2. In case of any bitumen found in the waters searched by the diving operation team of Fuzhou Station, the diving operation team of Fuzhou Station was responsible for removing the bitumen. On 20 April, Fuzhou Station issued an invoice to M/V “Nissho 1” in the amount of RMB357,100, including the service charges in the sum of RMB199,990, costs of necessary equipment and machinery respectively in the sum of RMB127,000 and RMB31,100. The Plaintiff alleged that the said costs were incurred on 26 April 2002. The Plaintiff confirmed that Penavico Fuzhou concluded on behalf of the Plaintiff the Contract for Removal of Underwater Bitumen with Fuzhou Station. However, the Plaintiff did not provide the relevant payment vouchers. The Defendant contended that the invoice issued by Fuzhou Station to M/V “Nissho 1” was not the actual payment invoice, and there was no evidence in support of the fact that the owner of M/V “Nissho 1” had entrusted Penavico Fuzhou to conclude the Contract for Removal of Underwater Bitumen; therefore the aforesaid costs shall not be ascertained. The Collegial Panel holds that: after the collision, part of the bitumen carried onboard M/V “Nissho 1” spilled into the waters; in order to reduce the pollution caused by the spilled bitumen, M/V “Nissho 1” carried out, under the organization of the competent authority, search and removal of the underwater bitumen at the accident waters, which is reasonable; thus, the costs incurred therefrom shall be ascertained. In consideration that Penavico Fuzhou had disclosed to Fuzhou Station its acting as agent of the owner of M/V “Nissho 1” at the time of concluding the Contract for Removal of Underwater Bitumen, and that the Plaintiff confirmed Penavico Fuzhou acted as the agent of the Owner of M/V “Nissho 1”, it shall be ascertained that an agency relationship existed between Penavico Fuzhou and the Plaintiff, and that the Plaintiff shall assume the civil liabilities arising from the acts of Penavico Fuzhou as the agent of the Plaintiff. Since the Plaintiff neither provided any evidence in support of the aforesaid costs, nor adduced any evidence indicating the reasons why the total costs for contracting the project actually incurred were more than those specified in the Contract, therefore the Court ascertains the total costs for contracting the project was in the amount of RMB350,000 as specified in the Contract for Removal of Underwater Bitumen. The Plaintiff claimed that such costs were incurred on 26 April 2006, namely the date after the invoice date issued by Fuzhou Station. Therefore, such costs shall be ascertained. 24. Costs of Supervision and Safeguard on M/V “Nissho 1”at the Accident Scene After the collision, Fuzhou MSA dispatched patrol vessels to the accident scene to deal with the accident from 21 December 2001 to 20 January 2002, and charged M/V “Nissho 1” RMB107,200 for such supervision and safeguard, which was paid by Penavico Fuzhou to Fuzhou MSA on 1 April 2002. In order to support the aforesaid facts, the Plaintiff provided 2 originals of the receipts of charges for supervision and control of port service and 2 copies of the certificates of hire of patrol vessels as well as 1 original Statement of Costs Incurred by Using Patrol Vessels due to Grounding of M/V “Nissho 1”. The Defendant raised an objection to the aforesaid facts, contending that those costs might overlap with each other, and the Plaintiff failed to provide any evidence to support its payment to Penavico Fuzhou. Thus the Defendant refused to recognize the aforesaid costs. The Collegial Panel holds that: according to the relevant facts, Penavico Fuzhou, after the collision accident, was entrusted by the owner to act as the ship agent of M/V “Nissho 1” to participate in dealing with this collision accident. Therefore, it shall be ascertained that the aforesaid costs of supervision and safeguard on M/V “Nissho 1” at the accident scene was paid by Penavico Fuzhou on behalf of the owner of M/V “Nissho 1” to Fuzhou MSA. The said costs were resulted from handling the collision accident. Therefore such costs are reasonable and shall be ascertained. 25. Travel Expenses of the Representative of the Owner of M/V “Nissho 1” arising in Fuzhou From 26 to 29 December 2001, Nissho sent its general manager of the maritime and technical department, i.e. Mr. Shigeru Yoshida, from Narita, Japan to Fuzhou, China to supervise and manage the repair of M/V “Nissho 1”. The travel expenses arising therefrom were in the sum of JPY749,566, including the accommodation fees in the sum of RMB1682 for accommodation in Shanghai Pudong New Asia Limited Intercontinental Hotel on 26 and 27 December 2001. The said travel expenses were paid on 29 January 2002. The Plaintiff provided the receipts and payment vouchers of the accommodation fees, the internal requisition of travel expenses of Nissho, and the bills issued by Nissho to the Plaintiff. The Defendant contended that the evidential materials in support of the aforesaid facts were the internal documents between the Plaintiff and Nissho, and it was difficult to ascertain whether it did actual happen. The Collegial Panel holds that: it is reasonable for Nissho, as the ship’s manager of M/V “Nissho 1”, to send a technician to the accident scene to supervise the temporary repair of M/V “Nissho 1” as required by M/V “Nissho 1” due to the collision accident, and thus the expenses arising therefrom are also reasonable; in addition, the Defendant failed to present any good reasons or any rebuttal evidence. Therefore, the travel expenses in the amount of JPY749,566 shall be ascertained. 26. Travel Expenses and Superintendence Fees of the Representative of the Owner of M/V “Nissho 1” incurred at Ehime, Japan According to the Ship Management Agreement entered into by and between Nissho and the Plaintiff, Nissho sent the General Manager of the maritime and technical department, i.e. Mr. Shigeru Yoshida, to Murakami Hide for supervising the repair of M/V “Nissho 1” during the period from 4 February to 22 February 2002. The total costs arising therefrom were in the amount of JPY373,400, including the travel expenses in the sum of JPY55,160, and the superintendence fees in the sum of JPY318,240. The Plaintiff claimed that the said costs were paid on 24 February 2002. The Plaintiff provided the debit note issued by Nissho in respect of the aforesaid costs. The Defendant contended that the evidential materials provided by the Plaintiff in support of the aforesaid facts were the internal documents between the Plaintiff and Nissho, and therefore it was difficult to ascertain the facts only based on such evidence. The Collegial Panel holds that: it is reasonable for Nissho, as the ship’s manager of M/V “Nissho 1”, to send a technician to the accident scene to supervise the permanent repair of M/V “Nissho 1” as required by M/V “Nissho 1” due to the collision accident, and thus the expenses and fees arising therefrom are also reasonable; in addition, the Defendant failed to present any good reasons or any rebuttal evidence. Therefore, the said travel expenses and superintendence fees shall be ascertained. 27. Superintendence Fees of the Representative of the Owner of M/V “Nissho 1” incurred at Ehime, Japan According to the Ship Management Agreement entered into by and between Nissho and the Plaintiff, Nissho sent the ship’s repair superintendents, i.e. Mr. Susaki and Mr. K. Mantoku, to Hakata Sima (namely the location of Murakami Hide) for supervising the permanent repair of M/V “Nissho 1” during the period from 4 February to 22 February 2002. The total costs arising therefrom were in the amount of JPY1,923,890, including the travel expenses in the sum of JPY14,450, and the daily wages in the sum of JPY1,909,440. The Plaintiff claimed that the said costs were paid on 25 February 2002. The Plaintiff provided the internal requisition of travel expenses of Nissho, and the debit note issued by Nissho in respect of the aforesaid fees. The Defendant contended that the evidential materials provided by the Plaintiff in support of the aforesaid facts were not payment vouchers evidencing Plaintiff’s payment and it was difficult to ascertain the facts only based on such evidence. Therefore, the Defendant refused to admit such fees. The Collegial Panel holds that: it is reasonable for Nissho, as the ship’s manager of M/V “Nissho 1”, to send a technician to the accident scene to supervise the permanent repair of M/V “Nissho 1” as required by M/V “Nissho 1” due to the collision accident, and thus the expenses and fees arising therefrom are also reasonable; in addition, the Defendant failed to present any good reasons or any rebuttal evidence. Therefore, the said superintendence fees shall be ascertained. 28. Survey Fee sustained by M/V “Nissho 1” in Japan When M/V “Nissho 1” was accepting permanent repair at Murakami Hide between 4 and 22 February 2002, the relevant Japanese inspection company carried out survey for M/V “Nissho 1”. On 4, 5 and 14 February, NKK Onomichi Branch carried out surveys for the hull, which incurred fee and expenses in the amount of JPY464, 362; On 14 February, NKK Onomichi Branch carried out a special survey for the vessel which incurred fee and expenses in the amount of JPY3666, 500; On 22 February, NKK Jpima Imabari Office carried out an occasional survey which incurred fee and expenses in the amount of JPY106, 000. The aforesaid surveys totally incurred JPY979, 166. The Plaintiff provided the invoice of the aforesaid fee and expenses. The Defendant alleged that the aforesaid survey should have been carried out in the place where the accident took place. Or otherwise, none of them should be deemed as reasonable and ascertained. The collegial panel holds as follows: Where a vessel is partially damaged due to any ship collision, the loss thereof shall include the reasonable auxiliary expenses incurred for supporting the permanent repair. However, in accordance with Article 16 of the Provisions of the Supreme People’s Court on Determination of Property Damage Compensation in the Trial of Cases of Ship Collision and Contact, “auxiliary expenses” refers to the reasonable costs incurred by ship’s repair including the survey fee. It is reasonable to carry out survey for M/V “Nissho 1” before and after the permanent repair. Therefore the aforesaid survey fee in the amount of JPY979, 166 should be ascertained. 29. Cost of Permanent Repair for M/V “Nissho 1” With regard to the cost of permanent repair for M/V “Nissho 1”, both parties have respectively provided three sets of evidential materials. Such evidential materials are ascertained as follows: (1) The Survey Report issued by Guang Dong Maritime Engineering Consulting & Survey Co., Ltd. provide by Sun Font On 18 January 2002, Guang Dong Maritime Engineering Consulting & Survey Co., Ltd. as entrusted by PICC Guangdong carried out a survey of the damage to M/V “Nissho 1” caused by the collision accident and issued on 5 February an English Survey Report. The Defendant neither provided the Chinese version of that Survey Report as required by the relevant laws and regulations, nor invited the surveyor to appear in court accepting interrogations. The Plaintiff alleged that the repair cost incurred by M/V “Nissho 1” as estimated by the aforesaid Survey Report are unreasonable and refused to recognize the same on the grounds that the relevant surveyor failed to appear in court accepting interrogations, and the scope of repair was determined based on the surveyor’s discretion instead of the repair requirements provided by the classification surveyor. The collegial panel holds as follows: The aforesaid Survey Report is an expert conclusion. In accordance with provisions of Paragraph 1 of Article 59 of Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures, the authenticators shall appear in court to accept the interrogations of the parties concerned. Furthermore, pursuant to provisions of Paragraph 2 of Article 68 of the Civil Procedure Law of the People’s Republic of China, if a document in a foreign language is submitted as evidence, a Chinese translation must be appended. The surveyor issuing the aforesaid Survey Report did not appear in court accepting interrogations, and the Defendant failed to provide the Chinese translation of the Survey Report, which are against the aforesaid provisions of law. Therefore, the aforesaid Survey Report shall not be adopted. (2) The Evaluation Report for Repair of M/V “Nissho 1” issued by Teamhead Surveyors Co., Ltd. (hereinafter referred to “Teamhead”) provided by the Plaintiff. Teamhead was entrusted by Wang Jing & Co. Law Firm on behalf of the owner of M/V “Nissho 1” to evaluate the time and cost of repair of M/V “Nissho 1” in China. It issued on 25 August 2003 the Evaluation Report for Repair of M/V “Nissho 1”. According to such report, the reasonable time and cost of permanent repair in China are estimated as 20 to 25 days and USD 417,297 referring to the Survey Report issued by NKK, the List of Repair of Murakami Hide where the items to be repaired are specified, and the Price List of Ship Repair (1996) issued by China State Shipbuilding Corporation. However, in consideration of the time spent for deviation from Fuzhou to Shanghai and for waiting for tide and entry of dock as well as the Spring Festival which lead to the extension of repair, the time required by permanent repair of M/V “Nissho 1” would be 31 to 39 days. The Collegial Panel holds that: Teamhead was qualified to evaluate the cost of repair of M/V “Nissho 1”. It issued the Evaluation Report by reference to the Survey Report issued by NKK, the scope of repair and the Price List of Ship Repair (1996) issued by China State Shipbuilding Corporation, and made clear and detailed calculation and confirmation of the repair items and unit price and total amount thereof based on sufficient grounds. The surveyor from Teamhead, Mr. Fang Weiguo, appeared in court and accepted interrogations of the parties concerned. In addition, the Defendant failed to provide any evidence conclusive enough to repudiate the Evaluation Report on any reasonable grounds. Therefore, the Evaluation Report issued by Teamhead can be adopted. (3) Statement of Repair Cost of M/V “Nissho 1” issued by Murakami Hide and the Survey Report issued by NKK provide by the Plaintiff On 31 January 2002, M/V “Nissho 1” departed from Mawei Dockyard where she accepted the repair heading for Japan. On 4 February, M/V “Nissho 1” arrived at Murakami Hide in Ehime Pref., Japan and entered into the dry dock accepting permanent repair which was accomplished on 22 February. According to the Statement of Repair Cost of M/V “Nissho 1” issued by Murakami Hide, the costs of permanent repair of M/V “Nissho 1” are in the amount of JPY72, 400, 000, which should be settled on 6 April 2002. On 5 June, NKK issued a Survey Report indicating that the marine surveyors of NKK, at the request of Nissan Fire And Marine Insurance Co., Ltd. as hull underwriter of M/V “Nissho 1”, attended on 4 February 2002 and the subsequent dates aboard in order to ascertain the nature and extent of damage to her starboard hull alleged to have sustained due to the collision with M/V “Hui Yang”. It is specified in the Time Sheet of the Collision Accident of M/V “Nissho 1” under the aforesaid Survey Report that NKK carried out a survey for M/V “Nissho 1” at Mawei port, Fuzhou on 18 January 2002. NKK stated in the aforesaid Survey Report that it is reasonable for Murakami Hide to undertake repair from 4 to 22 February, and that the total cost of permanent repair in the amount of JPY72, 400, 000 which should be settled among the owner, repairer and hull underwriter of M/V “Nissho 1”’ is fair and reasonable. The Defendant refuses to recognize the aforesaid evidence on the grounds that: I. The Plaintiff’s undertaking of permanent repair for M/V “Nissho 1” in Japan violates the law of the PRC on repairing the vessel in the nearest place available. II. After the collision accident, M/V “Nissho 1” grounded. Thus the repair includes both the damage caused by collision and her grounding. However, the cost of repair for damage caused by the vessel’s grounding has no connection with the collision accident. The aforesaid repair cost which includes the repair cost for damage caused by grounding is unreasonable. III. The collision accident took place at Minjiang Kou, Fuzhou on 21 December 2001, but NKK carried out survey for M/V “Nissho 1” at Japan and attend aboard on 4 February 2002. Apparently, NKK did not carry out relevant survey immediately after the collision accident so that the survey could not reflect the actual damage caused by the collision. IV. NKK does not have the qualification to carry out ship survey in China. Therefore, the damage survey for M/V “Nissho 1” is against relevant regulations of the PRC. The Plaintiff refuses to recognize the aforesaid evidence on the grounds that: I. The violates the law of the PRC on repairing the vessel in the nearest place available by undertaking permanent repair for M/V “Nissho 1” in Japan. II. After the collision accident, M/V “Nissho 1” grounded. Thus the repair includes both the damage caused by collision and her grounding. However, there is no causal connection between the repair cost for damage caused by grounding and the collision accident. The aforesaid repair cost which includes the repair cost for damage caused by grounding is not reasonable. III. The collision accident took place at Minjiang Kou, Fuzhou on 21 December 2001. Nevertheless, NKK carried out survey for M/V “Nissho 1” at Japan and attend aboard on 4 February 2002. Apparently, NKK did not carry out relevant survey immediately after the collision accident, thus the survey could not reflect the actual damage caused by the collision. IV. NKK does not have the qualification to carry out ship survey in China. Therefore, the damage survey for M/V “Nissho 1” is against relevant regulations of the PRC. The Plaintiff alleged during the evidence examination that the permanent repair of M/V “Nissho 1” carried out in Murakami Hide is reasonable on the grounds that: I. M/V “Nissho 1”, an asphalt tanker, suffered breakage on the shell plates and cargo hold and severe damage to the heat insulating materials of cargo holds. For the purpose of permanent repair, high standard of technique and quality are required. Murakami Hide as the shipbuilder of M/V “Nissho 1” is very familiar with her particulars such as design, structure and materials, etc. Murakami Hide’s undertaking of repair could increase the operation efficiency, save the time of waiting for supply and import of special materials, and ensure the quality of repair. II. The expenses of labour in China, the price of ordinary steel plate and materials are lower than those in Japan, but the traditional holidays, Spring Festival (commencing from 12 to 18 February 2002), may inevitably increase the overtime payment or extend the time of repair for another 7 to 8 days. Pursuant to the Evaluation Report for Repair of M/V “Nissho 1” issued by Teamhead, it would take 4 to 9 more days if undertaking ship repair in China instead of in Murakami Hide, Japan. In addition to the time spent for deviation and waiting for entry into dockyard, the repair would take 12 to 20 more days. The daily hire of M/V “Nissho 1” as a special purpose vessel is USD 7,000. Accordingly, the loss of profit would be increased to USD 84,000 to USD 140,000 if undertaking permanent repair in China excluding the loss caused by waiting for import or supply of materials. Moreover, the personnel of the vessel operator in charge of the ship repair are required to go to China, which would undoubtedly incur additional cost of superintendence and travel. Such being the case, the total repair costs should have been over USD600,000 if M/V “Nissho 1” was repaired in China. III. NKK ascertained after survey that the scope, type, cost and time of permanent repair of M/V “Nissho 1” due to her collision with M/V “Hui Yang” are fair and reasonable. The collegial panel holds as follows: In accordance with the Provisions of the Supreme People’s Court on Determination of Property Damage Compensation in the Trial of Cases of Ship Collision and Contact, ship repair due to collision accident shall be carried out in the nearest place available, unless otherwise the applicant of repair is able to prove that it may minimize the loss and cost, or provide other reasonable grounds if the repair is carried out in other places. The Plaintiff believes that it can minimize the loss and cost if the repair is carried out in Japan. However, it is ascertained in the Survey Report issued by Teamhead that the Chinese shipyard is able to undertake permanent repair of M/V “Nissho 1”, and the reasonable repair cost is only USD417, 2997. The cost of permanent repair incurred in China would still be lower than that in Japan, even considering the additional loss for detention for 12 to 20 days due to deviation from Fuzhou to Shanghai, waiting for tide and entry of dock, and holidays for Chinese Spring Festival. Accordingly, the collegial panel holds that the repair cost in the amount of USD417, 297 as estimated by Teamhead should be ascertained as the reasonable repair cost for M/V “Nissho 1”. Additionally, in consideration of the loss for detention for 16 days in the amount of USD112, 000 as estimated by Teamhead according to the circumstances, the total repair cost of and loss for detention suffered by M/V “Nissho 1” should be USD529,297. Furthermore, M/V “Nissho 1” grounded due to the collision accident so that the damage arising therefrom does have a causal connection with the collision accident. Therefore, the cost and expenses of repair for damage caused by M/V “Nissho 1”’s grounding should fall within the loss due to the collision accident. The Classification Certificate for M/V “Nissho 1” was issued by NKK whose undertaking of survey of the repair scope, the vessel’s seaworthiness, and other matters and issuance of corresponding certificate of survey are in compliance with the rules and regulations of classification society and usual practice. NKK also carried out a survey for M/V “Nissho 1” at Mawei port, Fuzhou on 18 January 2002. Therefore, the Defendant’s allegation that NKK did not obtain the qualification of undertaking ship survey in China and that the survey carried out by NKK violated relevant laws and regulations of the PRC should not be supported. 30. Agency Fees Incurred in the Course of Permanent Repair The Plaintiff alleged that the agency fee incurred in the course of permanent repair of M/V “Nissho 1” is in the amount of JPY224, 670, and provided the invoice of cost and expenses incurred by M/V “Nissho 1” at Kinoura, Makiyama, Japan. It is indicated in the invoice provided by the Plaintiff as follows: On 3 February 2002, M/V “Nissho 1” arrived in Japan for permanent repair and paid the customs clearance and port charges at Kinoura in the amount of JPY42, 480. On 4 February 2002, the Plaintiff’s agent hired launches for going through quarantine and customs formalities at Matsuyama at the hire of JPY14, 700. Between 1 and 4 February 2002, the Plaintiff’s agent had paid some cost of transportations in the amount of JPY14, 140 for going through entry formalities. M/V “Nissho 1” had paid for carrying out permanent repair the communication charges in the amount of JPY42, 000 including telex and telephone charges and etc., and fees for immigration and quarantine procedures at Matsuyama, Japan. The Japanese agent of the Plaintiff submitted to the Coast Guard of Matsuyama the application for entering into port and paid JPY17, 400. The postage incurred by delivery of relevant documents amounts to JPY1, 530, of which the postage in the amount of JPY510 incurred by delivery of documents to crew members that has no connection with the collision accident is deducted, and thus the postage caused by the collision is JPY1, 020. The service charges of the Plaintiff’s Japanese agent for permanent repair amount to JPY75, 000. Accordingly, the total agency fees amount to JPY 224, 670, which should be paid by 26 February 2002. The Defendant alleged during the examination of evidence that it is unreasonable to carry out permanent repair for M/V “Nissho 1” in Japan, and refused to recognize the agency fees incurred in Japan. The collegial panel holds as follows: For the purpose of undertaking permanent repair of M/V “Nissho 1”, relevant customs, quarantine and entry and exit formalities are required to be handled at local competent authorities. Thus the agency fees arising therefrom were paid by reason of the repair of M/V “Nissho 1”. The Defendant raised a dissention on undertaking permanent repair of M/V “Nissho 1” in Japan, but the agency fee can not be avoided even if the permanent repair is carried out in China. The agency fee incurred in the course of the repair is related to the collision accident and falls into the “auxiliary expenses” as provided in Article 16 of the Provisions of the Supreme People’s Court on Determination of Property Damage Compensation in the Trial of Cases of Ship Collision and Contact and as supported by relevant evidence. Furthermore, the Defendant did not raise any objection to the amount of the agency fees. Therefore, the aforesaid agency fees as claimed by the Plaintiff in the amount of JPY 224,670 should be ascertained. 31. Loss of Hire of M/V “Nissho 1” In accordance with the Time Charter of M/V “Nissho 1”, Nissho Shipping sublet M/V “Nissho 1” to Tsurumi Yuso Co., Ltd on 18 March 1997 on behalf of the vessel owner. The term of charter is 5 to 7 years, and the charterer has the option to extend the charter term for one more year respectively prior to the expiry of 5/6 years of charter. The vessel should be delivered from 15 June to 15 July 1997. The daily hire of M/V “Nissho 1” is USD7, 000. With regard to off hire, it is stipulated in the Time Charter that the vessel should be off hire in the event of loss of time due to ship collision, repair or other causes. The Plaintiff claimed as follows: The collision accident took place at 1512 hrs on 21 December 2001. At 0620 hrs on 25 January 2002, M/V “Nissho 1” proceeded to her discharging berth after temporary patching of the breakage of hull. The first off-hire of M/V “Nissho 1” lasted 34.63056 days, which caused loss of hire in the amount of USD242, 413.92. At 1945 hrs on 26 January 2002, M/V “Nissho 1” removed the discharging manifold branch after all the goods were discharged and continued temporary repair. At 1410 hrs on 31 January 2002, M/V “Nissho 1” finished the temporary repair and obtained interim seaworthiness certificate. The second off-hire of M/V “Nissho 1” lasted 4.76736 days, which caused loss of hire in the amount of USD 33, 371.52. At 1355 hrs on 3 February 2002, M/V “Nissho 1” arrived at Ehime pref., Japan and accepted permanent repair in Murakami Hide. At 1310 hrs on 22 February 2002, M/V “Nissho 1” completed permanent repair and return to normal operation. The third off-hire of M/V “Nissho 1” lasted 18.96875 days, which caused the loss of hire in the amount of USD132, 781.25. Accordingly, the total loss caused by the aforesaid off-hire amounts to USD408, 566.69. The Defendant refused to recognize the aforesaid claims filed by the Plaintiff on the grounds that: I. The Plaintiff failed to submit the original Time Charter within the time limit of adducing evidence. Instead, the original Time Charter was submitted after the trial; II. The Time Charter is actually a false contract as it was concluded on 18 March 1997 which was before the date of built of M/V “Nissho 1” (17 June 1997); III. The Time Charter was not concluded by the Plaintiffs so that it has no right to claim compensation for loss of off hire on the basis thereof; IV. Even if the Plaintiff is entitled to claim compensation for loss of off hire, such loss should be deducted by the savable expenses. The Plaintiff claimed during the evidence examination as follows: I. The Plaintiff has submitted the notarized copy of the Time Charter within the period of adducing evidence. The original copy thereof was submitted after trial only for the purpose of further proving the form of the evidence. Thus the regulations on period of adducing evidence are not applicable in this regard. II. According to the shipping practice, it is rather usual of a ship owner to conclude charter party with regard to a vessel under construction. Because if the owner looks for charterer after the vessel was built and delivered into service, it will cause unnecessary lay-up loss. Conclusion of a charter party prior to the completion of construction of a vessel is not prohibited by any of the laws and regulations of the PRC. Instead, it is allowed by the law of the PRC to conclude contracts subject to any condition or time limit which will become effective when the conditions are satisfied or the time limit expires. According to the Time Charter, M/V “Nissho 1” should be delivered in any time between 15 June and 15 July 1997, which conforms to the date of completion of construction. Apparently, M/V “Nissho 1” can be delivered to the charterer as per the stipulations of the Time Charter. III. Nissho, as the vessel operator of M/V “Nissho 1”, concluded with Tsurumi Yuso Co., Ltd the Charter Party on behalf of the Plaintiff, which is in compliance with the Ship Management Agreement and shipping practice. IV. Pursuant to the provisions of Clause 6, 7 of the Time Charter, “the Owners to provide and pay for all wages of the crew and relevant charges, for insurance of the vessel, for regular repair and maintenance, and for stores and fresh water; the Charterers to provide and pay for fuel oil, agency service, port charges and stevedorage, etc., and all the aforesaid charges and expenses shall be for the Charterers’ account during off-hire period.” During off hire period, expenses such as wages of the crew, insurance of the vessel, cost of stores and fresh water and other cost and expenses for supporting the normal operation of the vessel which are for the owner’s account could not be reduced. In addition, the owner should also bear the cost of fuel oil, agency fee, port charges and stevedorage and other expenses which should have been borne by the charterer. Accordingly, there is no such cost savable for the owner. The Plaintiff should have the right to claim compensation for the total loss of hire. The collegial panel holds as follows: The Plaintiff submitted the notarized copy of the Time Charter within the period of adducing evidence, and its submission of the original copy thereof is in compliance with the regulation in respect of limitation period of adducing evidence. Furthermore, in the course of construction of M/V “Nissho 1”, the Plaintiff concluded the Time Charter with the charterer in advance agreeing on commencing the hire on the date when the vessel is delivered into service, which is also in compliance with relevant laws and regulations. The Ship Management Agreement of M/V “Nissho 1” can prove that Nissho is the vessel operator. A vessel operator’s concluding charter party on behalf of the ship owner is in compliance with such Agreement and shipping practice. However, the Defendant alleged without providing other rebuttal evidence that the aforesaid Time Charter is a false contract. It presented an argument that the Time Charter was not concluded by the Plaintiff and was executed prior to the date when M/V “Nissho 1” was built, which lacks of factual or legal basis. Thus the daily hire of M/V “Nissho 1” should be ascertained as USD7, 000 according to the Time Charter. In addition, during the off hire period, the costs, such as the wages of the crew, insurance of the vessel, cost of stores and fresh water and other cost and expenses for supporting the normal operation of the vessel which are for the account of the Plaintiff were still incurred even if the vessel was off hire. Therefore, the operating losses sustained by M/V “Nissho 1” should be ascertained as per the hire rate thereof. After the collision accident, it took 39.39792 days to carry out salvage, temporary repair, and 18.96875 days to undertake permanent repair for M/V “Nissho 1”. Therefore her days off hire totals 58.36667 days. According to the daily hire rate of M/V “Nissho 1” in the amount of USD7, 000, the loss of hire of M/V “Nissho 1” amounts to USD408, 566.69 and shall be computed from 23 February 2002. 32. Loss of Fuel Oil during Off-Hire of M/V “Nissho 1” In the light of Clause 7 of the Time Charter of M/V “Nissho 1”, the cost of oil fuel are for the account of the charterer during the chartering, but for the account of the owner during off hire period. The Plaintiff claimed as follows: During the first off hire period between 25 December 2001 and 25 January 2002, M/V “Nissho 1” consumed 8.83 tons of diesel oil counting for USD2,454.74 (calculated at the price of USD278/ton), and 5.5 tons of bunker oil counting for USD739.20 (calculated at the price of USD134.40/ton); During the second off hire period between 26 and 31 January 2002, M/V “Nissho 1” consumed 28.51 tons of diesel oil counting for USD7, 425.71 (calculated at the price of USD260.46/ton), and 45.32 tons of bunker oil counting for USD5, 880.72 (calculated at the price of USD129.76/ton); During the third off hire period between 3 and 22 February 2002, M/V “Nissho 1” consumed 6.74 tons of diesel oil counting for USD1, 755.50 (calculated at the price of USD260.46/ton), and 3.81 tons of bunker oil counting for USD494.39 (calculated at the price of USD129.76/ton). In total, M/V “Nissho 1” has consumed fuel oil counting for USD18, 750.26. The Plaintiff has provided the Statement of the Loss of Fuel Oil sustained by and the Hire of M/V “Nissho 1” issued by the charterer in support of the aforesaid claims. The Defendant has objection to the aforesaid claims, but did not provide any rebuttal evidence. The collegial panel holds that, in accordance with the Provisions of the Supreme People’s Court on Determination of Property Damage Compensation in the Trial of Cases of Ship Collision and Contact, the fuel oil is consumed for the purpose of supporting the vessel. The cost thereof shall be included in the compensation for losses and damage caused by collision accident. As per the Time Charter, the costs of fuel oil are for the account of the charterer during the chartering, but for the account of the owner during off hire period. The consumption of fuel oil by M/V “Nissho 1” during the off hire period falls within the losses caused by the collision accident. Therefore, the Plaintiff shall have the right to claim for compensation. The fuel oil consumed by M/V “Nissho 1” during off hire period which totally counts for USD18, 750.26 as supported by the evidence should be ascertained. The loss of fuel oil consumed during off hire period shall be computed from 23 February 2002. 33. Additional Expenses Required to Be Paid by M/V “Nissho 1” during Off Hire Period The Plaintiff claimed that as per the agreements in the Time Charter, the charterer shall pay the Plaintiff on a monthly basis at the stipulated time of payment of hire the additional expenses in the amount of USD1, 850 in lump sum or pro rata, including costs of communication, entertainment and accommodation, etc. Since M/V “Nissho 1” was off hire due to the collision accident, the Plaintiff was prevented from collecting the aforesaid additional expenses totaling USD3, 604.45 from the charterer. However, they were still incurred and required to be paid by the ship owner even though the vessel was off hire. The aforesaid additional expenses were also caused by the collision accident and thus should be compensated. The Defendant has objection to the aforesaid claim, but did not provide any rebuttal evidence. The collegial panel holds as follows: The aforesaid expenses as claimed by the Plaintiff which could not be collected from the charterer during the off hire period should be paid by the owner as the compensation for loss caused by the collision accident in question. The Plaintiff has provided evidence in support of relevant facts. Therefore, the Plaintiff’ claim of the aforesaid losses in the amount of USD3, 604.45 should be ascertained, and should be computed from 23 February 2002. In summary, reasonable losses sustained by the Plaintiff due to the collision accident include: Salvage fee paid by M/V “Nissho 1” in the amount of RMB18, 000 incurred on 3 April 2002; Cost of diving survey for M/V “Nissho 1” in the amount of USD 6,000 incurred on 26 December 2001; Cost of patching of shell plate of M/V “Nissho 1” underwater in the amount of USD 120, 000, of which USD72, 000 was incurred on 28 December 2001 and USD48, 000 was incurred on 15 January 2002; Agency fee for arranging temporary patching of M/V “Nissho 1” in the amount of USD6, 000 incurred on 1 February 2002; Cost of temporary patching of M/V “Nissho 1” at Mawei Dockyard in the amount of USD47,500 incurred on 11 January 2002; Cost of cleaning up cargo holds Nos. 3 and 5 and cutting off the damaged steel plate of cargo hold No. 5 by Mawei Dockyard in the amount of USD67, 500 incurred on 28 January 2002; Management and service charges collected by Leelloyds in the amount of SGD73, 950.59 incurred on 28 March 2002; Cost of purchasing patching materials for M/V “Nissho 1” in the amount of USD2,595 incurred on 25 March 2002; Classification survey fee paid by M/V “Nissho 1” in the amount of USD1, 147 incurred on 31 January 2002; Cost of shifting and pilotage for refloating M/V “Nissho 1” in the amount of RMB4, 806 incurred on 14 January 2002; Tug hire for salvage operation in the amount of RMB389,376 incurred on 14 January 2002; Cost incurred by installation of oil fence paid by M/V “Nissho 1” in the amount of RMB45, 000, of which RMB45, 000 was incurred on 30 January 2002 and RMB3, 000 was incurred on 4 February 2002; Hire of small barge for collecting bitumen in the amount of RMB9, 450 incurred on 18 January 2002; Cost of appraisal and environmental monitoring paid by M/V “Nissho 1” in the amount of RMB2, 120 incurred on 4 January 2002; Accommodation fee incurred on 30 December 2001 in the course of handling the maritime accident in the amount of RMB1, 512.60; Agency fee paid by M/V “Nissho 1” to Penavico Fuzhou in the amount of RMB5,000 incurred on 22 February 2002; Cost incurred at Hong Kong on 23 December 2001 for assisting owner’s superintendent, Mr. Kitazawa paid by M/V “Nissho 1” to Patt Manfield & Co., Ltd. in the amount of USD687.44; Cost of removal of bitumen pollution under water in the amount of RMB350, 000 incurred on 26 April 2002; Cost of supervision of traffic at the scene in the amount of RMB 107, 200 incurred on 1 April 2002; Travel expenses incurred by the representative of the owner of M/V “Nissho 1” in Fuzhou on 29 January 2002 in the amount of JPY749, 566; Cost of travel and superintendence incurred at Ehime Pref., Japan on 24 February in the amount of JPY373, 400; Fees and expenses of the owner’s superintendent of M/V “Nissho 1” incurred at Ehime Pref., Japan on 25 February 2002 in the amount of JPY1, 923, 890; Survey fee paid by M/V “Nissho 1” incurred in Japan on 28 February 2002 in the amount of JPY979, 166; Cost of permanent repair for M/V “Nissho 1” and the loss arising therefrom incurred on 6 April in the amount of USD529, 297; Agency fee incurred in the course of permanent repair on 26 February 2002 in the amount of JPY224, 670; Loss of hire of M/V “Nissho 1” on 23 February 2002 in the amount of USD408, 566.69; Loss of fuel oil during off-hire of M/V “Nissho 1” on 23 February 2002 in the amount of USD18, 750.26; Additional expenses required to be paid by M/V “Nissho 1” during off hire period on 23 February 2002 in the amount of USD3, 604.45. The aforesaid losses total USD1, 211, 647.84, which is equivalent to SGD73, 950.59, RMB935, 464.60 or JPY4, 250, 692.00. vii. Losses Sustained by M/V “Hui Yang” 1. Cost of Repair of M/V “Hui Yang” As requested by the Defendant, China Classification Society, Fuzhou Branch attended on 6 January 2002 and subsequent dates aboard M/V “Hui Yang” in Fuzhou in order to carry out damage survey. On 5 February 2002, it issued a Survey Report of Damage to the Bow of M/V “Hui Yang” and the Repair thereof. It is specified in the Survey Report the conditions of damage to M/V “Hui Yang” due to the collision accident and recommendations of repair thereof as follows: (1) Cast steel stem post and stem plate between water lines of 0.7 meters and 12 meters were dented and twisted with a number of cracking, of which the largest dent was about 2500 mm deep. Repair recommendations: To cut off and replace the same between water lines of 0.65 meters and 12.5 meters (joint with the upper plate) according to original size. (2) Inward dent and a number of cracking were found between Fr. 196 and ship’s bow under water line of 12 meters on the port bow plate, of which the largest dent was about 2000mm deep. Repair recommendations: To cut off and replace the part between water lines of 0.65 meters and 12.5 meters (joint with the upper plate) and between Fr.196 – Fr.300 (joint with the shell plate) and ship’s bow according to original size. (3) Dents, warping and a number of cracking were found between the Fr.198 and Fr.196 to ship’s bow under water line of 12 meters on the starboard bow plate. Repair recommendations: To cut off and replace the part between water lines of 0.65 meters and 12.5 meters (joint with the upper plate) and between Fr.196 – Fr.300 (joint with the shell plate) and ship’s bow according to original size. (4) Dents, bending, warping and a number of cracking were found in the internal structures of the aforesaid stem post and shell plates. Repair recommendations: To cut off and replace the internal structures between water lines of 0.65 meters and 12.5 meters as well as between Fr.195 and ship’s bow according to original size. It was also recommended by China Classification Society that permanent repair of the aforesaid damage to ship’s bow should carried out and completed after the vessel entered into dock by reason of the cracking between cast steel stem post and stem plate which extended to water line 0.7 meters. The results of repair specified in the aforesaid Survey Report are as follows: The aforesaid damage to the ship’s bow was repaired in the dockyard of Lianjiang Wenwan Ocean Ship Repair Factory (hereinafter referred to as “Wenwan Repair Yard”) as per the aforesaid recommendations. The surveyor of China Classification Society inspected the repair of M/V “Hui Yang” in line with the requirements. Journals of the repair are specified in the aforesaid Survey Report as follows: M/V “Hui Yang” entered into the dockyard on 7 January, entered into the dock on 14 January, and left the dock and then dockyard on 1 February 2002. The Plaintiff raised a dissention on the aforesaid Survey Report claiming that within the period of adducing evidence, the Defendant only submitted the copy of the Survey Report of Damage to the Bow of M/V “Hui Yang” which was issued by China Classification Society on 24 January 2002, and that the Defendant submitted the original copy of the Survey Report of Damage to the Bow of M/V “Hui Yang” and the Repair thereof dated 5 February 2002 issued by China Classification Society on 22 July 2004 when the court was in session. The contents of the aforesaid reports are not completely identical. Therefore the Plaintiff claimed that the Survey Report dated 5 February 2002 should not be recognized. The collegial panel holds as follows: As per the Repair Schedule, M/V “Hui Yang” entered into the shipyard on 7 January 2002 accepting repair and left the shipyard on 1 February 2002 upon completion of repair. Accordingly, the Survey Report of Damage to the Bow of M/V “Hui Yang” dated 24 January 2002 submitted by the Defendant within the period of adducing evidence was an interim report issued by China Classification Society, Fuzhou Branch in the course of the repair. In fact, the Survey Report of Damage to the Bow of M/V “Hui Yang” and Repair thereof dated 5 February 2002 was the final survey report issued upon the completion of repair, of which the Defendant submitted the original copy. Thus the Survey Report dated 5 February 2002 should be recognized. With regard to relevant repair costs, the collegial panel holds as follows: ① Cost of Temporary Repair of M/V “Hui Yang” After the collision, M/V “Hui Yang” entered into Mawei Dockyard in Fu Jian on 7 January 2002 for temporary repair, for which the Defendant paid Mawei Dockyard RMB9, 069. The Plaintiff has no dissention on such cost. Therefore the cost of temporary repair of M/V “Hui Yang” should be ascertained. ② Cost of Permanent Repair of M/V “Hui Yang” The Defendant provided the copy of the Repair Agreement entered into by and between Sun Font and Wenwan Repair Yard on 8 January 2002 in support of the cost of permanent repair of M/V “Hui Yang”. It is stipulated in the Agreement as follows: The repair projects should be determined by both parties after joint onboard investigation. Waste materials removed in the course of repair operation shall be disposed by Wenwan Repair Yard; the term of repair of M/V “Hui Yang” at the dock shall be no more than 8 days, but may be extended in case more repair projects are required. M/V “Hui Yang” shall enter into the dockyard on 8 January 2002 and leave on 24 January so that the duration amounts to 15 days. It is agreed by and between the parties that about 70 tons of steel plate and steel structure which count for RMB850, 000 are to be cut off and replaced after relevant measurement and calculation. Due to the complex structure thereof, the actual cost will be determined after they are cut off and investigated. The Plaintiff raised a dissention on the form of the aforesaid evidence by reason of the absence of the original documents. The Defendant also provided the copy of the Statement of Repair Cost of M/V “Hui Yang” issued on 1 February 2002 which has the signatures of the representatives of the Defendant and Wenwan Repair Yard and the company seal of the latter. It is concluded in the Statement that the total repair cost of M/V “Hui Yang” amounts to RMB1, 251,076. The Plaintiff raised a dissention on the form of the aforesaid evidence by reason of the absence of the original documents. The Defendant also produced 9 original invoices issued by Wenwan Repair Yard in the amount of RMB820, 000. On 10 January 2002, the Defendant paid Wenwan Repair Yard RMB100, 000 for the repair of M/V “Hui Yang” through China Merchants Bank, Guangzhou Branch, Wuyang Subbranch. The Plaintiff claimed that the repair cost claimed by the Defendant was different from the amount specified in the invoices it provided. On 13 April 2004, the Plaintiff requested this Court to appoint an appropriate appraiser to evaluate and appraise the reasonable time and cost of repair of M/V “Hui Yang” due to the collision accident in question in accordance with the scope of repair estimated by China Classification Society in the Survey Report of Damage to the Bow of M/V “Hui Yang” and Repair thereof. On 18 June 2004, China Classification Society Industrial Corp., Guangzhou Branch as appointed by this Court issued an Evaluation Report of Repair of M/V “Hui Yang”. According to the extent and scope of damage and recommendations of repair provided by the Survey Report of Damage to the Bow of M/V “Hui Yang” issued by China Classification Society, Fuzhou Branch and relevant drawings, on the basis of the price provided by the List of Repair Cost of Domestic Civilian Vessels of China Classification Society Industrial Corp. (hereinafter referred to as “92 Yellow Book”) multiplied by 1.3 and on the basis of the reasonable cost of replacing plates, and in consideration of the capability and technique of local ship repair yards in Fu Jian province, China Classification Society Industrial Corp., Guangzhou Branch issued the following appraisal: 1. In consideration of the technique of local ship repair yards in Fu Jian province in the year of 2002, it will take 18 days for completing the permanent repair for the damage to M/V “Hui Yang” (14 days at dock and 4 days at berth); 2. As per the standard repair cost in Fujian in 2002, the permanent repair of M/V “Hui Yang” requires RMB706, 268. The Defendant agrees with the aforesaid Evaluation Report, but the Plaintiff held an opposite opinion. It claimed hat the reasonable quantity of steel plate to be cut off is estimated as 43.434 tons which is not nearly the quantity of 70 tons as specified in the Repair Agreement provided by the Defendant. However, the time and cost estimated and appraised is almost identical with that claimed by the Defendant. Therefore the Plaintiff claimed the repair cost should be RMB527, 410 calculated as per the proportion of steel plate being cut off. The Defendant agrees with the Evaluation Report of Repair of M/V “Hui Yang” which was made upon the request of the Plaintiff. However, the Plaintiff has objection to the result thereof, but failed to provide sufficient rebuttal evidence. The Plaintiff’s argument of calculating relevant repair costs as per the proportion of the damaged steel plate to be cut off and replaced is lack of scientific basis. In addition, pursuant to the provisions of Paragraph 2 of Article 77 of Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures, the authentication conclusions are more forceful than other written evidences. The collegial panel holds that the result of the aforesaid Evaluation Report that the permanent repair of M/V “Hui Yang” cost RMB706, 268 and took18 days (computed from 7 January 2002 when the vessel entered into dock accepting repair to 25 January 2002 when the repair was completed) should be ascertained. 2. Survey Fee caused by M/V “Hui Yang” The Defendant paid China Classification Society, Fuzhou Branch the survey fee in the amount of RMB3, 948 on 31 January 2002, to which the Plaintiff has no objection. On the same day, the Defendant paid the consultative department of Fu Jian Information Centre of Science and Technology RMB4, 800. The said department issued an invoice thereof specifying “Damage to M/V “Hui Yang”; Fair; Single Voyage.” The Plaintiff raised a dissention that such expense has no connection with the case in question. However, the Defendant claimed that such expense is part of the survey fee and was paid to the account designated by China Classification Society, Fuzhou Branch. The collegial panel holds as follows: The Defendant failed to submit evidence in support of the account designated by China Classification Society, Fuzhou Branch, and the beneficiary of the aforesaid expense is not the institution undertaking survey of the damage to the vessel. Therefore, such cost has no connection with this case and should not be ascertained. 3. Loss of Hire of M/V “Hui Yang” The Defendant provided the Time Charter concluded with Fuzhou Haida Shipping Co., Ltd. (hereinafter referred to as “Haida”) on 10 December 2001 in support of the loss of hire of M/V “Hui Yang”. It is stipulated in this Time Charter that: Sun Font is the Owner and Haida is the Charterer thereto; The Owner agrees to let and the Charterer agrees to hire the vessel for 3 + 3 calendar months, and ± 15 days and renewal of hire at the Owner’s option; the Charterer shall pay for the use and hire of the vessel at the rate of RMB25,000/day which shall be paid on a daily basis, commencing on and from the day of her delivery to the date of her redelivery. The rate of hire less than one day should be calculated pro rata. With regard to off hire, it is stipulated as follows: In the event of loss of time due to detention by marine accidents to the vessel or cargo including detention caused by collision or grounding; Should the Vessel be prevented or impeded from full working or become unavailable for the Charterer due to repair, entry into dry dock or other measures necessary for maintaining her performance, the Vessel should be off hire and the hire is to be suspended from the time lost until she is resumed into service, and the Vessel should be at the position which does not cause any loss to the Charterer compared with the position upon the loss of time. The Plaintiff claimed in the course of evidence examination that: I. The Defendant can not provide any evidence in support of the fact that M/V “Hui Yang” became off hire due to the collision accident. The Notice of Off-Hire and Statement of Hire Deduction of the charterer can not prove M/V “Hui Yang” was off hire. Thus such claim should not be recognized; II. The loss of hire claimed by the Defendant on the basis of hire rate of M/V “Hui Yang” should be deducted by the cost and expenses savable. The collegial panel holds as follows: The hire rate of M/V “Hui Yang” in the amount of RMB25, 000 as stipulated in the Time Charter provided by the Defendant should be ascertained. As per the abovementioned facts, under the Time Charter, there is no cost or expense savable for the owner during off hire period. Thus the loss of hire sustained by M/V “Hui Yang” can be determined on the basis of her hire rate stipulated in the Time Charter. At 1510 hrs on 21 December 2001, M/V “Hui Yang” collided with M/V “Nissho 1” and grounded thereafter. At 1805 hrs on 22 December 2001, M/V “Hui Yang” refloated after 1.122 days of salvage operation. In addition, it took 3 days to carry out temporary repair of M/V “Hui Yang”, and the reasonable time for permanent repair thereof should be 18 days. The reasonable loss of hire sustained by M/V “Hui Yang” should be 22.22 days, and the loss of hire amounts to RMB555, 500. 4. Other Losses Sustained by M/V “Hui Yang” (1) Expenses of Salvage for and Discharge of Goods on Board of M/V “Hui Yang” On 31 December 2001, the Defendant and Fuzhou Songmen Port Co., Ltd. entered into a Discharge Agreement. It is agreed that Fuzhou Songmen Port Co., Ltd. collects all the expenses in the amount of RMB257, 096.80 with regard to discharge of goods about 10,000 tons, that all the goods discharged shall be owned by Fuzhou Songmen Port Co., Ltd., and that Fuzhou Songmen Port Co., Ltd. undertakes to issue the full and official invoice of expenses of discharge specifying as the salvage fee and deliver the same to the Defendant. The Defendant provided 17 invoices specially used for loading, unloading and transporting goods in Fuzhou issued by Fuzhou Changxin Standstone Co., Ltd. dated 1 April 2002 totaling RMB163, 800 for 12,600 tons of goods at the rate of RMB 13/ton. According to the explanation of the Defendant, Fuzhou Songmen Port Co., Ltd. sold the river sand discharged from M/V “Hui Yang” to Fuzhou Changxin Standstone Co., Ltd. which issued the aforesaid 17 invoices thereafter. The expense indicated in the invoices also falls within the expenses of discharge of goods. The Plaintiff believes that Fuzhou Changxin Standstone Co., Ltd. and Fuzhou Songmen Port Co., Ltd. which carried out the discharge of goods are different companies. Fuzhou Changxin Standstone Co., Ltd. should have issued sales invoice but not invoice of discharge of goods. Additionally, the quantity of the cargo on board of M/V “Hui Yang” is different from that specified in the invoice. Therefore, the aforesaid expenses should not be ascertained. The collegial panel holds as follows: I. The Defendant admitted that Fuzhou Changxin Standstone Co., Ltd. has purchased the river sand discharged from M/V “Hui Yang”. Thus Fuzhou Changxin Standstone Co., Ltd. should have issued the sales invoice instead of invoice of discharge of goods. Accordingly, the claim for compensation for the expense of salvage and discharge for M/V “Hui Yang” in the amount of RMB163, 800 as specified in the aforesaid 17 invoices filed by the Defendant should not be supported. II. The Defendant provided another invoice of port charges in the amount of RMB74, 000 issued by Fuzhou Songmen Port Co., Ltd. which specifies the goods name, river sand, and the quantity thereof in the amount of 10,000 tons as well as the rate thereof RMB 7.4/ton. On 15 January 2002, the Defendant paid Fuzhou Songmen Port Co., Ltd. the salvage fee in the amount of RMB100, 000 through China Merchants Bank, Guangzhou Branch, Wuyang Subbranch. As claimed by the Defendant, the aforesaid expense falls within the expenses of salvage and discharge for M/V “Hui Yang”. The Plaintiff has no objection thereto. The aforesaid expense should be ascertained as per the amount of RMB74, 000 indicated in the invoice issued by Fuzhou Songmen Port Co., Ltd. (2) Charges for Tug’s Service Incurred by Salvage of M/V “Hui Yang” The Defendant provided an invoice of towage in the amount of RMB90, 581.45 issued by Fuzhou Port Authority. The Defendant remitted through China Merchants Bank, Guangzhou Branch, Wuyang Subbranch to the account of Fuzhou Port Authority RMB50, 000 and RMB51, 039.45 (including outward and inward towages totaling RMB10, 458) respectively on 15 and 25 January 2002 for the aforesaid towages. The aforesaid expense to which Plaintiff has no objection should be ascertained. (3) Expenses of Refloating, Shifting and Piloting of M/V “Hui Yang” in Fuzhou The Defendant provided the explanation of charges issued by Fuzhou pilot station on 7 January 2002 and the receipt of TT (telegraphic transfer) of China Merchants Bank dated 16 January. It specifies the expenses of refloating, shifting and piloting of M/V “Hui Yang” in Fuzhou port totaling RMB7, 676 paid by the Defendant to Fuzhou pilot station. The aforesaid expenses to which the Plaintiff has no objection should be ascertained. (4) Agency Fee Sustained by M/V “Hui Yang” due to the Handling of Collision Accident The Defendant claimed that it paid M/V “Hui Yang” the agency fee in the amount of RMB210, 625 for the purpose of handling the accident. However, it only provided an invoice dated 7 March 2002 indicating the agency fee in the amount of RMB2, 000 as issued by Mawei Xinggang Shipping Agency Co., Ltd. in Fuzhou. The Plaintiff admitted the agency fee in the amount of RMB2, 000 as evidenced by the said invoice, but refused to admit those without any supporting evidence. The collegial panel holds that the agency fee in the amount of RMB2, 000 as evidenced by the corresponding invoice can be ascertained, but those without any supporting evidence should not be ascertained. (5) Communication Fees Sustained by M/V “Hui Yang” due to the Handling of Collision Accident The Defendant provided two invoices dated 14 March 2002 indicating the communication fees sustained by M/V “Hui Yang” totaling RMB2, 115.30 due to the handling of the collision accident. The Plaintiff admitted the aforesaid communication fees. The collegial panel holds that the communication fees sustained by M/V “Hui Yang” due to the handling of the collision accident should be ascertained (6) Traveling Expenses Sustained by M/V “Hui Yang” due to the Handling of Collision Accident The Defendant has sustained travelling expenses due to the collision accident in the amount of RMB28, 301.39 (of which RMB5, 320.18 was reimbursed on 16 January 2002, RMB5, 803.21 was reimbursed on 7 February 2002, RMB5, 400 was reimbursed on 8 February 2002, and RMB8, 122 was reimbursed on 23 April 2002, but the date of reimbursement of the remaining amount of RMB3, 656 is unspecified), for which relevant supporting documents were provided. The Plaintiff admitted the aforesaid traveling expenses as reasonable cost. Therefore, the collegial panel holds that the aforesaid traveling expenses sustained by M/V “Hui Yang” due to the handling of collision accident should be ascertained. In summary, the Defendant has suffered the following losses due to the collision accident: Cost of temporary repair of M/V “Hui Yang” in the amount of RMB9, 069 incurred on 7 January 2002; Cost of permanent repair of M/V “Hui Yang” in the amount of RMB706, 268 ( of which RMB100, 000 was incurred on 10 January 2002 and RMB606, 268 was incurred on 26 January 2002; Survey fee caused by M/V “Hui Yang” in the amount of RMB3, 948 incurred on 31 January 2002; Loss of Hire in the amount of RMB555, 500 incurred on 26 January 2002; Cost of salvage and discharge in the amount of RMB74, 000 incurred on 15 January 2002; Towage in the amount of RMB90, 581.45 (of which RMB50, 000 was incurred on 15 January 2002 and RMB40, 581.45 was incurred on 25 January 2002); Expenses of refloating, shifting, and piloting in Fuzhou in the amount of RMB7, 676 incurred on 16 January 2002; Agency fee incurred by handling of collision accident on 7 March 2002 in the amount of RMB2,000; Communication fee incurred by handling of collision accident in the amount of RMB2, 115.30 on 14 March 2002; Traveling expenses incurred by handling of collision accident in the amount of RMB28, 301.39 (of which RMB5, 320.18 was incurred on 16 January 2002, RMB5, 803.21 was incurred on 7 February 2002, RMB5, 400 was incurred on 8 February 2002, RMB8, 122 was incurred on 23 April 2002, and the remaining amount of RMB3, 656 was determined as incurred on 23 April 2002 as the date of reimbursement is unspecified). The aforesaid losses amount to RMB1, 479, 459.14 in total. The collegial panel is of the following opinions: The subject case involves dispute over damage caused by ship collision. (1) Jurisdiction The cause of action of the subject case falls within maritime torts. In accordance with the provisions of Article 29 of the Civil Procedure Law of the People’s Republic of China, a lawsuit brought on a tortious act shall be under the jurisdiction of the People’s Court of the place where the tort is committed or where the defendant has his domicile. The accident in question took place in the territorial sea of the People’s Republic of China, and the Defendant has its domicile under the jurisdiction of this Court. Therefore, this Court have jurisdiction over this case. (2) Applicable Law The accident in question took place in the territorial sea of the People’s Republic of China. In accordance with Paragraph 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. Therefore, the law of the People’s Republic of China shall apply to this case. With regard to the proportion of liability and faults of both vessels, The Collegial Panel holds that: 1. Faults of M/V “Nissho 1”: (1) Improper timing to turn around. M/V “Nissho 1” proceeded inbound at an improper time. Even though M/V “Nissho 1” was fully loaded at that time, her maximum draft was only 6.19 meters. Thus she did not need to proceed on tide. However, when M/V “Nissho 1” was aware that there was some vessel with deep draft proceeding outbound on the tide in the vicinity, she still turned without careful consideration and proceeded inbound entering into the main channel of Mingjiang. Furthermore, she failed to apply good seamanship and caused the close quarter situation with M/V “Hui Yang”, which is against the provisions of Rule 8 of the COLREGs. (2) Negligence of Lookout. M/V “Nissho 1” failed to adopt proper lookout so as to observe the movement of other vessels in the vicinity before she proceeded inbound. Thus she failed to make correct judgment of the risk of collision and turned to starboard without making appropriate signals. Her conducts violated the provisions of Rule 5 of COLREGs and the Ru1es of the Ministry of Communication of the People’s Republic of China on Coastal Harbour Signals. (3) Failure in making a full appraisal of the risk of collision and to take proper measures to avoid collision. At 1508 hrs, M/V “Hui Yang” started turning to starboard. M/V “Nissho 1” mistakenly thought M/V “Hui Yang”’s turning to starboard was for avoiding Xifengshi reef in the north of the channel, and altered the course to port. M/V “Nissho 1” failed to properly judge the current situation and estimate the risk of collision so that she did not provide any measures to avoid collision. Eventually, the two vessels failed to carry out proper coordination and then collided with each other. M/V “Nissho 1” violated the provisions of Rule 7 and 8 of COLREGs. 2. Fault of M/V “Hui Yang”: (1) Failure in complying with the regulations on navigation in narrow channels. At 1500 hrs, M/V “Hui Yang” was on the north side of Mingjiang main channel heading 091. Between 1503 hrs and 1508 hrs, M/V “Hui Yang” still stayed at such position. From 1500 hrs to 1508 hrs, M/V “Hui Yang” has been navigating outbound in the north of Mingjiang main channel which is an inbound channel, which violated the provisions of Rule 9 of the COLREGs and Article 10 and 13 of port regulations of Fuzhou port, and caused the close quarter situation with the inbound vessel M/V “Nissho 1”. (2) Negligence of lookout and failure in making a full appraisal of the risk of collision: At 1500 hrs, M/V “Nissho 1”’s anchor aweigh. Subsequently, pilot of M/V “Hui Yang” informed the master that M/V “Nissho 1” was heaving up anchor for proceeding inbound, and observed that the heading of M/V “Nissho 1” was different from that of other anchored vessels. At 1505 hrs, pilot of M/V “Hui Yang” disembarked and informed the master of M/V “Nissho 1”’s turning around. Apparently, M/V “Hui Yang” was aware of the movement of M/V “Nissho 1”. However, after pilot disembarked the master of M/V “Hui Yang” committed negligence of lookout and failed to observe the following movement of M/V “Nissho 1” and to undertake timely communication and coordination with M/V “Nissho 1” for preventing collision, which result in her failure to make a full and proper appraisal of the situation and risk of collision. Pilot disembarked from M/V “Hui Yang” at improper timing when knowing that M/V “Hui Yang” was about to encounter the inbound vessel M/V “Nissho1” so that the pilot committed neglect of precaution. Accordingly, M/V “Hui Yang” violated the provisions of Paragraph 1 of Rule 2 and Rule 5 of COLREGs. (3) Failure to consider departing from the rules on emergency and to adopt effective measures to avoid collision. At 1508 hrs, M/V “Hui Yang” passed on the north of M/V “Wan Zhi”. At that time, M/V “Hui Yang” was about 0.38 nms away from M/V “Nissho 1” which turned her cause to 277. The two vessels then came into a “starboard to starboard” situation. M/V “Hui Yang” merely insisted turning to starboard without full appraisal and consideration of all the dangers of navigation and risk of collision under such special circumstance, and eventually collided with M/V “Nissho 1”. M/V “Hui Yang” failed to consider departing from the rules on emergency and to apply good seamanship by substantially turning to starboard when the waters in the starboard side was insufficient, which violated the provision of Paragraph 2 of Rule 2 and Rule 8 of the COLREGs. In summary, M/V “Nissho 1”’s improper movement is the main cause of the collision accident so that M/V “Nissho 1” should bear the major liability for this case. M/V “Hui Yang” also contributed to the collision in question and should bear the secondary liability for this case. In consideration of their degrees of faults, M/V “Nissho 1” should bear 60% of the liabilities and M/V “Hui Yang” should bear 40% of the liabilities. With regard to compensation for the damage caused by the ship collision: The owners of the two vessel involved should be liable for compensation for the damage caused by the ship collision. The Plaintiff is the owner of M/V “Nissho 1” and the Defendant is the owner of M/V “Hui Yang”. Therefore, the Plaintiff and the Defendant should be held liable for the damage caused by this ship collision. In accordance with provisions of Paragraph 1and 2 of Article 169 of the Maritime Code of the People’s Republic of China, “if the colliding ships are all in faults, 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 faults shall be liable for the damage to the ship, the goods and other property on board pursuant to the proportions prescribed in the preceding paragraph. Where damage is caused to the property of a third party, the liability for compensation of any of the colliding ships shall not exceed the proportion it shall bear.” Therefore, with regard to the current case, the Plaintiff and the Defendant shall bear corresponding liabilities in proportion to the extent of their faults. The losses sustained by the Plaintiff due to the collision accident amount to USD1,211, 647.84, SGD73, 950.59, RMB934, 464.6 and JPY4, 250, 692. As per the aforesaid proportion of liability, i.e. 40%, which should be borne by M/V “Hui Yang”, the Defendant shall compensate for the losses sustained by the Plaintiff in the amount of USD484, 659.14, SGD29, 580.24, RMB374, 185.84 and JPY1, 700, 276.8 as well as the interests thereof. The losses and interests thereof shall be computed from the date when such losses or relevant expenses were incurred until the date of payment as determined by this Judgment. However, there is no unified foreign currency loan rate in Mainland China since 21 September 2000 when the Notice of the People’s Bank of China on Reform of the Administration of Foreign Currency Loan Rate was promulgated providing that the foreign currency loan rate shall be determined by the financial institutions. For the purpose of determining the interests ex aequo et bono, it should be calculated based on the amount of the losses and expenses which are converted into Renminbi as per the foreign exchange rate on the date when the interested shall be computed. The losses sustained by the Defendant (the Plaintiff in the Counterclaim) due to the collision accident amount to RMB1, 479, 459.14. Based on the proportion of liability borne by M/V “Nissho 1”, i.e. 60%, the Plaintiff (the Defendant in the Counterclaim) shall compensate the Defendant as the Plaintiff in the counterclaim RMB887, 675.48 and the interests thereof. The losses or expenses sustained by the Defendant due to the collision accident shall be computed from the date when such losses or expenses were incurred to the date of payment provided by this Judgment based on the circulating fund loan rate over the same period published by the People’s Bank of China. In summary, in accordance with provisions of Paragraph 1 and 2 of Article 169 and Article 273 of the Maritime Code of the People’s Republic of China, I. The Defendant (the Plaintiff in the Counterclaim), Guangdong Sun Font Shipping Co., Ltd., shall compensate for losses sustained by the Plaintiff (the Defendant in the Counterclaim), Golden Palm Maritime S.A., in the amount of USD484, 659.14, SGD29, 580.24, RMB374, 185.84, JPY1, 700, 276.8 as well as the interests thereof. The interests thereof shall be computed from the date when relevant losses or relevant expenses were incurred, as follows: salvage fee in the amount of RMB7, 200 computed from 3 April 2002; cost of diving survey in the amount of USD2, 400 computed from 26 December 2001; cost of patching of hull plate underwater in the amount of USD48, 000 (of which USD28, 800 is computed from 28 December 2001 and USD19,200 is computed from 15 January 2002); agency fee for temporary repair in the amount of USD2, 400 counted from 1 February 2002; cost of temporary patching in the amount of USD19, 000 computed from 11 January 2002; cost of cleaning up cargo holds Nos. 3 and 5 and cutting off the damaged steel plate of cargo hold No. 5 by Mawei Dockyard in the amount of USD27, 000 computed from 28 January 2002; management and service charges collected by Leelloyds in the amount of SGD29, 580.24 computed from 28 March 2002; cost of purchasing patching materials in the amount of USD1,038 computed from 25 March 2002; classification survey fee in the amount of USD458.8 computed from 31 January 2002; cost of shifting and pilotage for refloating in the amount of RMB1, 922.40 computed from 14 January 2002; tug hire for salvage operation in the amount of RMB155,750,40 computed from 14 January 2002; cost incurred by installation of oil fence paid by in the amount of RMB19,200, of which RMB18, 000 is computed from 30 January 2002 and RMB1, 200 is computed from 4 February 2002; hire of small barge for collecting bitumen in the amount of RMB3, 780 computed from 18 January 2002; cost of appraisal and environmental monitoring in the amount of RMB848 incurred on 4 January 2002; accommodation fee in the amount of RMB605.04 computed from 30 December 2001; agency fee in amount of RMB2, 000 computed from 22 February 2002; cost incurred by the owner’s superintendent at Hong Kong in the amount of USD274.98 computed from 23 December 2001; cost of removal of bitumen pollution under water in the amount of RMB140, 000 computed from 26 April 2002; cost of supervision of traffic at the scene in the amount of RMB42, 880 computed from 1 April 2002; travel expenses incurred by the representative of the owner in Fuzhou in the amount of JPY299, 826.40 computed from 29 January 2002; travel and superintendence expense of the owner’s representatives at Ehime Pref., Japan in the amount of JPY149, 360 computed from 24 February 2002; fees and expenses of the owner’s representatives at Ehime Pref., Japan in the amount of JPY769, 556 computed from 25 February 2002; survey fee incurred in the amount of JPY391, 666.40 computed from 28 February 2002; cost of permanent repair and the loss arising therefrom in the amount of USD211, 718.80 computed from 6 April 2002; agency fee in the amount of JPY89, 868 computed from 26 February 2002; loss of hire in the amount of USD163, 426.68 computed from 23 February 2002; loss of fuel oil during off-hire in the amount of USD7, 500.10 computed from 23 February 2002; additional expenses during off-hire period in the amount of USD1, 441.78 computed from 23 February 2002. The aforesaid losses or expenses shall be computed until the date of payment as decided by this Judgment. With regard to losses or expenses in Renminbi currency, the interests thereof shall be calculated based on the circulating fund loan rate during the same period published by the People’s Bank of China. With regard to losses or expenses in foreign currency, the interests thereof shall be calculated based on the circulating fund loan rate for the same period published by the People’s Bank of China after being converted into Renminbi as per the foreign exchange rate published by the People’s Bank of China on the date from which such losses or expenses were computed. II. The Plaintiff (the Defendant in the Counterclaim), Golden Palm Maritime S.A., shall compensate for losses sustained by the Defendant (the Plaintiff in the Counterclaim), Guangdong Sun Font Shipping Co., Ltd., in the amount of RMB886,475.48. The interests thereof shall be computed from the date when relevant losses or relevant expenses were incurred, which include: cost of temporary repair in the amount of RMB5, 441.4 computed from 7 January 2002; cost of permanent repair in the amount of RMB423, 760.80 (of which RMB60, 000 is computed from 10 January 2002 and RMB363, 760.80 is computed from 26 January 2002; survey fee in the amount of RMB2, 368.80 computed from 31 January 2002; loss of hire in the amount of RMB333, 300 computed from 26 January 2002; cost of salvage and discharge in the amount of RMB44, 400 computed from 15 January 2002; towage in the amount of RMB54, 348.87 (of which RMB30, 000 is computed from 15 January 2002 and RMB24, 348.87 is computed from 25 January 2002); expenses of refloating, shifting, and piloting for entry and exit to the port totally in the amount of RMB4, 605.60 computed from 16 January 2002; agency fee in the amount of RMB1,200 computed from 7 March 2002; communication fee in the amount of RMB1, 269.18 computed from 14 March 2002; traveling expenses in the amount of RMB16, 980.83 (of which RMB3, 192.11 is computed from 16 January 2002, RMB3, 481.93 is computed from 7 February 2002, RMB3, 240 is computed from 8 February 2002, and RMB7, 066.79 is computed from 23 April 2002). The interest of the aforesaid losses or expenses shall be computed until the date of payment as decided by this Judgment, and shall be calculated based on the circulating fund loan rate for the same period published by the People’s Bank of China. The court acceptance fee for the subject claim amounts to RMB75, 146, of which RMB46, 801 shall be borne by the Plaintiff and RMB28, 336 shall be borne by the Defendant. The court acceptance fee for the counterclaim amounts to RMB26, 060, of which RMB18, 409 shall be borne by the Plaintiff in the counterclaim and RMB7, 651 shall be borne by the Defendant in the counterclaim. The Plaintiff in the subject claim and the Plaintiff in the counterclaim have prepaid the court acceptance fees respectively, which is not refunded by this Court. After appropriate deduction, the Defendant shall pay the Plaintiff the court acceptance fee in the amount of RMB20, 685. The appraisal fee has been paid by the Defendant in the counterclaim, of which RMB3, 600 shall be borne by the Defendant in the counterclaim, and RMB2, and 400 shall be borne by the Plaintiff in the counterclaim. This Court will not otherwise settle the aforesaid appraisal fee. The Plaintiff in the counterclaim shall directly pay the Defendant in the counterclaim the corresponding proportion thereof. The aforesaid obligation of payment shall be accomplished within 10 days after this judgment takes effects. If any of the parties fails to make corresponding payment within the time limit provided by this Judgment, such party shall pay double interest on the debt for the delayed payment in accordance with provisions of Article 229 of the Civil Procedure Law of the People’s Republic of China. If any of the parties objects to this judgment, the Plaintiff (the Defendant in the Counterclaim) may within 10 days and the Defendant (the Plaintiff in the Counterclaim) may within 15 days from the day when this judgment is served submit the statement of appeal to this courts, together with copies made according to the number of parties concerned. The appellate court shall be Guangdong Provincial High People’s Court. Presiding Judge : Wu Zili Judge : Deng Yufeng Judge : Ni Xuewei 5 May 2011 Official Stamp of Guangzhou Maritime Court Court Clerk : Yang Qian The translation is provided by Wang Jing & CO.

Guangzhou Maritime Court Civil Judgement (2002)GHFCZ No.340 Plaintiff: Zhou Hongru, male, born on October 8, 1951, Han Nationality, residing at No.23, first group of Hushan Cun, Shatian Village, Ningxiang County, Hunan Province Plaintiff: He Chunxiang, female, born on March 12, 1953, Han Nationality, residing at No.23, first group of Hushan Cun, Shatian Village, Ningxiang County, Hunan Province Plaintiff: Zhou Shuying, female, born on September 25, 1978, Han Nationality, residing at No.23, first group of Hushan Cun, Shatian Village, Ningxiang County, Hunan Province Plaintiff: Chen Juxiang, female, born on September 19, 1927, Han Nationality, residing at No.23, first group of Hushan Cun, Shatian Village, Ningxiang County, Hunan Province Agent ad Litem for the above four plaintiffs: Liu Shaobo, lawyer of Guangdong Hua Ye Law Firm Defendant: Shi Tianfa, male, born on November 2, 1944, Hn Nationality, residing at No.299, Xiayu, Xiayu Cun, Lancheng Village, Pingtan County, Fujian Province Agent ad Litem: yu Jianming, Xue Zeng, lawyers of Fujian Da Jia Law Firm Defendant: Huang Yifan, male, born on August 24, 1970, Han Nationality, residing at No.64, Dong Xiang, Lang Dun Village, Gaochao Administrative Region, Xitou Town, Yangxi County, Guangdong Province With respect to the case of dispute over maritime claim for death and injury, the Plaintiffs Zhou Hongru, He Chunxiang, Zhou Shuying, Chen Juxiang filed a claim against the Defendants Shi Tianfa and Huang Yifan with the People’s Court of Baoan District, Shenzhen on Jan. 21, 2002. The People’s Court of Baoan District, Shenzhen, after accepting the case, transferred it to this court on July 12. This court accepted the case on July 31 and constituted a collegiate bench according to law. This court summoned the relevant parties for prejudicial exchange of evidence on October 15, and held an open court hearing on the same day. The Plaintiffs Zhou Hongru and Zhou Shuying and the agent ad litem of the four plaintiffs Liu Shaobo, the Defendant Shi Tianfa and his agent ad litem Xue Zeng, attended the court hearing. The Defendant Huang Yifan refused to appear at court without justifiable reasons though he had received the summons. Now the case has been finalized. The Plaintiffs Zhou Hongru, He Chunxiang, Zhou Shuying, Chen Juxiang claimed that: at about 1900 hrs on Dec. 12, 2001, Zhou Yonglong, the husband of the Plaintiff Zhou Shuying, manually discharged red bricks from a vessel of the Defendant Huang Yifan at the Baole Terminal of Baoan District, Shenzhen. As there was not any lightings on the vessel of Huang Yifan, and the Defendant Shi Tianfa, as the buyer of the red bricks, engaged in the business of construction materials without license and did not provide any protective measure for the discharge of the red bricks, Zhou Yonglong fell into water and died unfortunately. After the accident, the two defendants evaded their liability and did not care about the aftermath of Zhou Yonglong. The death of Zhou Yonglong was caused by the wrongful acts of the two defendants, therefore they shall undertake the relevant compensation liability. Zhou Yonglong is the son of Zhou Hongru and He Chunxiang and the grandson of Chen Juxiang, and the four plaintiffs are the relatives of the dead, therefore they are entitled to file a claim against the two defendants for bodily death and damage. According to the Regulations of Guangdong Province Insurance Regulations for Injury and Death during Service, the two defendants shall be jointly and severally liable for compensating the four plaintiffs for the funeral expenses, pension for the family of the deceased, grant-in-aid for the life of the family members of the deceased. The fault of the two defendant has caused mental damage to the four plaintiffs. Considering that the two defendants are both individuals engaging in business and have good economic condition, they shall compensate the four plaintiffs in term of the spiritual consolation money. The court is requested to order that the two defendants jointly and severally compensate the four plaintiffs for the funeral expenses of RMB41,520, the pension for the family of the deceased of RMB92,160, the grant-in-aid for the life of the family member of the deceased in RMB86,256, the spiritual consolation money in RMB200,000, totaling RMB419,936, and undertake the court fees in this case. The Plaintiff Zhou Hongru, He Chunxiang, Zhou Shuying, and Chen Juxiang provided the following evidences within the time limit for adducing evidence: 1. Medical Jurisprudence Certificate of Death; 2. Notice of Cremation; 3. Witness statement of Xiao Junfan and Liu Guoshan; 4. The permanent household registration cards for the four plaintiffs and the deceased Zhou Yonglong. The Defendant Shi Tianfa defended that: I. The Defendant Shi Tianfa never knew the deceased Zhou Yonglong. The Defendant Shi Tianfa, as the buyer of the red bricks, entrusted the foreman Xiao Junfan to carry the red bricks from the vessel to the bank. However, Zhou Yonglong was employed by Xiao Junfan, the porters and tools were not provided by the Defendant Shi Tianfa. In this case, between the Defendants Shi Tianfa and Xiao Junfan existed the undertaking relationship, between Xiao Junfan and Zhou Yonglong existed the employment relationship, but there was no legal relationship between the Defendants Shi Tianfa and Zhou Yonglong. The Defendant Shi Tianfa paid the price for the undertaken project to Xiao Junfan. The Defendant Shi Tianfa was not the beneficiary of the handling/moving performed by Zhou Yonglong, therefore he shall not undertake the compensation liability for the death of Zhou Yonglong. II. Whether Zhou Yonglong’s falling into water and death was because of disease, insufficient physical strength during the course of unloading or for other reasons, there is no direct evidence in this regard. The Plaintiff’s view that Zhou Yonglong’s falling into water due to lack of safety facilities lacks convincing supporting evidence. III. The claim in this case shall be handled by reference to the Methods for Handling Traffic Accidents in Roads. The funeral expenses and pension claimed by the Plaintiff are too high, and are without legal basis. The death compensation claimed by the Plaintiff already includes the spiritual consolation money, which should not be claimed again. The court is requested to reject the litigation requests filed by the four plaintiffs against the Defendant Shi Tianfa. The Defendant Shi Tianfa provided the following evidences within the time limit for adducing evidence: 1. Business License of Guanlan Guangqing Construction Materials Business Department of Baoan District, Shenzhen; 2. Certification issued by Guanlan Guangqing Construction Materials Business Department of Baoan District, Shenzhen. The Defendant Huang Yifan defended that: on December 11, 2001, M/V “Yue Yang Jiang 0019” owned by the Defendant Huang Yifan carried a shipment of red bricks in about 200 tons to the Xinle Terminal, Baoan District, Shenzhen. The Defendant Shi Tianfa telephoned the Defendant Huang Yifan, requiring to buy all the red bricks carried on the vessel of Huang Yifan. The Defendant Huang Yifan agreed. After achieving a consensus regarding the sale price of the red bricks in telephone, the Defendant Shi Tianfa requested the Defendant Huang Yifan to berth the vessel at the terminal contracted by him. After Huang Yifan berthed the vessel at the terminal, four porters came to the terminal to manually discharge the red bricks from the vessel in the evening. At about 0800 hrs on December 12, more than ten porters boarded the vessel to discharge the bricks. Until evening, two porters still remained on board to continue the discharge. At about 1900 hrs, one of the porters went to the toilet and found the other one missing after he came back. More than one hour later, the Defendant Shi Tianfa had the porter dragged out of the water more than ten meters away from the vessel by fishing net, but the porter was already dead. When the Defendants Huang Yifan and Shi Tianfa negotiated for selling the red bricks, they agreed that the Defendant Shi Tianfa should be responsible for the discharge. Later, the Defendant Shi Tianfa sought a foreman and paid him the charge for discharging the red bricks. It was up to the foreman to seek someone else to discharge the bricks manually, and the porters should take the labor service fee from the foreman. During the course of the discharge, the vessel has fully provided the lighting facilities. No accident occurred to the porters when they discharged the bricks the previous night. The Defendant Huang Yifan held that the death after the porter’s falling into water was because of the reason that he worked for too long time so that he was exhausted and scatterbrained, and then stumbled and dropped into the water. The accident was nothing to do with the Defendant Huang Yifan. The Defendant Huang Yifan provided the following evidences within the time limit for adducing evidence: 1. Witness statement of Liu Yunmei and Wei Yemin; 2. 2 pieces of photos. At the application of the Defendant Shi Tianfa, this court collected the following evidences from the Xinle Police Station of Baoan District, Shenzhen (hereinafter referred to as “Xinle Police Station”): 1. Submission for Immediately Handling of Zhou Yonglong’s Death Suffered at Work to the People’s Congress of Baoan District, Shenzhen by the Plaintiffs Zhou Hongru, He Chunxiang, Zhou Shuying; 2. Written Record of Inquiry made by Xinle Police Station to Shi Tianfa, Xiao Guoqiang, Huang Yifan, Zhou Shuying, Yu Lichang, Xiao Junfan; 3. Notice of Cremation; 4. Medical Jurisprudence Certificate of Death. The Defendant Shi Tianfa paid the investigation and evidence collection fee in amount of RMB500. The collegiate bench unanimously holds that: as the Defendant Huang Yifan has not attended the court hearing, it shall be deemed that he has waived the right of adducing evidence and cross-examination. The Defendant Shi Tianfa had no dissension from the evidences provided by the four Plaintiffs. The four Plaintiffs had no dissension from the evidences provided by the Defendant Shi Tianfa. The four Plaintiffs and the Defendant Shi Tianfa had no objection to the evidences collected by this court from Xinle Police Station. The said evidences, which the relevant parties have no dissension from and are related to this case, shall be accepted by this court. According to the said evidences that have been accepted and ascertained, the facts of this case are determined as follows: At 1000 hrs on December 11, 2001, M/V “Yue Yang Jiang 0019” owned by the Defendant Huang Yifan carried a consignment of red bricks from Zhongshan, Guangdong to Shenzhen. At 1800 hrs of that day, the vessel arrived at the Xinle Terminal of Bao’an District, Shenzhen. Later, the Defendant Huang Yifan contacted with the Defendant Shi Tianfa via telephone, and confirmed that the Defendant Huang Yifan should sell all the red bricks carried on the vessel to the Defendant Shi Tianfa, and the Defendant Shi Tianfa should be responsible for discharging the goods. The Defendant Huang Yifan berthed “Yue Yang Jiang 0019” at the terminal hired by the Defendant Shi Tianfa. In order to discharge the red bricks, the Defendant Shi Tianfa contacted with the foreman Xiao Junfan. They agreed that: the Defendant Shi Tianfa would transfer the matter of discharging the red bricks to Xiao Junfan for handling; the labor service was fully paid to Xiao Junfan on basis of RMB0.007 for each red brick discharged, and it was up to Xiao Junfan to seek someone else to discharge the red bricks by himself. The porter’s labor service fee should be counted and paid by Xiao Junfan according to the quantity of the bricks actually discharged. Xiao Junfan would take 10% commission out of the payment. Later, Xiao Junfan arranged 15 porters including Zhou Yonglong to manually discharge the bricks from the vessel. At about 0700 hrs on December 12, Zhou Yonglong and other porters began to manually convey the red bricks from “Yue Yang Jiang 0019” to the terminal stockyard designated by the Defendant Shi Tianfa. According to the statement of Yu Lichang, who was one of the porters discharging the bricks, each porter must accomplish the rated quota of about 10,000 bricks before they could leave. At about 1900 hrs of that day, other porters left the site after completing the rated quota. Zhou Yonglong and another porter Yu Lichang continued to manually discharge the bricks as they had not completed the rated quota. During the operation, Yu Lichang went to the toilet. After that, he met with the Defendant Shi Tianfa. The Defendant Shi Tianfa asked Yu Lichang why there was still a stow of red bricks on board undischarged. Yu Lichang then came back to the vessel to seek Zhou Yonglong and could not find him. However, he found that one plank linking the vessel and the terminal fallen into the water and one shoulder pole floating on the water nearby. The Defendant Shi Tianfa suspected that Zhou Yonglong had fallen into water. Then he asked the fishermen in the vicinity to recover Zhou Yonglong by fishing net. After Zhou Yonglong was netted up to the bank, he was already dead. There was no witness when Zhou Yonglong fell into the water. The plank used at the time of discharge was provided by the Defendant Huang Yifan. As the porter Yu Lichang said: In the evening there were lights at the time of discharge, and the wooden plank linking the vessel and the bank was 3-4 meters long and about 1 chi wide. The Defendant Shi Tianfa stated that: when the operation was carried out in the evening at his terminal, there were neither lighting facilities nor other safety protective measures provided for the discharge. According to the Medical Jurisprudence Certificate of Death issued by Shenzhen Public Security Bureau Bao’an Branch Office: Zhou Yonglong died from drowning at Anle Terminal at the seashore of the 38th Quarter of Baocheng on December 12, 2001. Shenzhen Public Security Bureau Bao’an Branch Office issued the Notice of Cremation on December 17, 2001, informing that Shenzhen Funeral Parlor was allowed to cremate the corpse of Zhou Yonglong. On December 17, when inquiring the Plaintiff Zhou Shuying, Xinle Police Station informed her that she could handle cremation of Zhou Yonglong’s corpse against the Notice of Corpse Cremation. At the court hearing, the four Plaintiffs claimed that: due to economic difficulty, the corpse of Zhou Yonglong was still lying in Shenzhen Funeral Parlor without cremation, and corpse storage cost at RMB100/day should be paid. The household register provided by the four Plaintiffs state that: Zhou Yonglong was born on May 24, 1976. The Plaintiff Zhou Hongru is the father of Zhou Yonglong, the Plaintiff He Chunxiang is his mother, the Plaintiff Zhou Shuying is his wife, the Plaintiff Chen Juxiang is his grandmother. It is otherwise found out that: the Defendant Shi Tianfa was affiliated to Guanlan Guangqing Construction Materials Business Department of Bao’an District, Shenzhen and engaged in the business of construction materials at the Xinle Terminal. On December 24, 2001, the Plaintiffs Zhou Hongru, He Chunxiang and Zhou Shuying applied for labor arbitration with Shenzhen Bao’an District Labor Dispute Arbitration Commission in respect of the dispute under this case. On the same day, Shenzhen Bao’an District Labor Dispute Arbitration Commission issued the Notice of Refusal of acceptance of the case to refuse handling of the application. The collegiate bench unanimously holds that: on the ground that the fault of the two Defendants had caused the death of their family member, the four Plaintiffs applied to this court to order that the two defendants be jointly and severally liable for the compensation of death and damage. Therefore, this case is a tort dispute over compensation for death and injury. The Defendant Shi Tianfa was responsible for discharging the goods and undertaking the relevant expenses. Although Zhou Yonglong was employed by the foreman Xiao Junfan, the latter only took 10% out of the labor service fee. Therefore, the labor service fee for the porters was actually paid by the Defendant Shi Tianfa. Xiao Junfan was the entrustee and the Defendant Shi Taifa was the entrustor. The Defendant Shi Tianfa employed the porters including Zhou Yonglong through Xiao Junfan to carry out the discharging operation. The Defendant Shi Tianfa was the employer, Zhou Yonglong was the employee. There existed the factual employment relationship between the Defendant Shi Tianfa and Zhou Yonglong. Therefore, the Defendant Shi Tianfa’s allegation that he has not the employment relationship with Zhou Yonglong will not be supported. To accomplish the discharge operation, the Defendant Shi Tianfa temporarily employed some porters to manually discharge the bricks. Therefore he had the obligation to provide proper safety protective measures and the working environment suitable for the operation, such as setting up protective grating or guard and net etc.. However, he failed to do so. As the employer, he should have ensured the personal safety of the porters during the operation, but he did not fulfill the obligation but required the porters to work with overload for a long time. The fault committed by the Defendant Shi Tianfa had causal relationship with the process from falling into water and drowning until the death of Zhou Yonglong, therefore he shall undertake the relevant tort liability for compensation. The Defendant Huang Yifan was the provider of the plank, he should have ensured the safety in using the plank. When Zhou Yonglong fell into water, the plank also slipped into the water. This proves that the plank was not safely used. In the meantime, as the owner of the vessel, the Defendant Huang Yifan had the obligation to protect the safety of the porters during the course of their workings on the vessel. The Defendant Huang Yifan should also undertake the relevant liability corresponding to his fault for the drowning and death of Zhou Yonglong. As the Defendants Shi Tianfa and Huang Yifan committed the fault to the same degree, they shall undertake the compensation liability evenly. In view that the death of Zhou Yonglong was caused by the joint infringement by the Defendants Shi Tianfa and Huang Yifan, according to Article 130 of the General Principles of the Civil Law of the PRC, the Defendants Shi Tianfa and Huang Yifan should undertake the joint and several liability. The four Plaintiffs filed the claim on the ground that the infringement committed by the two Defendants has incurred losses to them. Therefore, the settlement of the dispute in this case shall apply the relevant provisions of the General Principles of the Civil Law of the PRC relating to infringement. The compensation standard in this case may refer to and apply the Methods for Handling Traffic Accidents in Roads promulgated by the State Council. The Defendant Shi Tianfa has not the qualification as an employing unit, thus relations between Zhou Yonglong and him was merely the temporary employment relationship. There did not exist the labor relationship between the Defendants Huang Yifan and Zhou Yonglong either. Therefore, it is without legal basis for the four Plaintiffs to request that the Guangdong Province Insurance Regulations for Injury and Death During Service be applicable in settling this case, therefore such request will not be supported. Zhou Yonglong, the family member of the Plaintiff, was born on May 24, 1976 and died on December 12, 2001. He was 25 years and 6 months old at the time of his death. By reference to the Methods for Handling Traffic Accidents in Roads, the compensation for the death of Zhou Yonglong shall be counted for 10 years on basis of the average cost of living at the place where the accident took place. The annual average cost of living per capita provided in the Standard of Guangdong Province for Calculating Damages in Traffic Accidents in Roads, 2001 is RMB8,016.91, therefore the compensation for the death of Zhou Yonglong is RMB80,169.10. The funeral expenses for Zhou Yonglong shall be paid according to the standard of funeral fee at the place where the accident took place. Therefore, the funeral expenses in this case shall be ascertained according to the standard RMB4,000 per person as provided in the Standard of Guangdong Province for Calculating Damages in Traffic Accidents in Roads, 2001. As the competent authorities have notified the family members of the dead to handle the funeral affairs, but his family members failed to do so within the time limit. Therefore, the overdue cost for storage of the corpse shall be undertaken by the family members of the dead. The part beyond the funeral fee of RMB4,000 claimed by the Plaintiffs will not be supported. The Plaintiff Zhou Hongru is the father of Zhou Yonglong, the Plaintiff He Chunxiang is his mother, the Plaintiff Zhou Shuying is his wife. According to Article 10 of the Succession Law of the PRC, the Plaintiffs Zhou Hongru, He Chunxiang and Zhou Shuying are the successors in the first priority, who have the right to claim for the compensations and funeral expenses for the death of Zhou Yonglong. When Zhou Yonglong was dead, Zhou Hongru was at the age of 51, He Chunxiang at the age of 48. As the Plaintiffs Zhou Hongru, He Chunxiang and Zhou Shuying failed to provide evidence to prove that they had lost physical ability to work and had no other sources to make a living, therefore the said three Plaintiffs cannot apply for the cost of living of the fostered. The Plaintiff Chen Juxiang is the grandmother of Zhou Yonglong. When the Plaintiff Zhou Hongru is still alive, Zhou Yonglong has no obligation to foster Chen Juxiang. Therefore, the Plaintiff Chen Juxiang is not entitled to claim for the cost of living of the fostered either. Although the death compensation as ascertained above is of the nature of spiritual consolation, considering that Zhou Yonglong is the only son of the Plaintiffs Zhou Hongru and He Chunxiang and the main labor power of the family, and also taking the actual situation of this case into consideration, after the claim for the death compensation is supported, it is still difficult to remedy the spiritual harm to the Plaintiffs Zhou Hongru, He Chunxiang and Zhou Shuying due to the accident. Therefore, according to Article 10 of the Explanation of the Supreme People’s Court on Certain Issues Concerning the Ascertainment of Civil Tort Liability for Compensation of Spiritual Damage, a sum of RMB30,000 as the spiritual consolation money shall be paid to the Plaintiffs Zhou Hongru, He Chunxiang and Zhou Shuying after the actual situation is taken into consideration, but the excessive part claimed will not be supported. The Plaintiff Chen Juxiang is the successor of Zhou Yonglong in the second priority. When there are the successors in the first priority, the Plaintiff Chen Juxiang is not entitled to claim for the death compensation, funeral fee and spiritual consolation money of Zhou Yonglong. Therefore, the litigation request of the Plaintiff Chen Juxiang against the Defendants Shi Tianfa and Huang Yifan shall be rejected. Pursuant to Article 119, Article 130 and Article 131 of the General Principles of the Civil Law of the PRC, the judgement is rendered as follows: I. The Defendants Shi Tianfa, Huang Yifan shall be jointly and severally liable for compensating the Plaintiffs Zhou Hongru, He Chunxiang and Zhou Shuying for the death compensation of RMB80,169.10, funeral expenses of RMB4,000 and the spiritual consolation money of RMB30,000 for the death of Zhou Yonglong; II. The other litigation requests of the Plaintiffs Zhou Hongru, He Chunxiang and Zhou Shuying shall be rejected; III. The litigation requests of the Plaintiff Chen Juxiang against the Defendants Shi Tianfa and Huang Yifan shall be rejected. The case acceptance fee in this case is RMB5,560, of which a sum of RMB4,048 shall be undertaken by the Plaintiffs Zhou Hongru, He Chunxiang, Zhou Shuying and Chen Juxiang, and a sum of RMB1,512 shall be jointly and severally undertaken by the Defendants Shi Tianfa and Huang Yifan. The investigation and evidence collection fee of RMB500 shall be undertaken by the Defendant Shi Tianfa. The above obligation for payment shall be accomplished within 10 days after this judgement takes effect. If any party is unsatisfied with this judgement, it may submit a statement of appeal to this court within 15 days upon service of this judgement, together with copies according to the number of the opposite parties. The appellate court shall be the Higher People’s Court of Guangdong Province. Presiding Judge: Wu Zili Judge: Chen Weiguo Judge: Weng Ziming December 9, 2002 Court Clerk: Yang Qian

Guangzhou Maritime Court Civil Judgement (2001)GHFCZ No.215 Plaintiff: China Telecom Corporation Address: No.33, Er Long Road, Xicheng District, Beijing Legal Rep.: Zhou Deqiang, general manager Agent ad Litem: Li Hongzhi, Zhang Wei, lawyers of Beijing China Base Law Firm Defendant: Shanghai Xin Hai Tian Shipping Co. Ltd. Address: 11/F, Double Dragon Building, No.974, Wai Ma Road, Shanghai Legal Rep.: Fang Weijian, chairman of the board of directors Agent ad Litem: Lin Qiming, deputy general manager of Shanghai Xin Hai Tian Shipping Co. Ltd. Agent ad Litem: Cai Cunqiang, lawyer of Shanghai Hua Li Law Firm With respect to the case of dispute between the Plaintiff China Telecom Corporation and the Defendant Shanghai Xin Hai Tian Shipping Co. Ltd. over damage to underwater facilities due to ship’s contact , this court accepted the case on September 28, 2001 and constituted the collegiate bench according to law. The court arranged pre-trial exchange of evidences on January 28, January 29, June 17, 2002 respectively, and held open court hearings on June 18 and July 30 respectively. Li Hongji and Zhang Wei, the agents ad litem of the Plaintiff China Telecom Corporation, Cai Cunqiang and Lin Qiming, the agents ad litem of the Defendant Shanghai Xin Hai Tian Shipping Co. Ltd., attended the court hearing. Now the case has been finalized. The Plaintiff China Telecom claimed that: on September 20, 2001, M/V “An Da Hai” owned by the Defendant, due to wrongful choice of an anchorage and failure in applying good seamanship to avoid the typhoon and prevent anchor dragging, hooked and broke the Sino-US seabed optic cable and the Asia-Europe seabed optic cable at a spot with about 20 kilometers from the Shantou landing station of the cables, causing interruption of the communication through the optic cable. After the seabed optic cables were broken, the Plaintiff input a large volume of manpower and material resources to repair them. The accident also greatly affected the life expectancy and communication quality of the optic cables. The Defendant has constituted infringement upon the Plaintiff. It shall undertake the liability for indemnifying the Plaintiff against the loss arising therefrom according to the Maritime Code of the PRC and the relevant laws and regulations. The court is requested to order that the Defendant compensate the Plaintiff for the economic loss of RMB40,000,000 and undertake the court fees and all other expenses in this case. The Plaintiff provided the following evidences within the time limit for adducing evidence: 1. The logbook of Shantou Seabed Cable Landing Station; 2. Record on failure of the facilities; 3. Table of registration on monitoring the routes of international seabed cables; 4. Estimation report on the repair cost for the damaged seabed cables; 5. Analytical report on the technical and economic influence of the interruption of the Sino-US and Asia-Europe seabed cables; 6. Public announcement of the State Ocean Bureau; 7. Route map and brief introduction of the Asia-Europe seabed optic cable; 8. Route map and brief introduction of the Sino-US seabed optic cables; 9. Location map of the Asia-Europe and Sino-US seabed cables at waters of Shantou; 10. Maritime Announcements 996(P)/99, 2239(P)/00 and 4886/2000 published by the British Waterway Measuring Bureau; 11. The English sea charts No.854 and No.1968; 12. E-mails concerning the location of the breakpoints of the seabed cables; 13. Videos and printed photos regarding the sea conditions which were taken at Shantou Seabed Cable Landing Station after the accident; 14. Photos taken at Shantou Seabed Cable Landing Station; 15. Civil Judgement (1997)QHFSCZ No.64; 16. Weather forecast; 17. Invoice for the cost of repairing the seabed cables; 18. Agreement on construction and maintenance of the Asia-Europe seabed cable system; 19. Agreement on construction and maintenance of the Sino-US cable network; 20. The Process of Repairing Shantou Seabed Cables and the Relevant Expenses issued by the Sino-British Seabed System Co. Ltd.; 21. Certification on Telegraphic Remittance of the costs for repairing seabed cables. The Defendant Shanghai Xin Hai Tian Shipping Co. Ltd. defended that: the Plaintiff did not provide the evidences that can prove that “An Da Hai” hooked and broke the seabed cables. The Plaintiff is groundless at all to claim that M/V “An Da Hai” owned by the Defendant hooked and broke the seabed cables when she was at anchor at the waters of Shantou Qiwang Bay. As the owner and manager of the Sino-US seabed cable and the Asia-Europe seabed cable in the Chinese region, the Plaintiff laid and used the seabed cables at the Shantou waters, but it did not report the actions accordingly to the relevant departments and authorities according to the relevant Chinese laws and regulations for the purpose of the relevant departments and authorities to publish the notice so that plotting can be made on the sea chart. Therefore, the hooking damage of the seabed cables was caused by the fault of the Plaintiff. The responsibility shall be undertaken by the Plaintiff. The Plaintiff has not provided the survey report on the hooking damage of the seabed cables, report on accomplishment of the repair and the basis for paying the repair costs, therefore its claim is without basis. The court is requested to dismiss the litigation requests filed by the Plaintiff against the Defendant. The Defendant Shanghai Xin Hai Tian Shipping Co. Ltd. provided the following evidences within the time limit for adducing evidence: 1. Certificate of Nationality, Certificate of Registry of Ownership and other ship survey certificates of M/V “An Da Hai”; 2. Sea Chart No.15100 for the waters of Shantou Qiwang Bay before the seabed cables sustained the hooking damage; 3. Certificates of competence of the master and some crewmembers of M/V “An Da Hai”; 4. Report addressed by the master of “An Da Hai” to MSA Shantou on suspicion of damaging the seabed cables; 5. Relevant news reports; 6. Index of provisional notices; 7. Relevant administrative regulations and administrative methods published by relevant Chinese administrative departments; 8. Sea Chart No.15100 published after the seabed cables sustained the hooking damage; 9. Ship’s position chart when “An Da Hai” was at anchor; 10. Navigational Warning No.0183; 11. Distribution and movement chart for other ships when the seabed cables sustained the hooking damage; 12. Explanation on the symbols of the relevant cables on the sea chart; 13. Letter of the Defendant to MSA Shantou; 14. Agreement on underwater probing of the anchor of “An Da Hai”; 15. Quotation for the underwater probing of the anchor of “An Da Hai”; 16. Distribution chart for the nodes of the seabed cables at Shantou; 17. Photos and construction and layout plan of “An Da Hai”; 18. Explanation on the type of “An Da Hai”. The Defendant also arranged the master Huang Dewei, the second officer Zhang Gongren, the third officer Liu Haiting of M/V “An Da Hai” to attend the court hearing as witness. According to the Plaintiff’s application for pre-trial preservation of maritime evidences, this court made a ruling on September 28, 2001 to collect the copies of the engine logbooks, telegraph records, deck logbooks several days before and after September 20, 2001 and sea charts of “An Da Hai”. During the course of the litigation, at the application of the Plaintiff, this court collected the report on suspicion of damaging the seabed cables that the master of “An Da Hai” addressed to MSA Shantou and the written record of investigation and inquiry that MSA Shantou made to the master, chief officer and carpenter of M/V “An Da Hai”. At the application of the Defendant, this court collected from the Unit 91162 of the PLA a copy of the certification on the sea conditions observed by the Unit on the day the seabed cables sustained the hooking damage. Upon examination, it is ascertained that the Plaintiff and the Defendant have no dissension from the following evidences and facts: the Asia-Europe seabed cable system (SEA-ME-WE3) is an intercontinental optic cable communication system for which the Plaintiff has participated in the construction. It was delivered for use in 1999. The cable has 33 landing stations in 39 countries and regions. The landing stations in China are set up at Shantou, Guangdong and Chongming Island, Shanghai respectively. Among them, the Shantou seabed cable landing station is a trunk line station, which is directly linked with two neighboring trunk line stations (at Okinawa, Japan and Singapore). The Asia-Europe seabed cable system is consisted of Section T and Section S, among which Section S2 is the interface of Section S of the cable system at the terminals of Shantou, Shenshui Bay, Taipa, Ba Da Yan, Danang, Tungku, Feng Sheng and Tuas. The Plaintiff is the maintenance supervisor for the part of the seabed cable linking China. According to the agreement on construction and maintenance of the Asia-Europe seabed cable system, when the cable or some part of it is damaged, the corresponding maintenance supervisor may claim for the compensation, lodge an action or initiate other legal proceedings in its own name on behalf of all parties. The Sino-US seabed cable system is an international optic cable lying across the Pacific Ocean the construction of which was initiated jointly by the Defendant and the main telecommunications companies of Japan and the United States. It was handed over for use in 1999. The cable has 9 landing points in total. The landing stations in China are set up at Shantou, Guangdong and Chongming Island, Shanghai respectively. The Sino-US seabed cable system is composed of Sections E, N, S, T and W, among which Section S1 is the part of Section S between the cable network interface of Shantou Seabed landing station and SBU1. Section W3 is the part of Section W between Shantou seabed cable landing station and WBU. The Plaintiff is the initiator of the Sino-US seabed cable system and the maintenance supervisor of the section linking to China. According to the agreement on construction and maintenance of the Sino-US seabed cable system, when the cable or some part of it is damaged, the corresponding maintenance supervisor may claim for compensation, lodge an action or initiate other petitions in its own name on behalf of all parties. On September 1, 1998, the State Ocean Bureau published a public notice in China Ocean Report regarding that the Sino-US seabed cable system was to be laid at the territorial waters within the jurisdiction of China. The Navigational Notice 996(P)/00 published by the British Waterway Measuring Bureau discloses the routes that the Asia-Europe seabed cable will be laid at the Shantou waters. On June 1, 2000, the British Waterway Measuring Bureau published the Public Notice 2239(P)/00, disclosing the routes that the Asia-Europe seabed cable will be laid at the Shantou waters and the sea chart of the waters affected. In the same year, the British Waterway Measuring Bureau published the Public Notice NO.4886, canceling the Public Notices 996(P)/99 and 2239(P)/00 but re-publishing the location of the Asia-Europe seabed cable at the Shantou waters and the sea chart of the waters affected. The English sea charts No.854 and No.1968 published by the British Waterway Measuring Bureau displayed the laid location, routes and landing points of the Asia-Europe seabed cable system at Shantou waters. After the Sino-US seabed cable and the Asia-Europe seabed cable were laid, the competent maritime administration of China has not issued the relevant navigational notice, and the Chinese sea chart published by the relevant Chinese departments has made no remarks of the seabed cables either. According to the duty logbook of the Plaintiff’s Shantou seabed cable landing station, at 1025 hrs on September 20, 2001, Section S of the Sino-US seabed cable sustained an interruption. The breakpoint was about 10.182km from Shantou. At 1026 hrs, Section W of the Sino-US seabed cable sustained an interruption, and the breakpoint was 10.062km from Shantou. At 1028 hrs, Section S2 of the Asia-Europe seabed cable sustained an interruption, and the breakpoint was 1.43km from Shantou. The staffs of Shantou seabed cable landing station made videos with video camera of the sea conditions in the Qiwang Bay in the vicinity of the landing station at about 1230 hrs. The video shows that the wind force was high at that moment; there was a vessel not far away from the landing station, whose bridge was at stern, with high mast in the middle and the fore quarters respectively. The Plaintiff alleged that the vessel was “An Da Hai” owned by the Defendant. After the vessel damaged the seabed cables she was then blown to a place quite close to the bank. “An Da Hai” is a steel bulk carrier, built in 1974, 174.07m in length, 25.45m in width, 14.02m in depth, with gross tonnage 18,247 and net tonnage 9,643. The owner is the Defendant. The vessel has no high masts. Her shape and size are obviously different from the one shown in the video taken by the staffs of Shantou seabed cable landing station. They are not identical to each other. On September 17, 2001, “An Da Hai” encountered a typhoon when she was on the way from Fangcheng port to a northern port of China. She dropped anchor at the waters near Qiwang Bay south to Shantou port to take shelter from the typhoon. On September 20, the typhoon landed between Shantou and Lufeng. At 0800 hrs, the center of the typhoon was located at the sea surface about 70km east-south-east to Shantou. The highest scale of wind force around the wind center was 11, and the wind force was on the increase. According to the deck logbook of “An Da Hai”, at 0800 hrs of that day, the anchor position of “An Da Hai” was at 23009’.84N/116044’.58E. At that moment, there was heavy rain and strong wind above the sea, accompanied with rough waves. The vessel additionally dropped the starboard anchor. The anchor position at 1000 hrs was at 23009’.93N/116044’.12E. At 1200 hrs, she was at 23009’.97N/116044’.14E. At 1400 hrs, she was at 23009’.9N/116044’.1. At 1540 hrs, as the typhoon force decreased, to prevent the two anchors from interwined, “An Da Hai” lifted the starboard anchor. The vessel’s position at 1600 hrs was same as that at 1400 hrs. During this period the anchor positions of “An Da Hai” were always located at the area through which routes of the Sino-US seabed cable and the Asia-Europe seabed cable went. The master Huang Dewei, the chief officer Wu Fahong of “An Da Hai”, when being investigated by MSA Shantou, the second officer Zhang Gangren, when giving witness statement at the court hearing, alleged that: when “An Da Hai” was at anchor at the waters near Qiwang Bay, the second officer had used pencil to mark the locations of some seabed cables on the sea chart. Both the master and the chief officer knew that there were seabed cables in the vicinity of the anchor position of the vessel, but they considered that to anchor at that location would not damage the seabed cables. Unit 91162 of the PLA issued a certification to this court on March 12, 2002, stating that: at 0830 hrs on September 20, 2001, the Unit received a notice from the maritime safety administration saying that the international optic cables had been interrupted, and the Unit was requested to search whether there were any target vessels berthing in the seabed cable area. After searching the sea area, a target vessel numbered 835pi was found berthing in that area, and two medium-sized target vessels numbered 857pi and 867pi were sailing normally. It was observed that the movements of the said three target vessels were as follows: the target vessel numbered 835pi berthed at 1242 hrs on September 18. She lifted anchor and sailed northward on September 24. The anchor position of the vessel was at 2250 from the observation point in a distance of 20.10 nautical miles. The vessel numbered 857pi entered the sea area on September 20. Between 0743 hrs and 1900 hrs, she was located at 1630-2230 of the observation point and sailing within an area in the distance of 23.50-39.40 nautical miles from the observation point. The vessel was seen at 2230 of the observation point at 1900 hrs, berthing at the position 24.10 nautical miles away. The vessel numbered 867pi entered the sea area at 1054 hrs from the observation point. She was located at 2220-2340 from 1054 hrs to 1900 hrs and sailing in an area in the distance of 33.10-49.40 nautical miles away. The vessel berthed at 1900 hrs. The vessel numbered 835pi was just the vessel “An Da Hai”. The sailing scope of the vessel numbered 857pi was also located in the routing region of the Sino-US seabed cable and the Asia-Europe seabed cable. The collegiate bench ascertained and accepted the above evidences and facts. The Plaintiff has provided one copy of the registration table for monitoring the routing of international seabed cables affixed with the chop of the Unit 91162 of the PLA, which states that: the Unit received a notice at 1030 hrs on September 20, 2001, informing that the Sino-US seabed cable might be interrupted at the point 20-30km away from Shantou and assistance was required. At 1050 hrs, after searching the sea, the Unit found that there was a Chinese merchant ship berthing at 23009’.9B/116044’.00E. On basis of the registration table the Plaintiff alleged that when the Sino-US seabed cable and the Asia-Europe seabed cable were interrupted, at the waters where the accident occurred there was only one vessel, that is, M/V “An Da Hai”. The Defendant held that the registration table was not issued by the Unit 91162 of the PLA, and the contents of the registration table was not in line with the facts, therefore it refused to confirm and verify the registration table. The collegiate bench holds that as there is no original of the registration table submitted by the Plaintiff for verification with the copy, and the contents are not in line with the certification provided by the Unit 91162 of the PLA to this court and with the video of the Shantou seabed cable landing station provided by the Plaintiff, therefore the registration table will not be adopted. After the Sino-US seabed cable and the Asia-Europe seabed cable were interrupted, the Plaintiff entrusted Sino-British Seabed System Co. Ltd. to repair the cables. The Process of Repairing Shantou Seabed Cables and the Relevant Expenses issued by the Sino-British Seabed System Co. Ltd. states that: Sino-British Seabed System Co. Ltd. repaired the interrupted Sino-US seabed cable and the Asia-Europe seabed cable during the period from September 23, 2001 to May 9, 2002, and the repair cost was USD4,612,435.50 in total. The Process of Repairing Shantou Seabed Cables and the Relevant Expenses detailed the items of the repair, the amount of the repair cost, the invoice number and the payers of the repair cost. The payers of the repair cost are the six companies including the Plaintiff and Chunghwa Telecom Limited, Korea Telecom. The repair cost paid by the Plaintiff was USD3,472,119.18. The invoices provided by the Plaintiff for the repair cost and issued by Sino-British Seabed System Co. Ltd. to the said payers, have the same numbers and amounts as those listed in the Process of Repairing Shantou Seabed Cables and the Relevant Expenses. In addition, the Plaintiff also provided the bank’s certification of payment to prove that it had paid Sino-British Seabed System Co. Ltd. the repair cost of RMB28,961,779.59. The Defendant had no dissension from the truthfulness of the said evidences. However, it considered that as the Plaintiff had not provided the relevant survey report, therefore it was unable to confirm whether the payment of the said repair cost was reasonable. The collegiate bench holds that the Process of Repairing Shantou Seabed Cables and the Relevant Expenses, the invoice for the repair cost issued by the Sino-British Seabed System Co. Ltd. and the bank’s certification for the Plaintiff’s payment of the repair cost can be corroborated with each other. Under the circumstance that the Defendant failed to provide sufficient contrary evidences, the amount of the repair cost stated in the said evidence shall be confirmed and accepted, that is, the cost for repairing the interrupted Sino-US seabed cable and Asia-Europe seabed cable amount to USD4,612,435.50. According to the Analytical Report on the Technical and Economic Influence resulting from the Interruption of the Sino-US and Asia-Europe Seabed Cables issued by the Design Institute of Post and Telecom of the Ministry of Information Industry on January 21, 2002, the Sino-US seabed cable and the Asia-Europe seabed cable were interrupted on September 20, 2001. After testing, it was ascertained that the points of failure were located at about 1.30km from Shantou. The points of failure in the three optic cables were basically on a straight line. According to the photo and analysis on basis of experience on the breakpoints of the Shantou seabed cables in failure, it is most probable that the interruption of the seabed cables was caused by direct hitting of the anchor dropped by the vessel or the cables were hooked at the time of anchor dragging. According to analysis, due to the interruption and repair of the Sino-US seabed cable and the Asia-Europe seabed cable, the loss in respect of quality of the optic cables was estimated to be USD2,518,085. The Defendant held that the analytical report lacked scientific basis and could not be taken as the evidence to support the loss sustained by the Plaintiff. The collegiate bench holds that: under the circumstance that the Defendant could not provide contrary evidences, the fact of the analytical report issued by the Design Institute of Post and Telecom of the Ministry of Information Industry on January 21, 2002 shall be confirmed and accepted. It is otherwise found out that: when the Plaintiff applied to this court for pre-trial preservation of maritime evidences, it prepaid the application fee of RMB5,000 and the execution fee of RMB20,000 to this court. In the course of litigation, the Plaintiff and the Defendant applied to this court for investigation and collection of the evidences, and prepaid the investigation and evidence collection fees of RMB2,000 and RMB3,000 respectively to this court. The members of the collegiate bench unanimously hold that: this case is a dispute over damage to underwater facilities through contact of ship. The Asia-Europe seabed cable system and the Sino-US seabed cable system involved in this case were jointly constructed by the Plaintiff and the relevant parties from other countries or regions. They are the international optic cable communication system linking China and other countries, which is related to the rights and interests of the relevant parties from various countries and regions. As the two optic cable systems sustained damage within China, that is, the act of infringement took place in China, according to Article 146 of the General Principles of the Civil Law of the PRC which provides that the law of the place where an infringing act is committed shall be applied in handling compensation claims for any damage caused by the act, so the Chinese laws shall be applicable in settling this case. As the joint owner of the Sino-US seabed cable system and the Asia-Europe seabed cable system and the maintenance supervisor of the section linking China, according to the agreement on construction and maintenance of the cable system, when the cable under its maintenance sustains damage, the Plaintiff has the right to lodge a claim in its own name on behalf of all relevant parties. In this case, the damage to the seabed cable falls within the scope of the Plaintiff’s maintenance and supervision. Therefore, the Plaintiff has the right to lodge compensation claims in its own name in respect of the damage to the seabed cable. The Plaintiff claimed that “An Da Hai” owned by the Defendant was the vessel causing the damage to the seabed cables in this case and provided evidences in this regard according to law. According to the video provided by the Plaintiff, which was taken at the waters nearby after the accident of the damage to seabed cables took place, the vessel found in the video is obviously not the vessel “An Da Hai”. Furthermore, according to the observation of the Unit 91162 of the PLA, when the seabed cables sustained the damage, besides “An Da Hai” which was at anchor within the routing region of the seabed cables, there was another vessel sailing against the typhoon. The said facts reveal that: at the moment when the Asia-Europe seabed cable system and the Sino-US seabed cable system sustained damage, there were at least two or three vessels including “An Da Hai” sailing or berthing within the routing region of the seabed cables. These vessel were all possible to cause damage to the seabed cables. Although the crewmembers of “An Da Hai” were aware that there were seabed cables in the vicinity of the anchor position of the vessel, and in fact the vessel was anchored in the routing region of the Asia-Europe seabed cable and the Sino-US seabed cable systems, this can only show that “An Da Hai” had the possibility to cause the damage, but it cannot ascertain that “An Da Hai” is just the accident-causing vessel. Therefore, the Plaintiff’s claim that the vessel “An Da Hai” owned by the Defendant caused damage to the seabed cables in this case is lack of sufficient evidential basis and is untenable. It is without factual and legal basis for the Plaintiff to claim that the Defendant should compensate for the loss of the seabed cables, therefore such claim is not supported by this court and will be rejected according to law. Pursuant to paragraph 1 of Article 64 of the Civil Procedure Law of the PRC, the judgement is rendered as follows: The litigation requests filed by China Telecom Corporation against the Defendant Shanghai Xin Hai Tian Shipping Co. Ltd. shall be dismissed. The case acceptance fee in this case is in sum of RMB211,560. The application fee of RMB5,000 prepaid by the Plaintiff for pre-trial preservation of maritime evidences, the execution fee of RMB20,000, the investigation and evidence collection fee of RMB2,000, shall be undertaken by the Plaintiff. The investigation and evidence collection fee of RMB3,000 prepaid by the Defendant Shanghai Xin Hai Tian Shipping Co. Ltd. shall be undertaken by the Defendant. If any party is not satisfied with this judgement, it may submit a statement of appeal to this court within 15 days upon service of this judgement, together with copies according to the number of the opposite parties. The appellate court shall be the Higher People’s Court of Guangdong Province. Presiding Judge: Zhan Simin Judge: Chen Weiguo Judge: Xu Yuanping November 13, 2002 Assistant Judge: Pan Guancong Court Clerk: Zhu Mingfang

Guangzhou Maritime Court Civil Judgement (2000)GHFSZ No.101 Plaintiff: FAW-Volkswagen Automotive Co, Ltd Address: 149-1, Dong Feng Da Jie, Changchun, Jilin Province Agent ad Litem: Feng Jiancheng, lawyer of Guangzhou Maritime Law Firm Agent ad Litem: Tang Jihai, staff of Guangzhou Maritime Law Firm Defendant: Lin Wucai, male, born on October 5, 1953, Han Nationality, residing at No.169, Xi Jiang Road, Teng Cheng Town, Teng County, Wuzhou, Guangxi Zhuang Nationality Autonomous Region Agent ad Litem: Zeng Hanping, lawyer of Jia Da Law Firm Defendant: Wuzhou Guidong Shipping Company. Address: No.59, Nan Ti Road, Wuzhou, Guangxi Zhuang Nationality Autonomous Region Legal Representative: Zhong Gang, manager Agent ad Litem: Zeng Hanping, lawyer of Jia Da Law Firm Defendant: Wuzhou Navigational Management Department. Address: No.127, Xin Xing Er Road, Wuzhou, Guangxi Zhuang Nationality Autonomous Region Legal Representative: Su Huiying, director Agent ad Litem: Zeng Hanping, lawyer of Jia Da Law Firm With respect to the case of dispute over damages due to ship explosion, which was filed by the Plaintiff FAW-Volkswagen Automotive Co, Ltd. (hereinafter referred to as “FAW-Volkswagen”) against the Defendants Lin Wucai, Wuzhou Guidong Shipping Company (hereinafter referred to as “Guidong Co.”), Wuzhou Communications Industrial Development Company (hereinafter referred to as “Communications Co.”), Wuzhou Navigational Management Department (hereinafter referred to as “Wuzhou Department”), this court accepted the case on October 19, 2000 and constituted the collegiate bench according to law. The court convened the relevant parties to carry out pre-trial exchange of evidences on November 22, and held an open court hearing on November 23. Feng Jiancheng and Tang Jihai, the agents ad litem of the Plaintiff FAW-Volkswagen Automotive Co, Ltd., Zeng Hanping, the agent ad litem of the Defendant Lin Wucai, Zhong Gang, the legal representative of the Defendant Guidong Co., Zeng Hanping, the agent ad litem of Guidong Co. and the Defendant Communications Co. and the Defendant Wuzhou Department, Su Huiying, the legal representative of the Defendant Wuzhou Department, attended the court hearing. Now the case has been finalized. The Plaintiff FAW-Volkswagen Automotive Co, Ltd claimed that: at about 1740 hrs of March 4, 2000, the Tanker “Gui Dong You 05” owned by the Defendant Lin Wucai sustained a big explosion when she berthed and repaired at the Haixinsha Terminal of Guangzhou port. Part wreck of the Tanker flew to the terminal, causing various degree of damage to some Plaintiff’s vehicles parking at the Haixinsha Terminal. Guangzhou Public Security Bureau found through investigation that the Tanker had carried methyl alcohol as cargo before the explosion, which is combustible and detonable. The cause of the explosion was that the operation was carried out on board with naked fire which ignited the remaining gas of methyl alcohol. According the relevant regulations of the State communications department on safety management of tankers, when tanker carries out a welding operation with naked fire, she must carry out tank cleaning, gas removing and explosion test according to the regulations, and file written application to the local competent department. The operation can be carried out only after the approval has been obtained. However, owner of the vessel, i.e. the Defendant Lin Wucai, and the operator, i.e. the Defendant Guidong Company, have violated the legal obligations. Without going through the said procedures, they carried out the repair with naked fire on the Tanker, resulting in the occurrence of the explosion. The Defendants Lin Wucai and Guidong Company violated Article 16 of the Administrative Regulations on Fire Control of Carrying Vessels and Article 17 of the Implementing Methods of Supervision on Fire Control at Ports, therefore they shall undertake full responsibility for the explosion of the Tanker. In this case, the economic loss of the damaged vehicles were appraised by Guangzhou Pricing Office at the entrustment of Guangzhou Public Security Bureau. The result of appraisal was that 66 vehicles (including 63 “Jetta” cars, 2 “Audi” cars and 1 “Jiefang” vans) were found damaged. The repair cost arising therefrom is in total of RMB411,475. The relevant evidences provided by Wuzhou Industrial and Commercial Administrative Bureau show that the Defendant Guidong Company was registered and incorporated on February 20, 1993 by the Defendant Communications Company by falsely declaring the investment of RMB50,000 in cash and RMB150,000 in substantive materials (steel cargo vessel). However, the Defendant (Communications Co.) in fact has not effected the investment. The original certification on assessment of capital is purely a false declaration. On Jan. 12, 1999, the Defendant Wuzhou Department alleged that it had invested RMB260,000 into Guidong Company, thus the registration capital was to be changed to be RMB360,000. However, a sum of RMB160,000 in the registration capital was the misappropriated administration fee for waterway transportation which should have been handed over to the state treasury. Therefore, the Defendant Guidong Company has no independent properties. The act of its obtaining the qualification as legal person shall be deemed invalid. According to Administrative Regulations on Registration of Enterprises as Legal Persons, only the units possessing the legal person qualification can undertake civil liabilities independently. Therefore, the civil liability of the Defendant Guidong Company shall be undertaken by its founder the Defendant Communications Company and the investor Wuzhou Department. The Plaintiff requested the court to order those four Defendants jointly and severally compensate the Plaintiff for the latter’s economic loss of RMB411,475. The Plaintiff FAW-Volkswagen Automotive Co. Ltd. provided the following evidences within the time limit for adducing evidence: 1. the Written Record of Field Survey issued by Guangzhou Public Security Bureau; 2. Ascertainment on the Cause of the Fire Accident issued by Guangzhou PSB Fire-fighting Bureau; 3. Appraisal Conclusion for the Price of the Ill-gotten Goods issued by Guangzhou Pricing Office; 4. Register of Ship of the Tanker “Gui Dong You 05”; 5. Registration data for enterprise as legal person of the Defendant Guidong Company; 6. Information on registration of change of the Defendant Guidong Company; 7. Information on registration of legal person of the Defendant Communications Company. The Defendant Lin Wucai contended that: the explosion of the Tanker was caused by the handlings of the master Zhou Tianwen, the repairman Huang Yuangui, the chief engineer Chen Suizhu, the first engineer Zhong Jinde in violation of the regulations. The Defendant Lin Wucai had no knowledge and qualification for engagement in ship management, therefore there is no question of his violation of any statutory obligations or legal regulations. The master and the engineering officers are engineering personnel of the Tanker, who should have gone through special training and passed examinations before they can take up the post. Especially for the vessels carrying dangerous goods such as tankers, the master and the engineering officer shall have to be trained more strictly. The Defendant Lin Wucai is only the owner of the Tanker. He stayed on the Tanker only for arranging shipping business and collecting freight, but knew little about repairs of tankers. It is without factual basis for the Plaintiff to allege in the statement of claim that the Defendant Lin Wucai violated the legal obligations and the relevant regulations, resulting in the occurrence of the explosion of the Tanker “Gui Dong You 05” and shall undertake full responsibility for the explosion accident. The Defendant Lin Wucai requested the court to reject the litigation requests of the Plaintiff. The Defendant Lin Wucai provided the following evidences within the time limit for adducing evidence: 1. The certification issued by Wuzhou Harbor Master on June 26, 2000; 2. Reports of Yangcheng Evening and Guangzhou Daily on the explosion of the Tanker “Guidong You 05”; 3. Report of the New Express on the master Zhou Tianwen’s accepting criminal adjudication; 4. Contract for purchase of the Tanker “Gui Dong You 05”, the letter of delivery of the vessel; 5. Certification of increased facilities for the Tanker “Gui Dong You 05” issued by Teng County Teng City Shipyard on June 28, 1998. The Defendant Guidong Company defended that: as Lin Wucai, the owner of the Tanker “Gui Dong You 05”, could not afford the ship affiliation and administration fee in March, 1999, he returned the license for operation of ship to Wuzhou Department via Guidong Company, declaring lay-up of the Tanker. He orally requested for severing the affiliation relationship. In September, 1999, Guidong Company issued a notice of terminating the affiliation relationship as the tanker could not hand in the administration fee for 6 months. Therefore, the affiliation relationship between Guidong Company and “Gui Dong You 05” has terminated. Guidong Company shall not undertake the civil liability for the damage arising from the explosion of the tanker “Gui Dong Yu 05”. Even though Guidong Company had the affiliation relationship with the Tanker, Guidong Company was not involved in the process of shipment. It is without factual and legal basis for the Plaintiff to hold that Guidong Company violated the legal obligations, causing occurrence of the explosion of “Gui Dong You 05”, and shall undertake full liability for the accident. The Defendant Guidong Company requested the court to reject the litigation requests of the Plaintiff. The Defendant Guidong Company provided the following evidences within the time limit for adducing evidence: 1. Affiliation Agreement for “Gui Dong You 05”; 2. License for Operation of Ship for “Gui Dong You 05”; 3. Register of Lay-up of “Gui Dong You 05” issued by Wuzhou Department; 4. Detailed list of the affiliation and administration fees handed in by “Gui Dong You 05”; 5. Notice of severing the affiliation relationship issued by Guidong Company to Lin Wucai on September 22, 1999; 6. Report of the Business Situation of Guidong Company produced by Guidong Company on December 28, 1999 to Wuzhou Communications Bureau; 7. Crew service book of crew-member Luo Xijiu. The Defendant Communications Company defended that: on February 20, 1993 when Guidong Company was registered and incorporated, the registration capital in sum of RMB200,000 was really not invested by Communications Company, but paid by Wuzhou Department. For this reason, Communications Company completed the change of registration with Wuzhou Industrial and Commercial Administrative Bureau in January, 1999. The certification for assessment of capital for Guidong Company is not false, and the acquisition of the qualification as legal person by Guidong Company is not illegal. The change of the subject of investor of Guidong Co. took place at an earlier time, but the explosion of the Tanker “Gui Dong You 05” occurred later. Therefore, Communications Company needs not to shoulder the liability for compensation for Guidong Company who had the qualification as legal person. The Defendant Communications Company requested the court to reject the litigation requests of the Plaintiff. The Defendant Communications Company provided the following evidences within the time limit for adducing evidence: 1. Certification for assessment of capital for Guidong Company; 2. Information on registration of the change of investor in respect of Guidong Company. The Defendant Wuzhou Department defended that: there does not exist any issue that Wuzhou Department, when investing capital to Guidong Company, misappropriated the waterway transportation administration fees which should have been handed in to the state treasury. According to the relevant regulations, the waterway transportation administration fee shall be used as employee’s salary, business expenditures and administration fees, and as the costs for retired staff, but it is not the sum for handing in to the state treasury. Wuzhou Department has fully handed in the waterway transportation administration fee in time, has not delayed payment of or withheld or misappropriated such fee Since 1993 when Guidong Company was founded, its registration capital has been in line with the legal provisions, and the company can undertake civil liabilities independently. It is without legal basis for the Plaintiff to request Wuzhou Department to undertake the civil liability. The Tanker “Gui Dong You 05” has been unable to set sail since April, 1999 due to the lack of the license for engagement in shipment. As Guidong Company issued a notice of terminating the affiliation relationship to Lin Wucai in September, 1999, the relationship of rights and obligations between the two party has been ended. There is no prerequisite for the company to undertake the civil liability for “Gui Dong You 05”. In summary, The Defendant Wuzhou Department requested the court to reject the litigation requests of the Plaintiff. The Defendant Wuzhou Department provided the following evidences within the time limit for adducing evidence: 1. The receipt for the waterway transportation administration fees from 1995 to 1997 which were collected by the Navigational Administration Bureau of Guangxi Zhuang Nationality Autonomous Region (hereinafter called “Guangxi Bureau”) from Wuzhou Department; 2. Certification issued by Guangxi Bureau on November, 7, 2000 regarding Wuzhou Department has fully paid the waterway transportation administration fees in time; 3. Information on the registration of Guidong Company as legal person. It has been ascertained after trial that: the three defendants had no dissension from the evidences provided by the Plaintiff FAW-Volkswagen Automotive Co. Ltd., so the collegiate bench confirmed the evidences. As to the contract for purchase of “Gui Dong You 05”, letter of delivery of the ship, and the certification on supplementing facilities for “Gui Dong You 05” issued by Teng County Teng City Shipyard on June 28, 1998, which were provided by the Defendant Lin Wucai, the Plaintiff FAW-Volkswagen and other defendants had no dissension, therefore, they are confirmed by the collegiate bench. The certification issued by Wuzhou Harbor Master on June 26, 2000, and provided by the Defendant Lin Wucai, is to certify that the crewmembers Chen Shuizhu and Zhong Jinde attended the professional training for tankers, passed the exams and obtained the relevant qualifications. However, the certification has no statement that the master Zhou Tianwen has the relevant qualification. As the evidence has no relevance to this case, therefore it will not be adopted by the collegiate bench. As for the news reports of Yangcheng Evening, Guangzhou Daily and New Express regarding the explosion of “Gui Dong You 05” as provided by the Defendant Lin Wucai, the facts stated in the relevant reports have not been ascertained by a judicial organ, therefore they are not of the effect to prove the facts in this case. The collegiate bench holds that the above news report cannot be taken as the evidences for this case. As for the evidences provided by the Defendant Guidong Company, other defendants had no dissension, but the Plaintiff FAW-Volkswagen had dissension. But it has neither provided sufficient reasons nor opposite evidences for its rebuttal. Therefore, the evidences have been confirmed by the collegiate bench. As for the evidences provided by the Defendant Communications Company, the other defendants had no dissension. The Plaintiff FAW-Volkswagen also provided the evidences as same as those provided by Communications Company to support its claim, therefore they are accepted by the collegiate bench. As for the evidences provided by Wuzhou Department, the Plaintiff and the other defendants had no dissension, therefore they are confirmed by this collegiate bench. In summary of the evidences provided by the Plaintiff and the Defendants which have been ascertained and accepted by the collegiate bench, the collegiate bench ascertains the facts as follows: According to the Register Book of the Tanker “Gui Dong You 05” in respect of the registration of the ownership, as confirmed by Wuzhou Department: the owner of the Tanker “Gui Dong You 05” is the Defendant Lin Wucai, and the date of obtaining the ownership is November 26, 1998; it is stated in the relevant certificate of registration of nationality that: the operator of “Gui Dong You 05” is the Defendant Guidong Company and the date of issuing the certificate is on November 26, 1998. The certificate is valid until November 25, 2003. Before the explosion took place, the owner and operator of the tanker have not handled formalities for change of the registration. The Ascertainment for the Cause of the Fire Accident issued by Guangzhou PSB Fire-fighting Bureau on March 31, 2000 states that: at 1740 hrs of March 4, “Gui Dong You 05” lying alongside the terminal of Guangzhou Harbor Bureau Henan Harbor Company Lijiao Branch (address: No.26, Zhen Xing Da Jie, Haizhu District, Guangzhou, hereinafter called “the Lijiao Terminal”) sustained an explosion. The hull of the tanker was heavily damaged. Part of the wrecks flew to the parking area near the bank, causing damage in various degree to some vehicles pending for sale and parking at the parking area. 3 person died and 2 were injured due to the explosion. The cause of the explosion of “Gui Dong You 05” ascertained by Guangzhou PSB Fire-fighting Bureau is that: a welder named Huang Yuangui, whose home town is Guangxi, carried out welding operation with naked fire, so that the volatile gas of methyl alcohol remaining in the tank was ignited and the explosion was incurred. On September 2, Guangzhou Pricing Office issued a copy of Appraisal Conclusion for the Price of Ill-gotten Goods in Guangzhou (hereinafter referred to as “Appraisal Conclusion”). The Appraisal Conclusion holds that: when “Gui Dong You 05” sustained the explosion, 63 brand-new “Jetta” cars, 2 brand-new “Audi” cars and 1 brand-new “Jiefang” van were damaged due to impulsion of the blast, striking by the falling substances and scorching of splashing sparks. The said damaged vehicles can be repaired. The Appraisal Conclusion determines the repair cost for the vehicles to be RMB411,475. It is additionally ascertained that: Zhou Tianwen was employed by the Defendant Lin Wucai and worked as the master of the Tanker “Gui Dong You 05”. On the morning of March 2, 2000, after the Tanker “Gui Dong You 05” discharged 500 tons of methyl alcohol at Jiangmen Solvent Factory, she did not clear off the gas of methyl alcohol remaining in the tank, and did not carry out the operations of gas removing and detonable test. In the evening of March 2, without the approval and designation of Guangzhou Harbor Master, the tanker sailed to the Lijiao Terminal for berthing. On the afternoon of March 4, after discussions, between master Zhou Tianwen and the Defendant Lin Wucai, the master asked the welder Huang Yuangui, who had not the license to work on the post, to repair the tanker by way of welding and cutting. As Huang Yuangui repaired the tanker with naked fire, so that a heavy explosion was incurred in the tank. The Defendant Lin Wucai confirmed that: the Defendant Guidong Company did not know the facts that he had carried in his own name methyl alcohol at the voyage prior to the explosion accident of “Gui Dong You 05” and the consequent business activities. The Defendant Guidong Company and the Defendant Lin Wucai signed an Agreement regarding the Tanker’s Joining in Wuzhou Guidong Shipping Company on October 20, 1993. The Agreement stipulates that: the Defendant Lin Wucai affiliated “Gui Dong You 05” under his ownership to the Defendant Guidong Company, but the ownership of the tanker remained unchanged. The Defendant Lin Wucai shall be in charge of the operation of the tanker and pay the enterprise administration fee to the Defendant Guidong Company at RMB1.5 per deadweight ton per month. In March, 1999, the Defendant Guidong Company took back the License for Engagement in Transportation of “Gui Dong You 05”. The period of usage stated in the license is valid until June 20, 1999, and the owner and operator of the tanker are both the Defendant Guidong Company. Since April, 1999, the Defendant Lin Wucai no longer paid any administration fee to the Defendant Guidong Company. On September 22, the Defendant Guidong Company notified the Defendant Lin Wucai to terminate the affiliation relationship. The Defendant Lin Wucai signed and acknowledged receipt of the said notice on January 3, 2000. On February 16, 1993, as a unit in charge of the incorporation, the Defendant Communications Company provided documents for registration of enterprises such as the Application for Assessment of Capital, Certification of Fund Guaranty and Certification on Assessment of Capital to Wuzhou Industrial and Commercial Administrative Bureau (hereinafter referred to as “Wuzhou AIC”). According to the said documents, the Defendant Communications Company invested RMB50,000 in cash and invested with the substantive materials of the “Steel Cargo Vessel” (equivalent to RMB150,000). On February 20, Wuzhou AIC approved the establishment of Guidong Company, with its nature determined to be enterprise as legal person and the registration capital to be RMB200,000. On January 8, 1999, the Defendants Communications Company and Wuzhou Department respectively issued the certifications to Wuzhou AIC, stating that Communications Co. should have put the investment when the Guidong Company was at the stage of preparing for establishment as a company, but it was lack of funds at that moment and was unable to pay the investment. Therefore, the registration capital in amount of RMB200,000 was actually injected by Wuzhou Department. On the same day, the Defendant Wuzhou Department issued a Letter of Authorization to Wuzhou Port Transportation United Corp. (hereinafter called “Port United Co.”), requested Port United Co. to pay the waterway transportation administration fees of RMB160,000 in arrears from 1995 to 1997 to Wuzhou Department directly to the Defendant Guidong Company. On Jan. 12, 1999, the Port United Co. paid to Guidong Co. RMB160,000. On October 8, 1998 and January 12, 1999, the Defendant Guidong Company issued payment receipts for the investments respectively in the amount of RMB100,000 and RMB160,000 to the Defendant Wuzhou Department. According to the business license for enterprise as legal person provided by Guidong Company when it responded to the action, the registration capital of the Company is RMB360,000. The date of issuing the license is January 21, 1999. On November 13, 2000, Wuzhou AIC provided the information on registration of enterprises, which states that: the subscriber of Guidong Company is changed to be Wuzhou Navigational Management Department, and the amount of subscription is RMB360,000. According to the receipt issued by Guangxi Bureau for the payment of waterway transportation administration fees from 1995 to 1997 received from Wuzhou Department and the certification issued by Guangxi Bureau on November 7, 2000, the Defendant Wuzhou Department has fully paid the waterway transportation administration fees from 1995 to 1997 in time. The collegiate bench holds that: this case is a dispute over damages arising from ship explosion. According to Article 16 of the Administrative Provisions on Fire Control of Vessels, the operations with naked fire on a vessel shall be subject to examination and approval; the operations with naked fire on vessels berthing at ports shall be examined and approved by the harbor superintendent department and filed to the PSB fire-control superintendent authority for record; the operators for the operations using naked fire must be certified before being qualified for their post. In violation of the above regulations, without carrying out the operations of cleaning, gas removing, detonable test for the tanker from which the methyl alcohol was just discharged and without making ensured that there was no combustible gas on the tanker, without prior approval by competent authorities concerned, “Gui Dong You 05” employed unlicensed persons to carry out welding operation with naked fire, resulting in the explosion of the tanker and the property loss of the Plaintiff FAW-Volkswagen. The accident was caused due to the fault jointly committed by the master Zhou Tianwen who was in charge of safety management of “Gui Dong You 05” and the welder Huang Yuangui. Pursuant to Article 130 of the General Principles of the Civil Law of the PRC, if two or more persons jointly infringe upon another person's rights and cause harm to him, they shall bear joint liability. The Plaintiff FAW-Volkswagen has the right to claim for the damages against the two parties or one party which have committed the fault. As the master Zhou Tianwen was employed by the Defendant Lin Wucai, the Defendant Lin Wucai shall undertake the civil liability for the loss incurred to the properties of the other persons due to the fault committed by his employee. Therefore, the claim of the Plaintiff FAW-Volkswagen against the Defendant Lin Wucai for indemnifying the loss of the vehicles in amount of RMB411,475 shall be supported. As the Defendant Lin Wucai has not paid the affiliation administration fee to the Defendant Guidong Company, Guidong Company took back the License for Engagement of Transportation from the Defendant Lin Wucai in March, 1999. The validity of the license has been exceeded when the accident occurred. Before the accident, the Defendant Guidong Company also issued the notice of terminating the affiliation relationship to the Defendant Lin Wucai, and the Defendant confirmed receipt of the same. Therefore, it shall be ascertained that the Defendant Guidong Company has terminated the affiliation relationship with the Defendant Lin Wucai. Furthermore, the Defendant Guidong Company is not the operator stated in the certificate of registry of vessel’s ownership for “Gui Dong You 05”. When the accident took place, “Gui Dong You 05” was actually operated by the Defendant Lin Wucai. Therefore, the Defendant Guidong Company shall not undertake joint and several liability for the indemnification. In view that the Defendant Guidong Company is not liable for the indemnification, and Guidong Company is a legal person enterprise incorporated according to law, it shall undertake the civil liability independently. As the investor of Guidong Company, the Defendant Wuzhou Department shall not undertake the civil liability on its behalf. When the accident took place, the Defendant Communications Company was not the investor of Guidong Company, therefore let alone it shall undertake the civil liability. It is without factual and legal basis for the Plaintiff FAW-Volkswagen to claim against the Defendants Wuzhou Department and Communications Company to undertake the joint and several liability for the indemnification, therefore its claim will not be supported. Pursuant to paragraph 2 of Article 117 of the General Principles of the Civil Law of the PRC, the judgement is rendered as follows: I. The Defendant Lin Wucai compensate the Plaintiff FAW-Volkswagen for the loss of properties in amount of RMB411,475; II. The litigation requests filed by the Plaintiff against the Defendants Guidong Company, Communications Company and Wuzhou Department shall be dismissed. The case acceptance fee for this case in RMB8,682 shall be undertaken by the Defendant Lin Wucai. The case acceptance fee prepaid by the Plaintiff will not be refunded by this court. The part to be undertaken by the Defendant Lin Wucai shall be directly paid to the Plaintiff. The above-mentioned obligation of payment shall be accomplished within 10 days after this judgement takes effect. If any party is not unsatisfied with this judgement, it may submit a statement of appeal to this court within 15 days upon service of this judgement, together with copies corresponding to the number of the opposite parties. The appellate court shall be the Higher People’s Court of Guangdong Province. Presiding Judge: Wu Zili Judge: Deng Yufeng Judge: Huang Qiusheng December 12, 2000 Court Clerk: Tan Shumin

Guangzhou Maritime Court of the PRC Civil Judgement (2000)GHFSZ No.013 Plaintiff: Giant Zinc Enterprise Corporation Address: Suite 02 of 13/F, No.148, Si Wei Er Road, Ling Ya District, Kaoxiong, Taiwan Person in Charge: Su Jiaqing Agent ad Litem: Yang Yufu, lawyer of Guangdong Maritime Law Firm Agent ad Litem: Zhao Xiangsheng, manager of Hunan International Economy and Technology Cooperation Corp. Defendant: the People's Insurance (Property) Company of China, Changsha Branch Address: No.99, Chezhan Road, Changsha, Hunan Province Person in Charge: Jin Hong, manager Agent ad Litem: Zhou Zhiru, lawyer of Hunan Xiangjun Law Firm Agent ad Litem: Xu Faming, lawyer of Goldsun Law Firm With respect to the dispute over insurance contract for carriage of cargo by sea between the Plaintiff Giant Zinc Enterprise Corporation and the Defendant the People’s Insurance (Property) Company of China, Changsha Branch, the case was transferred to this court by the People’s Court of Furong District, Changsha, Hunan Province on January 3, 2000. After accepting the case, this court constituted the collegiate bench according to law and arranged the pre-trial exchange of evidences on February 28. An open court hearing was held on February 28 to try the case. Yang Yunfu, Zhao Xiangsheng, the agents ad litem of the Plaintiff, Xu Faming and Zhou Zhiru, the agents ad litem of the Defendant, attended the court hearing. Now the case has been finalized. The Plaintiff Giant Zinc Enterprise Corporation stated that: in February, 1997, the Plaintiff entrusted China Hunan International Economy and Technology Cooperation Corp. (hereinafter referred to as “HIETCC”) to export 20 tons of zinc powder at USD1,310/ton CIF Kaoxiong in the total price of USD26,200. HIETCC effected the insurance with the Defendant against “All Risks and War Risk” for insured amount at 110% of the total price. The number of the insurance policy was CS49(01)/970110013. The consignment of cargo arrived at Kaoxiong on February 21, 1997. The Plaintiff is the consignee for that consignment. When it took delivery of the cargo, 40 bags of zinc powder were found seriously wet and caked. The Plaintiff then asked Taiwan Marine Survey, Ltd. to conduct a survey. The survey had the conclusion that the extent of cargo damage was 80%. The cause of the damage was that the rainwater seeped through the cracks on the containers. The cargoes in the containers were wet and caked in transportation, resulting in a total loss of USD21,012.4. For this reason, HIETCC lodged claims against the Defendant for many times, but the Defendant had no intention to effect any compensation. The Plaintiff held that: 1. The damaged cargo alleged by the Plaintiff was the subject matter clearly stated in the insurance policy. The Defendant had confirmed that the cargoes stated in two bills of lading were corresponding to the cargoes stated in the insurance policy. As there was no direct voyage from Mainland China to Taiwan, the cargoes had to be transshiped at Hong Kong. Therefore, the shipowner of on-carriage held a copy of the memo bill of lading, so that the number of such bill of lading was different from that of the through bill of lading. 2. The cargo damages alleged by the Plaintiff was covered by the Defendant’s insurance. The cause for the cargo damage, which had been ascertained in the Civil Judgement (1998)GHFSZ No.9, was due to the cause that the containers were damaged in transportation. The damage of the containers occurred during the period of the carrier’s responsibility, therefore it was under the coverage of All Risks undertaken by the Defendant. 3. The loss claimed by the Plaintiff was reasonable. According to Article 23 of the Insurance Law of the PRC, the indirect loss sustained by the insured due to the fault of the insurer shall also be indemnified by the insurer. 4. The Defendant shall immediately compensate the Plaintiff for the cargo damage. On basis of the above, pursuant to PICC’s Marine Cargo Clauses, Article 237 and Article 252 of the Maritime Code of the PRC, Article 7 of the Provisions on Property Insurance Contracts and the Insurance Law of the PRC, in order to protect the legitimate rights and interests of the Plaintiff, the Plaintiff hereby files the claim to this court, requesting to order that: I. The Defendant shall compensate the Plaintiff for the cargo damages in amount of USD21,012.4, notarial fee of USD381.82, the interest on the cargo and the notarial fee of USD1,283.64 (interest is counted from March 15, 1997 until March 15, 1998, on basis of 6%, i.e. the annual loan interest rate in US dollars published by the People’s Bank of China. However, the interest actually paid shall be counted until the date when all the payment in arrears is cleared). II. The Defendant shall undertake the court fees for the Case (1998)GHFSZ No.9 in RMB7,178, and the court fees for this case in RMB5,274, and the relevant expenses that the Plaintiff paid for handling the accident and the litigation in RMB56,000. III. After the Defendant compensates the above expenses as ordered, the Plaintiff will transfer to the Defendant the right of recovery (claim) against the carrier Hong Guang Shipping Co. Ltd.. The Defendant the People’s Insurance (Property) Company of China Changsha Branch contended that: I. The Defendant will not undertake the liability of compensation as the cargo which have been damaged is not covered under the Insurance Policy CS49(01)/970110013. The Plaintiff purchased 20 tons of zinc powder at issue from HIETCC at the price terms of CIF Kaoxiong. When the seller effected the insurance, it declared the cargo quantity as 80 bags and the package as plastic knitted bags in the weight of 1,000kg each bag. However, the survey report shows that there are 40 bags of the cargoes sustaining damage in the specification of 500kg each bag. Obviously, they are not the cargoes covered under the insurance policy. The cargoes sustaining damage are in the specification inconsistent with that of the cargoes under the insurance policy. The documents provided by the Plaintiff are self-contradictory. Generally speaking, in such circumstances, the insurer has the ground to consider that they are not the cargoes under insurance coverage and so they refuse to pay the compensation. Let alone that the cargoes carried in this voyage are the dangerous cargo listed in the IMDG Code, for which there is special requirement for its packing containers. The export commodities inspection authority of China also lists the packing of Zinc powder into the scope of statutory inspection. Any package not inspected shall be deemed as unqualified packing and will not be allowed to be exported. In this case, the Plaintiff and the insurer did not invite the commodities inspection department to conduct a survey on the packing of the cargoes in 500kg each bag. Up to now the certificate for allowing the use of 500kg packing issued by the commodities inspection department has not yet obtained. Obviously, the packing for the cargo in this case is not qualified and the export process is illegal. The claim filed by the Plaintiff in respect of the export cargo through illegal process is against the principle of legality in China’s insurance. Therefore, the Defendant would certainly refuse to pay the compensation. II. The cargo upon which the Plaintiff entrusted Taiwan Marine Survey Co. Ltd. to conduct a survey is not the cargo under the insurance coverage by our company. Therefore, our company shall not be liable for indemnifying the Plaintiff against the damages of cargo alleged in the Survey Report. The bill of lading related to the cargo surveyed by Taiwan Marine Survey Co. Ltd. is numbered HKG/KAO-9707031A and the container is numbered TEXU3869342/1/2200. While the combined bill of lading issued by Hong Guang Shipping Co. Ltd. (hereinafter referred to as “Hong Guang Co.”), which was provided by the Plaintiff and the applicant for insurance to the Defendant, is numbered WSGE970198 and the container is numbered TEXU3869342/20. Obviously, the cargo surveyed by Taiwan Marine Survey Co. Ltd. is not consistent with the one for which the Plaintiff claimed against the Defendant. The former is not that under the insurance of the Defendant, therefore the Plaintiff shall have no right to claim against the Defendant in this respect. In view that the Plaintiff’s claim does not comply with the terms in paragraph 4 of Clause 4 of PICC Marine Cargo Insurance Clauses, that is, the claim documents provided by the Plaintiff, such as the original insurance policy, bill of lading, packing list, survey report etc., contain serious points of inconsistence, the Defendant is entitled not to pay any compensation. III. The insured shall tell the truth of the insurance. The insurance in this case was effected by the seller and the price terms was CIF Hong Kong. There was no insurable interest from Hong Kong to Kaoxiong, therefore the insurance effected by the Plaintiff is invalid. The voyage under the insurance of the Defendant is from Huangpu to Hong Kong. If any problem occurs from Hongpu to Hong Kong, the Defendant shall be liable for compensation. On basis of above arguments, the Defendant requested the court to reject the Plaintiff’s claim and protect the legitimate rights and interests of the Defendant. Upon examination, it has been ascertained that: on January 5, 1997, HIETCC and the Plaintiff concluded the Purchase Contract No.Y97-002, which stipulates that: the Plaintiff will purchase 20 tons of zinc powder from HIETCC at the price of USD1,310/Ton CIF Hong Kong. The packing is knitted bag with the capacity of 500kg. Hong Kong Zhongda Development Co. Ltd. was entrusted to act as the agent to ship the cargo, with the port of shipment as Huangpu and the port of destination as Kaoxiong. The insurance covering All Risks and War Risk was bought by the seller according to the PICC Insurance Clauses on basis of 110% of the total invoice value. In January 1997, HIETCC entrusted Hong Guang Co. to ship the said cargo from Huangpu to Kaoxiong via Hong Kong. The cargo after arriving at Huangpu port was loaded into containers by Guangzhou Huangpu Harbor Company. On January 24, 1997, the contract number stated in the Packing List/Weight List issued by HIETCC is Y97-002, which is consistent with that of the said Purchase Contract. The invoice number is C380207001(A), in which the cargo description, quantity, packing etc. are all same as that stated in the B/L No.WSGZ-970198 issued by the carrier Hong Guang Co.. The Commercial Invoice No.C380207001 issued by HIETCC on the same day states that: Number of the Sale Contract: Y97-002, Quantity and Product: 20 tons of Zinc powder (325MESH), Unit Price: USD1,310/ton CIF Hong Kong. Total price: USD26,200. On January 31, 1997, HIETCC arranged the insurance with the Defendant in respect of the shipment of the said cargo from Huangpu to Kaoxiong via Hong Kong. For this insurance, the Defendant issued the Insurance Policy No.CS49(01)970110013 at Changsha. The Insurance Policy states that: as per the requirement of the insured HIETCC, for the purpose of accepting the insurance for the shipment of the following cargo of the risks covered in this insurance policy and in accordance with the terms stated overleaf and the following special terms, we hereby establish this insurance policy, and the insurance premium as agreed upon shall be paid by the insured to the insurer. The Invoice No.: C380207001, Mark: N/A. Packing and Quantity: 80 plastic knitted bags, Insured Item: Zinc Powder (325MESH), Insured Amount: USD86,020. The two columns for carrier and the date of sailing are both in blank, but they are affixed with the round chop of the Defendant with its name in English. From: Huangpu, To: Kaoxiong via Hong Kong. Risks to be insured: All Risks under the PICC Marine Cargo Insurance Clauses as amended on Jan. 1, 1981, including the W/W Clause. If the insured cargo suffered loss/damage from the risks stated in the policy, the insurer shall pay the compensation according to the first original and the other relevant certificates. If the insured cargo suffers the loss or accident for which compensation should be paid according to the insurance policy, notice shall be given to the insurer’s agent immediately for a survey. Once a cargo damage occurs, the insured shall file an application to the local inspection organ for an inspection and obtain the survey report and relevant certificates therefor, and lodges the claim. The back of the insurance policy carries the PICC Marine Cargo Insurance Clauses as amended on Jan. 1, 1981 and the PICC War Risk Insurance Clauses for Marine Cargo. Among them, Item (3) “All Risks” of Article 1 “Scope of Cover” of PICC marine Cargo Insurance Clauses provides that: Aside from the risks covered under the F.P.A. and W.A. conditions as above, this insurance also cover all risks of loss of or damage to the insured cargo whether partial or total, arising from external causes in the course of transit. Article 4 “Duty of the Insured” provides that: It is the duty of the insured to attend to all matters as specified hereunder, failing which the company reserves the right to reject his claim for any loss if and when such failure prejudice the rights of the Company: (1) The insured shall take delivery of the insured cargo in good time upon their arrival at the port of destination named in the Policy. In the event of any damage to the cargo, the insured shall immediately apply for survey to the Survey and/or settling agent stipulated in the Policy, …… Should the carrier, assignee or other relevant parties be responsible for such shortage and/or damage, the insured shall lodge a claim in writing against them and, if necessary, obtain their confirmation of an extension of the time limit of such claim. …… (4) The following documents should accompany any claim hereunder made against this Company: Original Policy, Bill of Lading, Invoice, Packing List, Tally Sheet, Weight Memo, Certificate of Loss or Damage and/or Shorthand Memo, Survey Report, statement of claim. If any third party is involved, documents, invoices and/or letter, cables necessitated and relative to pursuing of recovery from such party should also be provided…… HIETCC paid the insurance premium therefor in the amount of RMB2,499. As the consignee for the cargo involved in this case, the Plaintiff in this case has provided this court with the first original of the insurance policy No.CS49(01)/970110013, on the back of which there is the blank endorsement of HIETCC. On February 13, 1997, Hong Guang Co. issued two clean on board through bill of lading numbered WSGZ-970197 and WSGZ-970198 respectively at Guangzhou for the said 80 bags of zinc powder in 3 20’ containers covered under the Insurance Policy No.CS49(01)/970110013. Among them, the Bill of Lading No.WSGZ-970198 states that: Shipper: Hunan International Economy and Technology Cooperation Corp., Consignee: the Plaintiff, Port of Loading: Guangzhou, Port of Discharge: Kaoxiong, Carrying Vessel: Pretty Lake, Voyage: 9707N, Cargo Description: Zinc Powder (325MESH), Pieces and Type of Packaging: 40 plastic knitted bags (500kg each bag), Gross Tonnage: 20,050kg, Container No.: TEXU3869342/20’, Way of Handover: CY/CY, one 20’ container in total, loaded, counted and sealed by the shipper. The overleaf clauses of the bill of lading states that: the period of the carrier’s responsibility shall commence from the time when the cargo are loaded on board the ship and shall cease when they are discharged from the ship. On February 21, 1997, M/V “Pretty Lake” discharged the cargo at Kaoxiong, Taiwan. There were two corresponding copies of Inward Declaration , one of which for the Container TEXU3869342/1/2200 states that: port of shipment: Hong Kong, Inward Vessel and Voyage: Pretty Lake V-9707, Cargo Description: Zinc Powder, Taxpayer: the Plaintiff, Pieces: 40 bags (one container), Gross Weight: 20,050kg. Except that the bill of lading is numbered HKG/KAO-9707031A and the port of shipment is Hong Kong, other contents are completely the same as that in the Through Bill of Lading No.WSGZ-970198 issued by Hong Guang Co.. In the other Inward Declaration, except that the bill of lading is numbered HKG/KAO-9707031B and the port of shipment is Hong Kong, other contents are completely the same as that in the Through Bill of Lading No.WSGZ-970197 issued by Hong Guang Co.. Taiwan YiHo Transportation Co. Ltd., the agent of Hong Guang Co. at the port of discharge, transferred the Container No.TEXU3869342 with zinc powder to Asia Pacific Container Terminal, Inc.. The relevant Container Handover/Acceptance Certificate states that: the container has a hole at the bottom of its forward end, the lower edge of door is deformed, the floor beam and the door bar bent. On February 25, 1997, the Plaintiff took delivery of the cargo from Asia Pacific Containers Terminal, Inc. against presentation of the original Bill of Lading No.WSGZ-970198. Both parties made the Acceptance Certificate for Takeover of Outward Containers, in which the contents are the same as that in the previous acceptance certificate. The container numbers stated in the said acceptance certificates are both TEXU3869342, the vessel’s name and voyage are both PRLA (this should be the abbreviation of “Pretty Lake”), 9707. The Plaintiff sent the cargo to its own warehouse. It opened the container and found the zinc powder wetted. On February 27, 1997, the Plaintiff issued a notice of damage to Taiwan YiHo Transportation Co. Ltd., stating that once the scope and cause of the loss have been ascertained, the Plaintiff will exercise his right of claim. On March 4, 1997, the Plaintiff sent a fax to Taiwan YiHo Transportation Co. Ltd., stating that the Plaintiff had invited Taiwan Marine Suvey Co. Ltd. to sort out the loss of the cargo on March 5. If Taiwan YiHo Transportation Co. Ltd. failed to send someone to attend the survey, it shall be deemed that it waives the right and agrees with the result of the sorting out. The Notarial Report of Taiwan Marine Survey Co. Ltd. (hereinafter referred to as “the Notarial Report”) that the Plaintiff provided to the court states that: as per the request of the Plaintiff, Taiwan Marine Survey Co. Ltd. conducted a survey on the 40 bags of zinc powder under the B/L No.HKG/KAO-9707031A in the Container No.TEXU3869342, which was carried by M/V “Pretty Lake” and arrived at Kaoxiong port on February 21, 1997. The 40 bags of zinc powder were found wetted and caked. The loss was incurred due to the damage of the container, so that the cargo was caked after continuously immersed in the water. This happened within the period of management under the carrier. The rate of cargo loss is 80%. The cost for the inspection is TWD10,500, equivalent to USD381.82. On March 14, 1997, the Plaintiff notified Hong Guang Co. of the Notarial Report and lodged a claim against Hong Guang Co.. On May 19, 1997, HIETCC sent a claim letter to the Defendant in respect of the cargo damage to claim for compensation for the loss formally, together with 9 documents such as the contract, invoice, packing list, bill of lading, insurance policy, relevant survey report, statement of claim, the claim letter against the carrier and the carrier’s letter rejecting the claim. On June 17, 1997, the Defendant rejected the claim on the ground that: the Defendant has the ground to consider that the container was damaged before the shipment, but the insured did not find out or pay attention to the damage. Furthermore, the package of that consignment did not meet the international standard. The accident was caused by the fault of the insured. According to the insurance clauses, this is a loss resulting from the fault/negligence of the insured, which does not fall within the scope of the insurance cover. On August 15, 1997, the carrier Hong Guang Co. issued a Certification, with the contents as follows: “China Hunan International Economy and Technology Cooperation Corp. entrusted our company to carry a cargo of 20T zinc powder (40 bags, 500kg each bag) with the invoice number being C380207001(A). After the cargo arrived at Guangzhou port, Guangzhou Huangpu Harbor Company was in charge of loading the cargo at Huangpu port into a container with number TEXU3869342. Our company issued the B/L No.WSGZ-970198 at Guangzhou on February 13. The certification is hereby given.” On January 30, 1997, Guangzhou Huangpu Harbor Company issued a container tally sheet, which states that: 1x20’ Container No.TEXU3869342, loaded with 40 bags of zinc powder with 750kg in total in each bag; the container is in good condition. As to the statement “750kg each bag” filled in the tally sheet, according to the said documents, especially the carrier’s certification, this should be a clerical error. The actual weight in each bag should be ascertained as 500kg. In respect of the cargo loss, the Plaintiff has filed with this court a claim against the carrier Hong Guang Co.. This court handed down the Civil Judgement (1998)GHFSZ No.9 on June 17, 1998, holding that: although the B/L number as referred to in the Notarial Report, i.e. HKG/KAO-9707031A, is inconsistent with that of the through bill of lading issued by the carrier Hong Guang Co., the other contents in the report, including the container number, the carrying vessel, the name of the consignee, the cargo description and the kind of packages, are all same as those in the through bill of lading. Furthermore, the date of the vessel’s arriving at Kaoxiong port as stated in the report is same as the date when the cargo under the through bill of lading arrived at Kaoxiong port. The judgement ascertained that the cargo damage occurred during the period of responsibility of the carrier (Hong Guang Co.), and rules that Hong Guang Co. shall compensate the Plaintiff for the cargo loss in amount of USD20,960, the survey fee in amount of USD381.82 as well as the accrued interest (the interest shall be counted from March 15, 1997 on basis of the loan interest rate published by the People’s Bank of China for the same period until the date when the judgement takes effect ). The judgement has taken legal effect already. The Plaintiff applied to this court for the execution on December 30, 1998. The Plaintiff applied for postponing the enforcement as it could not provide the court with the information of the enforceable properties of the party against whom the judgement will be enforced. This court rendered the Civil Ruling (1999)GHFZZ No.021 on June 17, 1999, according to which the enforcement of the Civil Judgement (1998)GHFSZ No.9 be suspended. In addition, the Plaintiff also claimed for the relevant expenses arising from the handling of the accident and the litigation, which amounts to RMB56,000 in total. However, it failed to provide the relevant evidences within the time limit prescribed by this court for adducing evidences. There are the evidences in file supporting all the above facts. Upon discussions, the collegiate bench unanimously holds that: this is a case related to dispute over insurance contract for marine cargo transportation. The Plaintiff and the Defendant shall both be bound by the contractual terms as stipulated in the Insurance Policy CS49(01)/970110013. According to the findings of facts that have been ascertained, the insurance policy at issue has not clearly stated the weight of the cargo in each bag. The Defendant has not provided evidence to prove that the Plaintiff declared the weight of each bag as 1,000kg when the Plaintiff effected the insurance. To the contrary, the Sale Contract, the Bill of Lading No.WSGZ-970198, the corresponding Packing List/Weight Memo, the Commercial Invoice and the Certification issued by the carrier all prove that the 20T zinc powder are with a weight of 500kg in each bag. It was appropriate for the Plaintiff to apply for a survey merely on the damaged cargo at the port of destination. Therefore, there does not exist the inconsistency of the specification of the packages and quantity of the damaged cargo with the insured cargo as alleged by the Defendant. The Bill of Lading No.WSGZ-970198 issued at the port of loading and the container number stated in the Notarial Report issued by Taiwan Marine Survey Co. Ltd. both adopt the international uniform identification, with the container owner codes written in 4-digit Latin letters both as TEXU and the six-digit sequential number both as 386934. The numbers in the two documents for the verification of the container owner and the sequential number comply with each other, which are both 2. It is sufficient to hold that they are identical. As to the digit at the rear end of the container number is merely the number and code additionally indicating the number, size and type of the container. In practice, whether they should be marked or not on documents is various. The fact that such digit is not unified cannot prove whether they are not indicating the same container. The Certification issued by the carrier Hong Guang Co. certifies that: the invoice number for the 20T zinc powder under the B/L No.WSGZ-970198 issued by the carrier is C380207001(A), which can be collaborated with the Invoice number C380207001 for the insured cargo stated in the insurance policy. In the Commercial Invoice No.C380207001(A) related to the cargo damage provided by the Plaintiff, the contract number is Y97-002, which is identical to that of the said Purchase Contract. During the course of court’s investigation, the Defendant has confirmed that the cargo stated in the two through bills of lading issued by Hong Guang Co. are the insured cargo under the insurance policy at issue. The Civil Judgement (1998)GHFSZ No.9 of this court has ascertained that the loss of the cargo in Container TEXU3869342 occurred during the period of the responsibility of the carrier Hong Guang Co.. For this reason, the 20T zinc powder under the B/L No.WSGZ-970198, which the Plaintiff delivered to Hong Guang Co. for shipment, is the insured cargo under the insurance policy at issue, and risks covered by the insurance has taken place. The Civil Judgement (1998)GHFSZ No.9 provided by the Plaintiff has taken legal effect. The facts ascertained in the said judgement are of relativity to this case, which can be taken as the basis for ascertaining the facts in this case. The judgement ascertained that the damage to the cargo insured in this case was caused by the damage of the container TEXU3869342, so that the cargo were immersed in water and caked. The cargo damage occurred during the period of the responsibility of the carrier Hong Guang Co., and was caused by the fault of the carrier during the period of its responsibility. The cargo damage has no direct causal relationship with the packages and the nature of the cargo. What the Defendant insured was the voyage for the shipment of cargo from Hong Kong to Huangpu. The scope of cover undertaken by the Defendant is not necessarily affected by the price terms in the sale contract of the insured. As long as any risks covered by insurance occurs in the agreed voyage, the Defendant shall be liable to compensate. As the period of the carrier’s responsibility is within the scope of W/W liability undertaken by the Defendant, therefore the accident related to the cargo damage falls within the scope of cover undertaken by the Defendant. To sum up, the grounds of the Defendant’s defence are without factual basis and lack of legal basis. They are not tenable. The Plaintiff has fulfilled the obligations under the insurance contract. As the insurer, the Defendant shall reasonably settle the claim for the insurance accident under the insurance contract and timely pay the insurance compensation to the Plaintiff. The Plaintiff has factual and legal basis to claim for the cargo damage against the Defendant, therefore it shall be supported by this court. However, the amount of cargo damage shall be calculated on basis of the net weight of the cargo and the CIF price stated in the commercial invoice according to Article 55 of the Maritime Code of the PRC, but shall not counted on basis of the gross weight. Therefore, the cargo damage in this case shall take USD20,960 which has been ascertained in the Civil Judgement (1998)GHFSZ No.9 as the criterion. According to Article 240 of the Maritime Code of the PRC, the Plaintiff had the legal basis to claim for the notarial survey fee in amount of USD381.82, therefore it is supported by this court. As the Defendant has not settled the claim in time for the insurance compensation and the relevant expenses payable, this court supports the Plaintiff’s claim for the interest arising from the cargo damage and notarial survey fee. The Plaintiff requested the court to order that the Defendant undertake the case acceptance fee of RMB7,178 prepaid by the Plaintiff for the Case (1998)GHFSZ No.9, but such sum is the expense arising from the insured’s execution of the special notice to the Defendant as the insurer, pursuant to Article 240 of the Maritime Code of the PRC, such a sum shall be undertaken by the Defendant, therefore it is supported by this court. The Plaintiff requested the court to order that the Defendant pay for the relevant expenses arising from handling of the accident and initiating the litigation in total amount of RMB56,000. As it has not provided the relevant evidences within the time limit for adducing evidence, it shall be deemed that the Plaintiff has waived the right to claim for such sum, therefore it is not supported by this court. The Plaintiff claimed that after the Defendant had compensated the Plaintiff for the said expenses, the Plaintiff would transfer the right to the Defendant in respect of the claim against Hong Guang Co.. The claim is in line with the spirit in Article 252 of the Maritime Code of the PRC, therefore it is supported by this court. The case acceptance fee in this case in amount of RMB5,274 shall be fully undertaken by the Defendant. As to the time of commencement for calculating the interest of the cargo damage and the notarial survey fee, both the judges Wu Zili and Deng Yufeng hold that: the Defendant’s compensation for the cargo damage and the payment for the survey fee is on the basis of the obligation of timely payment of the insurance compensation under the insurance policy as well as the relevant legal provisions, but it is not the compensation liability under a contract for carriage of cargo by sea. Therefore, according to Article 23 of the Insurance Law of the PRC, the next day of the 10-day period of reasonable handling time after the day when HIETCC lodged a formal claim against the Defendant in respect of the cargo damage involved in this case, i.e. May 30, 1997, shall be taken as the criterion of the date commencing calculation of the said interest. The Judge Cheng Shengxiang holds that: the interest shall be counted from the day of the occurrence of the accident according to the relevant provisions of the Maritime Code of the PRC. According to the majority opinions of the collegiate bench, pursuant to Article 55, Article 237, Article 240 and Article 252 of the Maritime Code of the PRC and Article 23 of the Insurance Law of the PRC, the judgement is rendered as follows: I. The Defendant the People’s Insurance (Property) Company of China, Changsha Branch shall pay the insurance compensation of USD20,960, the notarial survey fee of USD381.82 and the interest of the two sums mentioned above (the interest shall be counted from May 30, 1997 until the day when the judgement takes effect, on basis of the loan interest rate of current fund in US dollars published by the People’s Bank of China) to the Plaintiff Giant Zinc Enterprise Corporation. II. The Defendant the People’s Insurance (Property) Company of China, Changsha Branch shall pay the case acceptance fee of RMB7,178 under the Case (1998)GHFSZ No.9 to the Plaintiff Giant Zinc Enterprise Corporation. III. After the Defendant the People’s Insurance (Property) Company of China, Changsha Branch has paid the sums mentioned in the above Items I and II of this judgement to the Plaintiff Giant Zinc Enterprise Corporation, the Plaintiff shall transfer the recovery right to the Plaintiff in respect of claim against the carrier Hong Guang Shipping Co. Ltd.. The case acceptance fee in this case of RMB5,274 shall be undertaken by the Defendant. The case acceptance fee prepaid by the Plaintiff will not be refunded by this court. The Defendant shall pay the part payable by him directly to the Plaintiff. The above-mentioned obligation of payment shall be accomplished within 10 days after this judgement takes effect. If any of the parties objects to this judgement, the party concerned may submit the statement of appeal to this court within 15 days from the day when this judgement is served, together with 8 copies. The appellate court shall be Guangdong Provincial Higher People’s Court. Presiding Judge: Wu Zili Judge: Deng Yufeng Judge: Cheng Shengxiang March 30, 2000 Court Clerk: Huang Qiusheng

Guangzhou Maritime Court Civil Judgement (2001)GHFCZ No.109 (2001)GHFCZ No.163 Plaintiff (Defendant in the counterclaim): Nantong Tianshun Shipping Co. Ltd. Address: No.50, Qing Nian Road, Nantong, Jiangsu Province Agents ad Litem: Lin Yihua, Chen Yusheng, lawyers of Guangdong Yong Hang Law Firm Defendant (Plaintiff in the counterclaim): Yangzhou Yuyang Ocean Shipping Co. Ltd. Address: No.32, Si Wang Ting Road, Yangzhou, Jiangsu Province Legal Representative: Song Xingting, chairman of the board of directors Agent ad Litem: Liao Hong, lawyer of Guangdong Pacific Law Firm Agent ad Litem: Yuan Gang, staff of Guangdong Pacific Law Firm Defendant: Tian Shen International Shipping Co. Ltd. Address: Er Men, No.70, Xi Hao Road, He Ping District, Tianjin Legal Representative: Song Xingting, chairman of the board of directors Agent ad Litem: Liao Hong, lawyer of Guangdong Pacific Law Firm Agent ad Litem: Yuan Gang, lawyer of Guangdong Pacific Law Firm With respect to the dispute over compensation for ship collision damage, the Plaintiff Nantong Tianshun Shipping Co. Ltd. filed a claim against the Defendants Yangzhou Yuyang Ocean Shipping Co. Ltd. (hereinafter called “Yuyang Co.”), Tian Shen International Shipping Co. Ltd. (hereinafter called “Tian Shen Co.”), and the Defendant Yuyang Co. counterclaim against the Plaintiff. This court accepted the cases respectively on July 30 and September 3, 2001 and constituted the collegiate bench according to law. The court convened all parties concerned to conduct pre-trial exchange of evidences on September 12, and held open court hearings respectively on September 13 and October 23. Li Yihua and Chen Yusheng, the agents ad litem of the Plaintiff, Liao Hong and Yuan Gang, the agents ad litem jointly appointed by the Defendants Yuyang Co. and Tian Shen Co. attended the court hearing. Now the case has been finalized. The Plaintiff claimed that: on June 16, 2001, M/V “Tong Tian Shun” owned by the Plaintiff carried plaster stone in 7,390 tons from Lanshan port, Shandong to Sanya, Hainan. At the time of departure, the vessel was seaworthy, the relevant certificates were valid, and the crew on board were qualified. On the morning of June 21, M/V “Tong Tian Shun” arrived at the Shantou waters. At 0600 hrs, the GPS position of M/V “Tong Tian Shun” was 22058’.0N/116039’.1E, on the course 2430 and at the speed of 10.5 knots. At that moment, the visibility was about 0.5 nautical mile. The bridge ordered the engine room to get the engine ready and changed automatic steering to manual steering. At 0620 hrs, the radar of M/V “Tong Tian Shun” detected two northward ships sailing on her portside 50 in a distance of 4 nautical miles and one northward ship sailing on her starboard 50 in a distance of 5 nautical miles. She then contacted the ship on starboard side by VHF for many times, but there was no response. After consecutive observation by radar, M/V “Tong Tian Shun” found that she had a distance of 0.5 nautical mile with the ships on her port side and a distance of 0.7 nautical mile with the ship on her starboard side. She kept on sailing at the same speed and on the same course. When the northward ship on her starboard was 0.4 nautical mile away from M/V “Tong Tian Shun”, the radar of M/V “Tong Tian Shun” detected there was slight change of its course and the distance between the ships became shorter. In the meantime, the two northward ships on port side were already 0.5 nautical miles to her port side abeam. M/V “Tong Tian Shun” then steered hard port in order to increase the distance from the northward ship on starboard side. She sounded two short blasts and continued to contact the opposite ship by VHF. However, there was no response from the opposite ship. M/V “Tong Tian Shun” continued steering hard port, and the opposite ship kept approaching. When the opposite ship was on a course perpendicular to that of M/V “Tong Tian Shun”, M/V “Tong Tian Shun” sounded two short blasts as warning. At 0635 hrs, the port side of the bow of the opposite ship (at that moment it was found that the name of the ship was “Tian Shen”) hit the starboard No.2 hold of M/V “Tong Tian Shun”. “Tong Tian Shun” stopped engine. The body of “Tian Shen” hit again the starboard stern of “Tong Tian Shun”. The master of “Tong Tian Shun” immediately came to the bridge, and found that “Tian Shen” was about 200 meters to the starboard quarter of “Tong Tian Shun” with her bow heading to the same course as “Tong Tian Shun”. When “Tong Tian Shun” requested “Tian Shen” to render assistance, “Tian Shen” answered that she had not changed to use of the diesel oil and was unable to change and stop the engine. At that moment, “Tong Tian Shun” listed to starboard quickly. Upon examination, it was found that the No.4 double-bottom starboard tank and topside No.2 tank and starboard Hold No.2 had serious ingress of water. Then she took measures to pump out the water immediately, and reported the case to MSA Shantou at the same time. Due to the ingress of water, the vessel was in danger of capsizing. To save the vessel and the crew, the master of “Tong Tian Shun” had no choice but to beach. Finally, the vessel ran aground at a spot 0.5 nautical mile right east of Shi Bei Shan Corner. The vessel sunk after declaring abandoning the ship. Due to sinking of the vessel, the Plaintiff suffered losses of the ship and losses in respect of earnings, expenses for probing and sealing hull, anti-pollution measures, crew’s personal articles, ship’s supplies and articles as well as the losses of spare parts, inspection fees, case handling cost and crew repatriating fee etc., in total of RMB12,265,260.66. The Plaintiff held that the collision was caused because “Tian Shen” was negligent in lookout in poor visibility and had not sailed at a safe speed and with prudence so that a pressing situation was caused and the regulations on ship navigation and prevention of collision had been violated. The Defendants, i.e. Tian Shen Co. as the owner of M/V “Tian Shen” and Yuyang Co. as the demise charterer of M/V “Tian Shen”, should undertake the major responsibility for the collision. The court was requested to order the two defendants to undertake joint and several liability to compensate the Plaintiff for the above losses in amount of RMB12,265,260.66 arising from the collision and sustained by “Tong Tian Shun” and the interest counted from June 21, 2001 to the actual payment on basis of the loan interest rate announced by the People’s Bank of China for the same period, and to undertake the liability for compensating the oil pollution damages arising from sinking of “Tong Tian Shun” as well as the court fees in this case. Before completing the explanation report on the evidences, the Plaintiff provided the following evidences: 1. Sea Protest of M/V “Tong Tian Shun”; 2. The evaluation report and survey report issued by Guangdong Maritime Engineering Consultation and Survey Company, one copy for each; 3. The Charter-party concluded between the Plaintiff and Nantong Huateng International Freight Forwarding Co. Ltd. (hereinafter called “Nantong Huateng Co.”); 4. The Agreement on Underwater Probing and Sealing between the Plaintiff and Guangzhou Maritime Rescue and Salvage Bureau; 5. The Confirmation between the Plaintiff and Yuyang Co.; 6. The invoice for the salvage award issued by Guangzhou Maritime Rescue and Salvage Bureau; 7. The copy of the Report on Probing of “Tong Tian Shun” and Temporary Sealing of the Air Pipes and Sounding Tubes issued by Guangzhou Maritime Rescue and Salvage Bureau (hereinafter called “Report on Probing and Sealing”); 8. The Agreement on Oil Extracting Operation between the Plaintiff and Donghai County Da Li Underwater Engineering Co. Ltd. (hereinafter referred to as “Da Li Co.”); 9. The letter of Yuyang Co. to the Plaintiff confirming the Agreement on Oil Extracting Operation; 10. Explanation by Da Li Co. on Additional Payment for the Oil Extracting Operation on board “Tong Tian Shun” to the Plaintiff; 11. The Agreement on clearance of pollutants for “Tong Tian Shun” between the Plaintiff and Shantou Ocean Shipping Agency Service Company; 12. The Report on Claiming for the Expenses for Clearing the Spilled Oil issued by Shantou Ocean Shipping Agency Service Company, the expenses for clearing oil pollution, the list of calculation and the invoice for the cost of clearing oil pollution; 13. 25 copies of Statement of Losses sustained by the crew of “Tong Tian Shun”; 14. 2 copies of the list of ship’s supplies and provisions; 15. 28 copies of the lists of ship’s spare parts, purchase invoices and purchase contracts; 16. 2 copies of invoices of lubricating oil; 17. 6 copies of lists of newly added fixed assets on board and the invoices; 18. One copy of oil replenishment invoice; 19. 2 copies of the debit notes for the services issued by Guangdong Maritime Engineering Consultation and Survey Company; 20. List of repatriating expenses for crew of M/V “Tong Tian Shun”; 21. 3 tables of crew’s salaries and subsidies issued by the Plaintiff (from July to September); 22. One copy of the list of travel expenses for handling the accident and 1,036 copies of bills therefor; 23. 3 copies of special-purpose bills for the payment of port charges issued by Shangdong Province Lanshan Port Authority; 24. One copy of the receipt for port charges issued by MSA Rizhao; 25. One copy of the notice on pre-paid litigation fees for the preservation of maritime claim prior to proceedings; 26. Table of investigation of maritime accident for M/V “Tong Tian Shun”. After completing the explanation report on the evidences, the Plaintiff provided the following evidences: 1. Certificate of Vessel’s Nationality of M/V “Tong Tian Shun”; 2. Ship Inspection Certificate Book of M/V “Tong Tian Shun”; 3. Certificate of Lowest Safety Manning of M/V “Tong Tian Shun”; 4. Copies of the Certificates of Competence of 10 crew members; 5. Certificate of Ship’s Engagement in Transportation (Provisional) for M/V “Tong Tian Shun”; 6. Certificate of Registry of Ship’s Ownership for M/V “Tong Tian Shun”; 7. Investigation Report on the Collision between “Tong Tian Shun” and “Tian Shen” issued by MSA Shantou (hereinafter referred to as “Investigation Report”); 8. 14 copies of invoices of salvage charges. The Defendant Yuyang Co. contended that: 1. The occurrence of this accident is resulted from M/V “Tong Tian Shun” sailing in high speed and she did not maintain a proper lookout, did not sound the fog signal in line with the relevant regulations on sailing in fog and violated the regulations on prevention of collision, and did not exercise good seamanship. Without the radar plotting, M/V “Tong Tian Shun” suddenly turned the course to port in close quarter blindly and at a large angle, so that a pressing situation was caused to M/V “Tian Shen”. At the emergent situation, M/V “Tian Shen”, in accordance with the relevant regulations on prevention of collision and by applying good seamanship, reasonably turned hard starboard. However, due to the pressing of time and the too close a distance, the two vessels collided with each other finally. As to the occurrence of the accident, M/V “Tong Tian Shun” shall undertake 90% of the liabilities at least. 2. After the accident, M/V “Tong Tian Shun” did not sustain serious damage and she could still be afloat on the water. However, due to the fault of the crew, M/V “Tong Tian Shun” ran aground, aggravating the ingress of water. Finally, the vessel sunk. The facts reveal that the sinking of M/V “Tong Tian Shun” and the loss arising therefrom were attributed to the cause that the crew members did not have good seamanship. The fault of the crew of M/V “Tong Tian Shun” was the cause for the vessel’s running aground and also the proximate cause for the sinking of the vessel. Therefore, the sinking of M/V “Tong Tian Shun” was not due to the ship collision but the fault of the crew members. The crew’s fault further enlarged the damage. The enlarged loss of M/V “Tong Tian Shun” arising from the crew’s fault should be separated from the loss arising from the collision and should be undertaken by the Plaintiff itself. M/V “Tian Shen” should only undertake the compensation liability for the loss directly arising from the collision on basis of proportion of blame. If the court holds that the compensation liability that should be undertaken by each party shall be calculated on basis of the proportion of blame and the loss arising from the collision, the court should take into consideration the factors such as the crew of M/V “Tong Tian Shun” had no good seamanship, the vessel ran aground and sunk due to the crew’s fault and the loss has not been mitigated. Those factors should be taken as the basis for adjudicating that the Plaintiff should undertake most of the liabilities for the collision. 3. The spot that M/V “Tong Tian Shun” collided with M/V “Tian Shen” were all at hull plates of the cargo holds. After the collision and when M/V “Tong Tian Shun” ran aground, no spillage of oil was found. The spillage of oil from M/V “Tong Tian Shun” was attributed to the cause that the vessel listed to one side after running aground, and the crew was negligent in shutting off the fuel pipe system. Therefore, the alleged spillage of oil in this case was due to the negligence and fault of the crew of M/V “Tong Tian Shun” and nothing to do with the collision liabilities. The Plaintiff should undertake the liabilities for the oil spillage by itself. Furthermore, the Plaintiff was not the holder of right with regard to the loss arising from the oil pollution in this case, and it has not actually suffered any loss. Therefore, it has no right to claim against Yuyang Co. for the oil pollution. 4. The evaluation report provided by the Plaintiff with regard to the ship’s value does not bear the legality, objectivity and relevance, which are the requirements for an evidence, and the conclusion of the evaluation is obviously not objective and not in line with the standard for general vessel’s evaluation. Therefore, it cannot be taken as the evidence for ascertaining the facts in this case. The Time Charter Party provided by the Plaintiff is not related to this case and cannot be taken as the basis for claiming for the loss of earrings. The sealing costs and anti-pollution expenses claimed by the Plaintiff were given rise by the fault of the crew of M/V “Tong Tian Shun” and shall be undertaken by the Plaintiff itself. The Plaintiff’s claim for the loss of crew’s personal articles is not in line with the provisions of law. The loss shall be subject to the limit of RMB800 per person. The evidences with regard to the losses such as provisions claimed by the Plaintiff are not sufficient, and the amounts of loss claimed by the Plaintiff for other relevant expenses are obviously too high. Therefore, they should not be supported. Apart from submitting the defensive arguments same as the above of Yuyang Co., the Defendant Tian Shen Co. also contended that: before occurrence of the collision accident, Tian Shen Co. had already demise chartered M/V “Tian Shen” to Yuyang Co.. When the collision accident took place, M/V “Tian Shen” was still under demise charter. According to the provisions of the Demise Charter Party, Yuyang Co. should be responsible for addressing of the disputes arising in the course of the operation of the vessel. After the collision accident, Yuyang Co. actively kept in close contact with the Plaintiff and all relevant parties all the time and discussed with them how to deal with the problems arising from the accident, and provided the court with the security required by the court. The above facts reveal that the Plaintiff already had an implied admission that Tian Shen Co. was not necessary to be responsible for the loss arising from the collision accident and Tian Shen Co. was not a relevant party to the collision liability. The court is requested to reject the litigation requests filed by the Plaintiff against the Defendant Tian Shen Co.. The Defendant Yuyang Co. counterclaim that: on June 21, 2001, Yuyang Co. demise chartered M/V “Tian Shen” to carry 165 containers from Hong Kong to Shanghai. While passing Shi Bei Shan Corner, at about 0635 hrs, M/V “Tian Shen” collided with M/V “Tong Tian Shun”. The collision accident was caused by the fault of M/V “Tong Tian Shun”, therefore M/V “Tong Tian Shun” should undertake 90% of the liabilities at least. After the collision accident, M/V “Tian Shen” sustained serious damage, resulting in the losses sustained by Yuyang Co. such as the repair cost, ship inspection fee, ship agency fee, travel expense, hire and fuel consumption during the suspension of the voyage in total amount of RMB586,254.87 as well as the loss of RMB25,068 arising from the too high a security amount required by the Plaintiff. In addition, Yuyang Co. also prepaid the anti-pollution cost in sum of RMB100,000. The court is requested to order the Plaintiff to compensate Yuyang Co. for the above losses of RMB711,322.87 arising from the ship collision as well as interest counting from June 21, 2001 to the date of actual payment on basis of the loan interest rate announced by the People’s Bank of China during the same period and undertake the court fees in this case. The Defendants Yuyang Co. and Tian Shen Co. provided the following evidences before issuing the explanation report on the evidences: 1. 16 copies of the certificates of M/V “Tian Shen” such as the Certificate of Registry of Ship’s Ownership and the Certificate of Vessel’s Nationality; 2. The Demise Charter Party and the certificate issued by Tian Shen Co.; 3. Copies of the Certificates of Competence of 8 crew members of M/V “Tian Shen”; 4. Sea Protest of M/V “Tian Shen”; 5. Sheet for Investigation of Maritime Accident to M/V “Tian Shen”; 6. Copies of Ship Steering Chart, Log Book, Engine Room Log Book and Telegraph Log Book of M/V “Tian Shen” on June 21, 2001; 7. Tide Table at Haimen Waters in 2001; 8. One copy of the Survey Report and 2 copies of statement of account for M/V “Tian Shen” issued by China Classification Society; 9. One copy of the contract for undertaking repair and 3 copies of the repair invoice for M/V “Tian Shen”; 10. 3 copies of the accounts for travel expense and the corresponding invoices; 11. 2 copies of statements of account issued by Shantou Ocean Shipping Agency and the corresponding invoices; 12. The time charter party concluded between Yuyang Co. and Dong Hang Shipping Co. Ltd., and the correspondences with Wei Hang Shipping Co. Ltd.; 13. Letter of Authorization issued by Yuyang Co. to MSA Shantou for clearing the oil pollution; 14. Certificate for the telegraphic transfer of the anti-pollution fee advanced by Yuyang Co.; 15. Evaluation report on the value of M/V “Tian Shen” issued by China Classification Society and the invoice for the evaluation; 16. One copy for each of the certificate and payment receipt issued by CITIC Industrial Bank Yangzhou Branch. With regard to the counterclaim filed by the Defendant Yuyang Co., the Plaintiff contended that: the loss of hire claimed by Yuyang Co. has no factual and legal basis. The allegation of the Defendant that loss arising from the too high a security required by the Plaintiff has no factual and legal basis either. The court is requested to reject the litigation requests of the Defendant Yuyang Co. against the Plaintiff. At the application of the Defendant Yuyang Co., this court collected the following evidences from MSA Shantou: 1. Sea protest and maritime accident report respectively for M/V “Tong Tian Shun” and M/V “Tian Shen”; 2. Copies of Log Book, Engine Room Log Book, Telegraph Records of the day and Sea Chart used on the day when the collision between M/V “Tong Tian Shun” and M/V “Tian Shen” took place; 3. Written record of inquiries to the master and some crew members of M/V “Tong Tian Shun” and M/V “Tian Shen”; 4. Report on Probing and Sealing; 5. Technical plan for oil extraction from the Sunken M/V “Tong Tian Shun”, Oil-extration on-site record report and the accomplishment report; 6. The certificate issued by the external service department of Shantou Port Material Supplies Company; 7. Report on Claiming for the Costs of Oil Pollution Cleaning for M/V “Tong Tian Shun” issued by Shantou Ocean Shipping agency Service Company, the list of calculation of pollution costs; 8. Certificate of telegraphic transfer of the anti-pollution cost advanced by Yuyang Co.; 9. Hand written record of investigation of this court to the chief of the risk control and pollution prevention department of MSA Shantou. The Plaintiff and the Defendants Yuyang Co. and Tian Shen Co. had no objection to the following facts. The collegiate bench confirmed acceptance of them: The owner of M/V “Tong Tian Shun” was the Plaintiff. The port of registry was Nantong, Jiangsu. The vessel was a steel bulk carrier with 133.9 meters in length, 18 meters in breadth, 9.1 meters in depth. Her gross tonnage was 6,633 and net tonnage was 3,339. The main engine was internal combustion engine with the capacity of 4,027kw. The vessel was built by the Spanish shipyard, i.e. ASTILLEROS. DE. T. RU, on November 1, 1975. On the voyage involved in the accident, the vessel was fully manned with licensed crew members as per the requirement of lowest safety manning. The certificates of competence of the crew were all within the period of validity. The ship’s certificate of seaworthiness was valid until February 28, 2002. The owner of M/V “Tian Shen” was the Defendant Tian Shen Co., the port of registry was Tianjin. She was a steel container vessel, 109.6 meters in length, 18 meters in breadth, 8.3 meters in depth. Her gross tonnage was 4,388 and net tonnage was 2,337. The main engine was internal combustion engine with the capacity of 4,310kw. The vessel was fully manned with licensed crew members as per the requirement of lowest safety manning. The certificates of competence of the crew were all within the period of validity. The ship’s certificate of seaworthiness was valid until March 16, 2004. The vessel acquired the Certificate of Compliance issued by China Classification Society on May 6, 1999 and the Certificate of Safety Management issued by China Maritime Safety Administration on October 27, 2001. The demise charterer of the vessel was the Defendant Yuyang Co., but the demise charter did not go through the registration formalities at the ship registration authority. On June 16, 2001, M/V “Tong Tian Shun v.13” carried 7,390 tons of plaster stone from Lanshan port, Shandong to Sanya port, Hainan. At 0500 hrs on June 21, the vessel sailed to the waters adjacent to Shi Bei Shan, and the ship GPS position was 22003’.0N/116048’.5E. The compass course was 2400 and the ship speed was 10.3 knots. At 0600 hrs, the visibility began to worsen and the range of visibility was about 1,000 meters. The chief officer on duty ordered the engine room to get the engine ready, but did not ask the master to go to the bridge to give command. At that moment, the ship GPS position was 22058’.0N/116039’.1E, and the compass course was 2430. The ship speed remained unchanged. The radar of M/V “Tong Tian Shun” did not have the ARPA function, but it could display the trail of the object under observation. At that moment, the radar’s range of measurement was 6 nautical miles in off-centered display. At 0615-0620 hrs, the radar detected that the approacing vessel, i.e. M/V “Tian Shen”, was about 70 to the starboard of this vessel and in a distance of 6-7 nautical miles. It was observed that M/V “Tian Shen” was sailing on the course nearly contrary to this vessel and at a faster speed. M/V “Tong Tian Shun” continued the voyage at the same speed and course. According to the chief officer of M/V “Tong Tian Shun”, there were many fishing boats nearby, which has influenced his decision of turning the course. When the distance between the two vessels was nearly 0.4 nautical mile, the chief officer found that the distance of approach between the two vessels became shorter. He immediately ordered hard port, without reducing speed. At about 0635 hrs, the starboard side of Hold No.2 of M/V “Tong Tian Shun” for the first time contacted the portside bow of “Tian Shen” where the name of M/V “Tian Shen” was located. Then the starboard stern of “Tong Tian Shun” contacted with the port midship of M/V “Tian Shen” for the second time. At the time of first contact, M/V “Tong Tian Shun” was on the course of about 1800 and the helm angle hard port, angle of blow was about 150. Not until the moment of collision did the chief officer ordered to stop engine. After the collision, the master of M/V “Tong Tian Shun” went to the bridge. After examination, it was found that Cargo Hold No.2, Topside Tank No.2 and the double-bottom ballast tank No.4 had serious ingress of water. The master alleged that the vessel listed to starboard at a fast speed and estimated that there would be the danger of capsizing, so he decided to get the ship stranded. During the course of stranding, M/V “Tong Tian Shun” ran aground at 22056’.62N/116030’.98E. As the vessel continued to go down after striking the rocks, the master declared to abandon the vessel at 0729 hrs. The crew left the vessel and boarded on two lifeboats. After two hours of guarding around the vessel, the crew were all rescued by the fishing boats in the vicinity. On June 20, 2001, M/V “Tian Shen v. 44” carried 1,230.20 tons cargo in total of 165 containers from Hong Kong to Shanghai. At 0500 hrs on June 21, M/V “Tian Shen” sailed to the waters close to Shi Bei Shan. The ship position then was 22048’.3N/116011’.5E, the compass course was 710, and the ship speed was about 13.5 knots. At that moment, the visibility began to worsen and the range of visibility was about 1-2 nautical miles. The chief officer on duty ordered the engine room to get the engine ready for sailing, and the master was asked to go to the bridge to give command. The main engine continued to use heavy fuel oil. According to the chief officer, he had carried out three experiments after he took up the post of chief engineer. He holds that it is still practicable to get the engine ready without using diesel oil. The master and the deck officer also approved and were used to such operation. At 0608 hrs, the GPS position of M/V “Tian Shen” was at 22053’.3/116027’.3, with the course and the speed remaining unchanged. The radar of M/V “Tian Shen” did not have the ARPA function either, but it could display the trail of the object under observation. At that moment, the radar’s range of measurement was 6 nautical miles and 12 nautical miles alternatively, in centered-off display. At 0615 hrs, the radar of M/V “Tian Shen” detected that the coming up vessel “Tong Tian Shun” was about 50 to her port side in a distance of about 7.8 nautical miles. It was observed that the bearing of the coming up vessel basically remained unchanged, and the transverse distance of approach was about 0.2 nautical mile. M/V “Tian Shen” continued to sail at the same speed and course. According to the master, there were quite a lot of fishing boats around, which has affected his decision on not turning course at an early stage. At about 0633-0634 hrs, when the distance between the two vessels was about 0.4 nautical mile, M/V “Tian Shen” found that M/V “Tong Tian Shun” turned her course to port at a large angle. He immediately steered hard starboard and in the meantime ordered to stop engine and full astern. At 0635 hrs when M/V “Tian Shen” collided with M/V “Tong Tian Shun”, the helm angle of M/V “Tian Shen” was hard starboard and the vessel was on a course of about 1100. The engine was already operating astern, but its rotating speed was not up to the full. When the collision between the two vessels took place, the state of the sea was: southeast wind in scale 3-4, dense fog, with the visibility about 1,000 meters. The place of collision was at about 22055’.0N/116033’.8E. During the course of the litigation, MSA Shantou issued the Investigation Report with regard to the collision accident on September 14, 2001 after they conducted an investigation. The investigation report has determined the facts basically the same as those ascertained by the collegiate bench as mentioned above. In analyzing the cause of the accident and the relevant responsibilities, the report holds that M/V “Tong Tian Shun” has committed the following faults: 1. In the circumstance that the visibility was restricted, the vessel was negligent in not sending a lookout to keep proper lookout. After seeing M/V “Tian Shen”, the vessel was not conscious of the danger of collision between the two vessels, but blindly kept on sailing on the same course and at the same speed. Measures were not taken until there was only 0.4 nautical mile between the two vessels. 2. The vessel did not sail at the safe speed. She sailed at full speed in the circumstance that the visibility was not good and there were many fishing boats around. At the time of collision, her speed was still full ahead, thus Article 6 concerning safety speed of the International Regulations for Preventing Collisions at Sea, 1972 has been violated. 3. The measures of avoiding collision were taken improperly. The vessel did not take the measure of avoiding collision in time, but turned the helm to port at large angle to avoid the coming vessel at a close distance. Therefore, Article 19 of the International Regulations for Preventing Collisions at Sea, 1972 regarding the conduct of vessels in restricted visibility has been violated. M/V “Tian Shen” has committed the following faults: 1. The vessel was negligent in keeping proper lookout under restricted visibility. After having the judgement on the trail of the radar echo that the transverse distance of approach between the coming vessel and this vessel was about 0.2 nautical mile, the master did not pay full attention in this regard, but let the vessel keep on the same course and at the same speed. He made no response until he found that the coming vessel turned her course to port side at a large angle. It means that he was inactive to take the action of avoiding the collision. 2. The vessel was not sailing at a safe speed. In the navigational environment that the visibility was restricted and there were many fishing boats around, the vessel still kept on sailing at full speed. Furthermore, the engine was not standby. The main engine was still using heavy fuel oil, which was detrimental to the operation of the machine. Finally, the vessel could not be brought to a halt even by stopping the engine and steering astern, therefore Article 6 and Article 19 of International Regulations for Preventing Collisions at Sea, 1972 regarding safe speed have been violated. 3. Measures to avoid the collision were taken improperly. The vessel did not take the measures of turning the course to avoid collision at an early stage. After finding that M/V “Tong Tian Shun” turned her course to port at a large angle, M/V “Tian Shen” turned the course to starboard so that the dangerous situation was unavoidable. To sum up, the cause of the collision accident was due to their low guard and negligent lookout of the two parties. The two parties failed to fully estimate the risk of collision, did not sail at a safe speed and did not take the measures of avoiding collision properly. The degree of faults committed by both parties are equal, therefore the blame proportion for each party is 50%. The Plaintiff and the Defendants have no objection to the facts ascertained in the investigation report, but the two Defendants hold that the report is wrongful in ascertaining that M/V “Tian Shen” has not conducted radar plotting and has not got the engine standby. The cause of accident so determined is not consistent with the conclusion. The liability for fault that should be undertaken by M/V “Tian Shen” has been obviously aggravated. It has been found that when the master and the chief officer of M/V “Tian Shen” was investigated by MSA Shantou, they both indicated that they judged the course and speed of the coming vessel according to the trail of the radar echo of the vessel. At the entrustment of the Plaintiff, Guangzhou Maritime Rescue and Salvage Bureau conducted probing of the sunken M/V “Tong Tian Shun” and temporary sealing of the vessel’s air pipes and sounding tubes, and issued the Report on Sounding and Sealing on June 30, 2001. It was stated in the report that: M/V “Tong Tian Shun” sustained damages as follows: at the bottom of the portside engine room, there was a crack of 0.8 meter long and about 3cm wide; at the central and forward part of Hold No.2 there was a crack of 2.3-2.5 meters long and about 3-10cm wide. The frogmen judged that the said two cracks were caused after the vessel ran aground. At a point in the port bow, which was about 3 meters backward from the starting point of the bilge keel, the hull plate of the vessel was dented, but no breakage was found. At the central and forward part starboard side of Hold No.2, there was a crack of 6-6.5 meters. The edge of the crack was relatively regular, and the hull plate of the crack was dented inward for about 40cm. The breach was about 10cm in width at both ends and the largest width in the middle was about 46cm. In the ascending direction, the crack was about 3 meters above the bilge keel. There was some plaster stone leaking from the crack. Guangzhou Maritime Rescue and Salvage Bureau carried out an examination on the vessel and conducted temporary sealing of the air pipes and sounding tubes of the oil tanks. 5 watertight doors of the engine room were closed and 11 lines of pipes were sealed off temporarily. At the entrustment of Guangdong Yong Hang Law Firm, Guangdong Maritime Engineering Consultation and Survey Company conducted an inspection on the cause, degree and extent of the damage, and issued the Inspection Report on July 11, 2001. The report holds that the damages sustained by M/V “Tong Tian Shun” as stated in the said Report on Probing and Sealing by Guangzhou Maritime Rescue and Salvage Bureau and the crack at the central and forward part on starboard side can be reasonably attributable to collision accident as alleged by the master. The damages in other parts can be reasonably attributable to the stranding after the collision as alleged by the master. It is estimated that for the salvage and repair of M/V “Tong Tian Shun”, the salvage would cost about RMB6,000,000, the temporary repair and towage service would cost about RMB1,000,000, and the repair would cost about 4,300,000. According to the Budget Report (Draft) attached in the Inspection Report on the Costs for Salvaging the Sunken Vessel “Tong Tian Shun” a whole object produced by Da Li Co., the total cost for salvaging M/V “Tong Tian Shun” is estimated to be about RMB7,000,000. At the application of the Defendant Yuyang Co., China Classification Society carried out on June 22, 2001 an inspection on the damage to M/V “Tian Shen” after the collision at Shantou port, and issued the Inspection Report on June 26. The report stated that there were many dents on the hull of the vessel “Tian Shen” or hull plates deformed, corrugated, cracked; the fender rails and air pipes were broken; the paint peeled off. Such damages could be reasonably attributable to the collision accident. According to the damages sustained by the vessel, and by reference to the Tariff for Repairing Domestic Vessels in Civil Use and taking the actual situation of Shantou district into consideration, it was estimated that the permanent repair would cost about RMB160,000. It was otherwise found that before the filing of the claim, the Plaintiff lodged an application for maritime preservation prior to proceedings. This court detained M/V “Tian Shen” on June 24, 2001 according to law. After the Defendant Yuyang Co. provided a security of RMB8,000,000, this court lifted the arrest of M/V “Tian Shen” on June 26. The Plaintiff prepaid the application fee of RMB5,000 and the execution fee of RMB20,000 to this court for the maritime preservation. During the course of litigation, at the application of the Defendant Yuyang Co., this court collected the relevant evidences from MSA Shantou. Yuyang Co. paid the investigation and evidence collection fees in sum of RMB3,000 to this court. In addition, with respect to the oil pollution caused by the sinking of M/V “Tong Tian Shun”, the relevant parties has filed an separate action to this court, and the action has been accepted by this court. The losses claimed by the Plaintiff have been ascertained as follows: Regarding the loss in the value of M/V “Tong Tian Shun” At the entrustment of Guangdong Yong Hang Law Firm, Guangdong Maritime Engineering Consultation and Survey Company issued an Evaluation Report on the value of M/V “Tong Tian Shun” on July 18, 2001. The report states that as M/V “Tong Tian Shun” has sunken at the waters off Shantou, the examination could not be carried out on board. The ship surveyor of Guangdong Maritime Engineering Consultation and Survey Company has examined the relevant materials and certificates of the vessel, referred to the ship price quotations in the market, and taken the following factors into consideration: 1. The vessel possesses the effective certificates issued by the Register of Shipping of the PRC and has been in normal operation; 2. The value of the said vessel when scrapped and dismantled is about RMB4,000,000; 3. The vessel was built in 1975. According to the Provisions on Management of Old and Outdated Vessels promulgated by the Ministry of Communications, the age of compulsory scrapping of the said vessel is 33 years; 4. The owner said that the vessel had renewed or additionally installed two diesel engines, intermediate shaft, stern bearing, radar and DSC equipment in the value of about RMB750,000. The vessel was examined and repaired at Qinhuangdao Shanhaiguan Shipyard in November, 2001 and the repair cost was about RMB1,600,000. It is estimated that the market price of the vessel before June 21, 2001, i.e. the date of the accident, is about RMB8,000,000. The Evaluation Report is affixed with the chop of Guangdong Maritime Engineering Consultation and Survey Company and there is not the signature of the surveyor on it. In light of the report, the Plaintiff alleged that the loss of the value of the said vessel was in the amount of RMB8,000,000. The two defendants hold that the evaluation report does not have the three essential factors as an evidence, i.e. legality, objectivity and relativity, therefore it shall not be adopted. The reasons are as follows: 1. Guangdong Maritime Engineering Consultation and Survey Company is not an institution of evaluating ships authorized by the state nor an organ with the professional qualification in this field, therefore it has no qualification to evaluate the vessel. 2. The surveyor has not carried out the inspection on site by himself, thus the process of the evaluation is illegal. 3. The evaluation report does not have the signature of the ship surveyor. 4. The party who entrust the evaluation is Guangdong Yong Hang Law Firm, which do not have any interests with the accident in this case, therefore it has no right to entrust the relevant organ of evaluation to evaluate the vessel. 5. On the basis of calculating the value of the scrapped steel vessel to be RMB4,000,000, the evaluation report asserts without foundation that the value of the vessel is as high as RMB8,000,000, which is obviously not objective. The report is also not objective in taking the costs for ship renewals and supplement of equipments and the repair cost as the basis for estimating the value of the vessel, and it is not objective and in line with the standard for evaluating general ships. According to the Business License for the Legal Person of the Enterprise of Guangdong Maritime Engineering Consultation and Survey Company provided by the Plaintiff, the business scope of the company is engagement in technical inspection of ships, offshore facilities and onshore engineering, notarial survey for damages, consultation, claims arising from maritime accidents and non-maritime accidents, claim adjustment and claim recovery. However, Guangdong Maritime Engineering Consultation and Survey Company has not the professional qualification certificate for evaluation of ship’s value issued by the relevant authority of the state. Furthermore, according to the certificate of registry of ship’s ownership for M/V “Tong Tian Shun” provided by the Plaintiff, the date when the Plaintiff acquired the ownership of the vessel was December 22, 1997 and the vessel’s value was RMB6,800,000. The collegiate bench holds that under the circumstance that Guangdong Maritime Engineering Consultation and Survey Company has neither boarded on the vessel to carry out an examination nor verified the relevant facts and the relevant expenses for the renewal or supplement of the equipment, regular examination and repair of the vessel have been taken as the factors in estimating the value of M/V “Tong Tian Shun”, so that the conclusion of the evaluation is lack of sufficient basis. Therefore, under the circumstance that the two defendants refuse to confirm such expenses, the evaluation conclusion reached by Guangdong Maritime Engineering Consultation and Survey Company for the value of M/V “Tong Tian Shun” will not be adopted. Under the circumstance that the market price of M/V “Tong Tian Shun” and other similar vessels at that place of collision or at the port of registry at the time when the collision took place, according to Article 8 of the Regulations on Adjudication of Compensation for Property Damages Related to Vessel’s Collision and Contact Cases, the loss of the value of M/V “Tong Tian Shun” can be calculated on basis of the building price or purchasing price of the original vessel after deducting the depreciation (the rate of depreciation is at about 4-10% per year). The certificate of registry of ownership of M/V “Tong Tian Shun” states that the time when the Plaintiff acquired the right of ownership of the vessel on December 22, 1997 the vessel’s value is RMB6,800,000. Under the circumstance that the Plaintiff and the two defendants have not provided the building price or purchasing price of M/V “Tong Tian Shun”, it can be ascertained that when the Plaintiff acquired the ownership of M/V “Tong Tian Shun” on December 22, 1997, the value of the vessel was RMB6,800,000. To calculate on basis of depreciation rate of 7% per year, the loss of the value of M/V “Tong Tian Shun” on June 21, 2001 when the vessel sank after collision should amount to RMB5,134,000. II. The loss of earnings of M/V “Tong Tian Shun” According to the Charter Party provided by the Plaintiff, which the Plaintiff alleged that it was concluded with Nantong Huateng Co. on June 8, 2001, Nantong Huateng Co. chartered M/V “Tong Tian Shun” from the Plaintiff for a period of six months. Nantong Huateng Co. might choose to continue the charter. The date of returning the vessel was temporarily arranged to be the first ten days of July, 2001. The specific time of delivery would be taken as the date of formal handover. The hire was RMB540,000 each month, or prorata if less than one day. The Plaintiff should supply food and pay salaries to the master, crew and sailors, and supply necessary articles to the deck and engine room, supply and pay for all the lubricating oil, pay the insurance premium and other expenses such as docking, repair and maintenance. On the ground of the two-month hire as stipulated in the contract, the Plaintiff claimed for the loss of earnings of M/V “Tong Tian Shun” in amount of RMB1,080,000. The two defendants hold that they are doubtful of the truthfulness of the charter party and believe that the contract has not be performed, therefore it has nothing to do with this case. According to Article 10 of the Regulations on Adjudication of Compensation for Property Damage Related to Ship Collision and Contact Cases of the Supreme People’s Court, the highest claim amount of the loss of earnings is two-month net profit of the vessel. However, in this case, the Plaintiff time chartered M/V “Tong Tian Shun” to Ningbo Qinning Shipping Agency Co. Ltd. at the hire of RMB450,000 each month. Therefore, the loss of earnings of M/V “Tong Tian Shun” should be calculated on basis of the hire RMB450,000/month, deducting the necessary expenses such as the crew’s salaries, ship’s provisions, lubricating oil, ship’s insurance premium, depreciation fee and the operation expenses of the company etc.. According to the market situation at the material time, the net profit generally would not exceed 10% of the hire, that is, the Plaintiff could only claim for the loss of earnings in amount of RMB90,000. Upon examination, the Time Charter Party between the Plaintiff and Ningbo Qinning Shipping Agency Co. Ltd. provides that the lease term is one month and the hire is RMB450,000/month. Other clauses on rights and obligations are the same as that in the Time Charter Party concluded between the Plaintiff and Nantong Huateng Co.. The collegiate bench holds that: according to Article 10 of the Regulations on the Adjudication of Compensation for Property Damage Related to Ship Collision and Contact Cases of the Supreme People’s Court, if a vessel sustains total loss, the calculation of loss of earnings shall be for two months at most. Generally speaking, it shall be calculated on basis of the average net profit of two voyages before and two voyages after the collision accident. If these are not two voyages before and after the collision for reference, it shall be calculated according to the average net profit of other corresponding voyages. The Time Charter Party concluded between the Plaintiff and Nantong Huateng Co. has not been actually performed due to the sinking of M/V “Tong Tian Shun”. Under the circumstance that the two defendants raised dissension from the authenticity of the charter party, the net profit of M/V “Tong Tian Shun” can be calculated on basis of the hire of the time charter voyage at issue to which the Plaintiff and the two defendants had no objection, that is, RMB450,000/month as stipulated in the Time Charter Party concluded between the Plaintiff and Ningbo Qinning Shipping Agency Co. Ltd.. As the Plaintiff and the two defendants have not provided the relevant evidences for the costs that should be incurred by M/V “Tong Tian Shun” during the time charter period, the net profit of the vessel cannot be calculated exactly. Under the circumstance that the plaintiff has not provided other contrary evidences, according to the general net profits of the vessels similar to M/V “Tong Tian Shun” in the Chinese time charter market, the monthly net profit of M/V “Tong Tian Shun” can be ascertained to be 10% of the monthly hire. The loss of earnings shall be calculated for two months, that is, RMB90,000. III. Expenses on Underwater Probing and Sealing On June 25, 2001, the Plaintiff concluded the Agreement on Underwater Probing and Sealing with Guangzhou Maritime Rescue and Salvage Bureau. Guangzhou Maritime Rescue and Salvage Bureau was entrusted to clear the oil pollutant floating around the vessel and to probe and to carry out temporary sealing of air pipes and sounding pipes on deck. The cost of the operation was about RMB290,000. On the same day, the Defendant Yuyang Co. and the Plaintiff signed a Confirmation to confirm that they had participated in the process of negotiating the said Agreement on Underwater Probing and Sealing and agreed with the Agreement. Guangzhou Maritime Rescue and Salvage Bureau performed the agreement. The Plaintiff paid Guangzhou Maritime Rescue and Salvage Bureau the costs of probing and sealing in amount of RMB290,000, and obtained the invoice issued by Guangzhou Maritime Rescue and Salvage Bureau. The two defendants had no objection to the expenses paid by the Plaintiff, thus it has been confirmed by the collegiate bench. IV. Cost for Clearing the Pollution The Plaintiff concluded the Agreement on Clearing the Pollution for M/V “Tong Tian Shun” with Shantou Ocean Shipping Agency Service Company on July 6, 2001. Shantou Ocean Shipping Agency Service Company was entrusted to clear the oil pollution around the place where M/V “Tong Tian Shun” sank. The Agreement also provided for the specific items and standard for calculating the anti-pollution cost. After Shantou Ocean Shipping Agency Service Company completed the anti-pollution operation, it requested the Plaintiff to pay for the expenses such as anti-pollution cost in amount of RMB154,927.57 and the anti-pollution management fee of RMB15,492.76 which are to be collected on behalf of the competent maritime administrative department. The Plaintiff alleged that it had paid for the said expenses such as the anti-pollution cost in total amount of RMB170,420.33. However, it only provided the invoice for the anti-pollution management fee in the amount of RMB154,927.57. The two defendants had no objection to the above facts and evidences. However, they held that the said anti-pollution cost was too high. The collegiate bench holds that as the Plaintiff has not provided the evidence for the payment of the anti-pollution management fee, the anti-pollution fee shall be ascertained as RMB154,927.57. The Defendant contended that the said anti-pollution fee paid by the Plaintiff was too high, however it has not provided any supporting evidence. Therefore, its allegation will not be supported. V. Cost for Oil Extraction On July 5, 2001, the Plaintiff signed an agreement with Da Li Co., entrusting Da Li Co. to extract oil from the sunken M/V “Tong Tian Shun” and the charge for the oil extraction was RMB1,154,800. The Defendant Yuyang Co. addressed a letter to the Plaintiff to indicate that it had no objection to the clauses of the said agreement and to the cost of oil extraction in sum of RMB1,154,800. However, it reserves the right of further verification. The specific oil-extracting operation was carried out by Unit 92213 of the People’s Liberation Army. The Unit commenced the operation on July 8 and completed the oil extracting operation on July 24. A total of 130 tons of useless oil was extracted out. During the period of operation, Da Li Co. sent a letter to the Plaintiff. In the letter, it requested for an additional charge for the oil extracting in amount of RMB150,000 on the ground that unexpected difficulties were encountered in the operation due to the influence of typhoon, the vessel seriously listed and capsized and was seriously damaged on her starboard side, there was great difficulties in the sealing of opening of the oil tank and a large volume of auxiliary measures such as underwater electric cutting and removing ores underwater needed to be taken. It was confirmed by the Plaintiff with a seal on the letter. The Plaintiff received the invoice for the oil-extracting charge issued by Da Li Co. in the amount of RMB1,304,800. The two defendants had no objection to the above facts. However, they held that Da Li Co. had no right to charge for the oil-extracting charge as it was not qualified to carry out such operation. Furthermore, it was not in line with the provisions of the agreement for Da Li Co. to additionally charge for the cost of oil extracting in RMB150,000. The collegiate bench holds that the two defendants have not provided the relevant evidences in respect of the professional qualification necessary for oil extracting operation in this case. Da Li Co. has performed the obligation of extracting the oil according to the contract, therefore it has the right to request for the payment of the oil extracting charges. Although there is no evidence showing that the requirement of Da Li Co. for the additional oil extracting charge of RMB150,000 has been agreed by the two defendants in advance. However, the cost has been paid by the Plaintiff. In the circumstance that the two defendants had no sufficient evidences proving that it was unnecessary for the Plaintiff to pay for the cost, the additional charge for the oil extracting shall be supported. Therefore, the fact that the plaintiff has paid for the oil extracting charge of RMB1,304,800 has been confirmed. VI. loss of personal articles suffered by the crew of M/V “Tong Tian Shun” The Plaintiff has provided the breakdown of losses sustained by 23 crewmembers of M/V “Tong Tian Shun” to prove that the loss of personal articles sustained by the said crewmembers amounted to RMB148,440 in total. Besides the articles for daily use, the crew’s articles stated in the said breakdown of losses also include cash and valuables such as gold and silver. The two defendants had no objection to the truthfulness of the loss of personal articles stated in the breakdown of loss. They held that according to the Regulations of the Supreme People’s Court on Adjudication of Ship Collision and Contact Cases Related to Compensation for Property Damages and Regulations on Handling of Marine Traffic Accidents of Guangdong Province, the losses of the valuable articles possessed by the crew such as currencies, gold and silver shall not be supported. The limit of the compensation for the loss of crew’s personal articles shall be ascertained on the basis of RMB800/person. The collegiate bench holds that according to items (7) and (8) of Article 9 of the Regulations of the Supreme People’s Court on Adjudication of Ship Collision and Contact Cases Related to Compensation for Property Damages, the loss of crew’s personal articles for daily use shall be compensated according to the actual amount of loss. The loss of currencies, gold and silver, jewelry, securities or other articles of value shall not be supported. The breakdown of losses provided by the Plaintiff in respect of the crew’s articles describes the items of the lost articles and the amount of loss, but there are not supportive evidences. Furthermore, the articles of value so lost such as the currencies, gold and silver shall not be ascertained according to law. In the circumstance that the actual loss of crew’s personal articles could not be ascertained, the loss of crew’s personal articles for daily use may be calculated on basis of RMB800/person according to the Regulations on Handling of Marine Traffic Accident of Guangdong Province. The loss of personal articles for daily use sustained by the 23 crewmembers of M/V “Tong Tian Shun” would be in amount of RMB18,400 in total. VII. Loss of Stores The alleged loss of stores claimed by the Plaintiff, i.e. RMB14,511.30, means the amount stated in the notes listed in the List of the Lost Ship Documents and lost with the vessel on purchasing stores, crew’s travel expenses and borrowed money. The two defendants held that the items stated in the List were not the loss of the stores itself and there were not the corresponding notes for verification, therefore they should not be approved. The collegiate bench holds that the Plaintiff has not provided evidences to prove that the said documents had actually lost together with the sinking of the vessel, and the loss of the notes on the relevant stores, crew’s travel expenses and debts of borrowed money could not support the loss of stores and expenses stated therein. Therefore, the alleged loss of stores claimed by the Plaintiff will not be supported. VIII. Loss of Spare Parts According to the List of Accessories and Spare Parts Belonging to Ship, the loss of spare parts claimed by the Plaintiff includes the facilities and spare parts such as the fittings of the main engine, piston ring, paint, stern bearing, water pump of air conditioner, etc. purchased from Jan. 19, 1999 to May 29, 2001. Attached with the List are the invoices for the Plaintiff’s purchasing the said facilities and articles. The expenses stated in some of the invoices are the costs for repair and maintenance, renewal of fittings, paint for ship repairing, and renewal of stern bearing etc.. Some others state that there are also the expenses on repair of facilities and articles, inspection, transportation etc.. The amounts stated in the above invoices are in total of RMB465,120.13. The two defendants held that the Plaintiff did not provide evidence to prove that the said spare parts and articles were all used by M/V “Tong Tian Shun”, some invoices stated that they were the expenses for replacement, repair and maintenance, and some others stated that the expenses included the travel expenses, labor cost etc.. Such expenses were not for spare parts. The invoices provided by the Plaintiff were for the purchasing of spare parts since 1999. M/V “Tong Tian Shun” had a major repair in November, 2000, but the Plaintiff had not provided sufficient evidence to prove that the relevant spare parts had not been used all the while. Some facilities in the list of spare parts, such as the fittings of the Main Engine VTR500, were not related to M/V “Tong Tian Shun”. Some facilities such as television and air conditioning water pump were the machinery equipment, which had been included in the ship’s value, therefore, such loss should not be claimed separately. The collegiate bench holds that the Plaintiff has not provided evidence to prove that the facilities and articles listed in the said List of Ship’s Spare Parts are all used as the spare parts of M/V “Tong Tian Shun”, and there are not sufficient evidences to prove that they have been used before the collision. In addition, the expenses on some spare parts stated in the List are actually for replacement, repair and maintenance, which should have been included in the value of the vessel. Therefore, the said List of Ship’s Spare Parts provided by the Plaintiff and invoices attached thereto are not sufficient to prove the loss of the spare parts of M/V “Tong Tian Shun” sustained by the Plaintiff. Therefore, this item of claim will not be supported. IX. Loss of Newly Added Fixed Assets The Plaintiff has provided the invoices for purchasing the facilities, such as anchors, two-way mobile phones, booster shells of Main Engine VTR500, bearings etc., to prove that the newly added fixed assets of M/V “Tong Tian Shun” were in value of RMB116,324. The two defendants held that the said facilities were machinery equipment, which should be included in the ship’s value. The collegiate bench holds that the said facilities should be the fixed assets of the ship itself, and its value should be included in the ship’s value. Therefore, such item of claim will not be supported. X. Loss of Lubricating Oil To support the loss of lubricating oil, the Plaintiff has provided the invoices for the purchase of lubricating oil on May 17, June 16, 2001. The two invoices were issued by Yonghui Lubricating Oil Co. Ltd. of Qingdao Economic Technology Development District, which states that the total amount of purchasing lubricating oil was RMB67,088.40. The two defendants held that M/V “Tong Tian Shun” commenced the voyage at issue from Lanshan port, Shandong. However, the said invoices stated that the lubricating oil was purchased at Qingdao, Shandong. The fact of the Plaintiff’s purchasing lubricating oil was doubtful. In addition, the lubricating oil would be consumed from time to time during the course of ship’s operation, therefore the amount should be discounted. The collegiate bench holds that the said invoice can only prove that the Plaintiff has purchased the lubricating oil but cannot prove that the said lubricating oil has been provided to M/V “Tong Tian Shun” and the remaining quantity of the lubricating oil when the vessel sunk. In the circumstance that the Plaintiff could not provide sufficient supportive evidences, this item of claim will not be supported. XI. Loss of bunkers The Plaintiff has provided a copy of the invoice related to the fact that the purchaser purchased bunkers from Ningbo Qinning Shipping Agency Co. Ltd., which is the basis for its claim for the loss of bunkers in RMB262,269.40. The two defendants held that the Plaintiff had no right of claim to this item of loss. The collegiate bench holds that the said bunkers were purchased by Ningbo Qinning Shipping Agency Co. Ltd. during the period of time charter of M/V “Tong Tian Shun”. Ningbo Qinning Shipping Agency Co. Ltd. has filed a claim for such loss against the Plaintiff and the two defendants in another case, therefore such loss is not within the judicial scope of this case. This court will deal with it in another case. XII. Expenses on Ship Survey and Evaluation The Plaintiff has provided the Debit Note for Providing Service in respect of ship survey fee and evaluation fee issued by Guangdong Maritime Engineering Consultation and Survey Company, and respectively claimed for the ship survey fee of RMB9,200 and the evaluation fee of RMB3,380, that is RMB12,580 in total. The two defendants held that the Plaintiff had not provided any certification for payment and invoices to support its payment of the said expenses, therefore it could not be proved that the Plaintiff had paid for the above expenses. Furthermore, such expenses had to be incurred by the Plaintiff for adducing evidences. Therefore, it should be undertaken by the Plaintiff for its own account. The collegiate bench holds that the Plaintiff has provided the Survey Report and Evaluation Report issued by Guangdong Maritime Engineering Consultation and Survey Company. Although the Plaintiff has not provided the certification for the actual payment of such expense, it should be deemed that such expenses have been actually incurred. The amount of RMB12,580, which is the expense on ship survey and evaluation, is the necessary expense paid by the Plaintiff for finding out and ascertaining the loss after the ship collision. Therefore, it shall be supported. XIII. Loss in Respect of Crew’s Repatriating Fee and the Severance Pay The Plaintiff claimed for the repatriating fee for the 23 crewmembers of M/V “Tong Tian Shun” at RMB1,000/person, and provided the list of the crewmembers to whom the repatriating fee had been paid, which does not bear the signatures of the crewmembers. The two defendants had no objection to the amount of the repatriating fee, but held that the list had not the signatures of the crewmembers, so it could not prove that this item of cost had been actually incurred. The collegiate bench holds that after M/V “Tong Tian Shun” sunk after the collision, the crewmembers’ repatriating cost is inevitably to be incurred. Now that the two defendants have no objection to the amount of repatriating fee claimed by the Plaintiff, the repatriating fee of RMB23,000 shall be approved. The Plaintiff also claimed for the crew’s severance pay of RMB198,000, which was calculated on basis of the total amount of salaries of the 23 crewmembers of M/V “Tong Tian Shun” for three months from July 1 to September 30, 2001. The Plaintiff provided the salary sheets of the 23 crewmembers for the three months. However, there was no signature of the crewmembers in the sheet. The Plaintiff did not provide the employment contracts of the said 23 crewmembers either. The two defendants held that the sheet had not the signatures of the crewmembers, thus it could not prove that the severance pay had been actually incurred, and that it was groundless to calculate the severance pay according to the salary standard of the three months. The collegiate bench holds that the Plaintiff has not provided the legal and contractual basis for its need to lay off the crew nor provided the evidences to support that it has actually paid the severance pay. Therefore, the Plaintiff’s claim for loss of crew’s severance pay will not be supported. XIV. Loss in Respect of Port Dues and Charges The Plaintiff has provided the invoices and receipts for the payment of towage service fee, pilotage fee, charge for mooring and unmooring tow lines, ship agency fee, fresh water charge, port charge etc. incurred by M/V “Tong Tian Shun” at Lanshan port, Shandong, and claim for the said port dues and charges in total amount of RMB17,467.45. The two defendants held that the said expenses should be paid by the charterer of MV “Tong Tian Shun” and they were not relevant to the collision accident. Therefore, they should not be approved. The collegiate bench holds that the opinion of the two defendants is reasonable, therefore will not support such loss. XV. Loss in Respect of Travel Expenses Paid by the Plaintiff for Handling the Collision Accident The Plaintiff provided 1,036 copies of bills related to the expenses covering travel, accommodation, food, telephone, fax etc., claiming for the loss in respect of travel expenses in RMB95,239.65 paid for handling of the collision accident. The two defendants were doubtful of the authenticity of the said bills, holding that the amount of the travel expenses were obviously too high and some of them were not within the category of travel expenses. The collegiate bench holds that it is unable to determine the relativity between the said expenses and the disposal of the accident merely on basis of the said bills. However, in the consideration that the Plaintiff should pay some travel expenses for handling the case, an amount of RMB20,000 could be reasonably ascertained. To sum up, the Plaintiff sustained a loss in total of RMB7,047,707.57 due to the collision of M/V “Tong Tian Shun”. The loss claimed by the Defendant Yuyang Co. has been approved as follows: Ship repairing expenses On June 30, 2001, Yuyang Co. concluded a Undertaking Contract with Zhongxing Ship Repairing Department of Shanghai Pudong New District (“Zhongxing Dept.”), entrusting Zhongxing Dept. to repair the damaged hull of M/V “Tian Shen” stated in the Survey Report issued by China Classification Society. The repair cost agreed between the two parties was RMB138,000 (not including the cost for painting). Yuyang Co. has provided this court with the invoices for the repair cost of RMB138,000 and the cost for purchasing paint in RMB4,185. Yuyang Co. claimed for the loss of ship repairing cost of RMB142,185 on this basis. The Plaintiff held that Yuyang Co. did not notify the Plaintiff of the repair of M/V “Tian Shen”, so it could not prove that the amount of the repair cost was reasonable. The invoice of paint could only evidence that the Defendant had purchased the paint but could not prove that the paint had been used for the ship repair. Therefore, the cost for the paint was irrelevant with this case. The collegiate bench holds that the loss arising from the collision of M/V “Tian Shen” has been ascertained by the survey of China Classification Society. To entrust other party for the ship repair, Yuyang Co. has concluded the repair contract and provided the invoice for the ship repair. Yuyang Co.’s purchasing the paint complies with the provisions of the undertaking contract, and the paint has to be used in the repair of M/V “Tian Shen”. Therefore, in the circumstance that the Plaintiff has not provided other contrary evidences, the loss of ship repair cost and the cost for the paint claimed by Yuyang Co. in total amount of RMB142,185 shall be supported. II. Cost for Ship Survey After M/V “Tian Shen” was damaged from the collision, Yuyang Co. entrusted China Classification Society to conduct a survey and paid the ship survey fee in total amount of RMB7,867. The Plaintiff had no objection to such expense, therefore it is approved by this collegiate bench. III. Loss in Respect of Travel Expenses Yuyang Co. has provided 110 copies of receipts for the traffic and accommodation expenses, claiming for the loss of travel expenses in amount of RMB14,009.20. The Plaintiff held that the said receipt could not prove the relativity of the expenses stated therein with this case. The collegiate bench holds that Yuyang Co. could not prove that the losses of all the said travel expenses were incurred by the collision of this case. However, in consideration that Yuyang Co. should pay for some of the travel expenses after the collision of M/V “Tian Shen”, an amount of RMB10,000 could be reasonably approved. IV. Ship Agency Fee After the collision, M/V “Tian Shen” was investigated by MSA Shantou at Shantou port and later arrested by this court. The exchanged statement of accounts with Penavico Shantou provided by Yuyang Co. and the bills attached thereto state that Yuyang Co. should pay the agency fee, traffic expense, garbage disposing fee, sea chart fee etc. to Penavico Shantou in total amount of RMB8,862.70. The Plaintiff held that the payment of the garbage disposing fee and the sea chart fee was irrelevant with this case. Yuyang Co. held that the garbage disposing fee was the compulsory charge against the inward and outward ships by the relevant departments of Shantou port, while the sea chart fee was the expense for purchasing the relevant sea chart after MSA Shantou detained the same. The said expenses were all incurred by the collision accident. In the circumstance that the Plaintiff has not provided other contrary evidences, the collegiate bench approves such expenses. V. Loss in Respect of Hire and Bunker Yuyang Co. provided a Time Charterparty that it concluded with Pan Oriental Shipping Co., Inc. on December 29, 2000, which stipulates that Pan Oriental Shipping Co., Inc. time charters M/V “Tian Shen” for six months plus six months with effective date from February 15, 2001 at the hire rate of USD2,900/day or prorata; if the vessel is delayed due to sea average (including collision and running aground), resulting in the delay, obstructing or preventing from use of the vessel, the payment of the hire may be suspended. The letter provided by Yuyang Co., which is alleged to be sent by the master of M/V “Tian Shen” to Waiwell Shipping ltd., states that: when the collision took place at 0634 hrs on June 21, 2001, M/V “Tian Shen” had 345.5 tons of fuel oil and 65.40 tons of diesel oil on board. The vessel departed from the place of collision at 1058 hrs and arrived at the anchorage of Shantou port at 1409 hrs. M/V “Tian Shen” departed from Shantou port at 1900 hrs on June 26. At that moment, she had 343.90 tons of fuel oil and 59.60 tons of diesel oil on board. At 1636 hrs on June 28 when she arrived at Shanghai port, she had 317.70 tons of fuel oil and 55.70 tons of diesel oil on board. M/V “Tian Shen” laid alongside a berth to discharge the goods at 2130 hrs. on June 28. At 0340 hrs on June 29, the discharge was completed. At that moment, the vessel had 317.40 tons of fuel oil and 54.40 tons of diesel oil on board. At 1215 hrs on July 8, M/V “Tian Shen” laid alongside the berth to load cargo again. At that moment, she had 312.40 tons of fuel oil and 44.60 tons of diesel oil on board. Yuyang Co. provided a letter that was sent by Weiwell Shipping Ltd. on July 12, 2001 in respect of the off-hire calculation. According to the said letter, a period in total of 5 days 15 hours 37 minutes, of which 5 days 12 hours 26 minutes calculated from 0634 hrs of June 21 to 1900 hrs of June 26 plus 3 hours 11 minutes during which the vessel returned to the place of collision from Shantou port, is the delay time incurred by the collision, for which the hire should not be paid. In this period, 3.20 tons of fuel oil and 6 tons of diesel oil were consumed. The period from 0340 hrs of June 29 to 1215 hrs of July 8, i.e. 9 days 8 hours and 35 minutes in total, was the time for repairing the vessel. In this period, 5 tons of fuel oil and 9.8 tons of diesel oil were consumed. The said off-hire period was 15 days 0 hour and 12 minutes in total. On basis of USD2,900/day, the off-hire should be USD43,523.20. A total of 8.20 tons of fuel oil and 15.80 tons of diesel oil were consumed. To calculate on basis of USD153.50/ton and USD240.50/ton respectively, the loss in oil consumption was about USD5,058.60. Similarly, according to the letter that the master of M/V “Tian Shen” sent to Weiwell Shipping Ltd. on July 30 regarding the time of M/V “Tian Shen” arriving at the Wusongkou Anchorage, storage of oil and the time of departing from Shanghai port, Weiwell Shipping Ltd. delivered a letter to Yuyang Co. on July 31, holding that for the period of 10.33 hours from 0800 hrs to 1820 hrs of July 30 which had been delayed due to the matter of security, the amount of off-hire should be USD1,248.21. In this period, the loss of oil consumption was USD149.55. On basis of the exchange rate between Renminbi and US dollars at 1:8.27, Yuyang Co. claimed for the losses of hire and oil consumption in total amount of RMB413,330.97. In addition, Yuyang Co. also provided a letter that Weiwell Shipping Ltd. and Pan Oriental Shipping Co., Inc. sent to Yuyang Co. on September 12, 2001, proving that the two companies were actually “one and same company”. The Plaintiff held that according to the evidence provided by Yuyang Co., the charterer of M/V “Tian Shen” and the party claiming for deducting the hire and compensating for the loss of oil consumption were different companies. Yuyang CO. did not provide evidence either to prove that it had actually sustained the said losses. M/V “Tian Shen” stayed at Shantou port as she had been detained. In the circumstance that the Plaintiff had no fault in applying for the arrest of the vessel, Yuyang should undertake the losses of off-hire and oil consumption by itself even the said losses had actually been incurred. There is no evidence supporting the loss of oil consumption claimed by Yuyang Co., therefore it should not be supported. The collegiate bench holds that Yuyang Co. merely provided the letter that the master of M/V “Tian Shen” sent to Weiwell Shipping Ltd. regarding the movements of the vessel and the letter that Weiwell Shipping Ltd. claimed for the losses of off-hire and oil consumption, but it did not provide the logbook and the evidences proving the losses of the actual consumption of bunkers, the actual off-hire and the compensation for the bunkers, which were not enough to prove the actual off-hire time, volume of the oil consumed and the amount of loss. Furthermore, the Time Charterparty provided by Yuyang Co. which was concluded between Yuyang Co. and Pan Oriental Shipping Co., Inc. only provided that the hire might be suspended due to delays arising from ship collision and running aground etc., but did not provide that during the off-hire period the charterer was entitled not to pay for the bunkers. Therefore, Yuyang’s claim for the loss from consumption of bunkers is groundless, therefore it will not be supported. The delays due to the detention of the vessel at Shantou port and due to the issue of security at Shanghai port were attributed to the reason that the preservation measure had been taken by the Plaintiff and other relevant parties on the ground that they had the right of maritime claim against Yuyang Co.. In the circumstance that Yuyang Co. could not prove the circumstances where the Plaintiff and the relevant parties were wrongful in applying for the preservation measures, the time delayed shall be undertaken by Yuyang Co. itself. The judges Xu Yuanping and Cheng Shengxiang hold that: the Time Charterparty between Yuyang Co. and Pan Oriental Shipping Co., Inc., which was provided by the Defendant Yuyang Co., can be verified with the letter that Weiwell Shipping Ltd. and Pan Oriental Shipping Co., Inc. sent to Yuyang Co. on September 12, 2001, the letter that Weiwell Shipping Ltd. sent to Yuyang Co. and the letter that the master of M/V “Tian Shen” sent to Weiwell Shipping Ltd.. In the circumstance that the Plaintiff could not provide contrary evidences, the authenticity of the Time Charterparty shall be confirmed. The Charterparty provides that the hire should be suspended during the period of delays due to the collision accident. In consideration that M/V “Tian Shen” had actually accepted the investigation and handling by relevant departments at Shantou port after the collision and was repaired at Shanghai port, and according to facts that M/V “Tian Shen” accepted investigation and handling at Shantou port and was repaired at Shanghai port, in the circumstance that Yuyang Co. and the Plaintiff did not provide other contrary evidences, it can be reasonably ascertained that the delayed time sustained by M/V “Tian Shen” due to the collision is 12 days, and the loss of hire shall be calculated on this basis. On basis of hire rate at USD2,900/day, the loss of hire shall be USD34,800, equivalent to RMB287,796 at the exchange rate of 1:8.27 between US dollars and Renminbi. The judge Chen Weiguo holds that: the Plaintiff refused to confirm the Time Charterparty concluded between Yuyang Co. and Pan Oriental Shipping Co., Inc., which was provided by Yuyang Co.. As Pan Oriental Shipping Co., Inc. is not a relevant party in this case, and has neither attended the court hearing nor appeared at court to give the witness statement, it is unable to confirm the authenticity of the contract through cross-examination of evidences. It was Weiwell Shipping Ltd. that claimed against Yuyang Co. for the loss of off-hire and oil consumption, but the relevant documents were all facsimile copies, therefore it is unable to verify the truthfulness of the evidences. The signing date stated in the contract is December 29, 2000, the date of delivering the vessel is February 15, 2001. Therefore, it should not be difficult for Yuyang Co. to provide the relevant evidences in respect of its performance of the contract, such as the bank’s certificates for the payment of hire. However, Yuyang Co. has not provided such evidences. Therefore, the loss of hire claimed by Yuyang Co. on basis of the contract is without sufficient support of evidences, and it will not be supported by this court. VI. Loss in Respect of Anti-pollution Cost Yuyang prepaid the anti-pollution fee in RMB100,000 to MSA Shantou on June 22, 2001, and issued a letter of authorization on June 24, entrusting MSA Shantou to pay the anti-pollution cost with the prepaid fund. The sharing of specific amounts should be pending until the liabilities of both parties are apportioned and the relevant accounting formalities have been gone through at MSA Shantou. The Plaintiff had no objection to the above facts. The collegiate bench holds that: as the Plaintiff has settled and paid the cost for clearing the oil pollution, and Yuyang Co. has not provided the evidence supporting that their prepaid sum for clearing the oil pollution has been actually used in clearing the oil pollution, this item of loss claimed by Yuyang Co. shall not be supported. VII. Loss Resulting from the Too High Security Claimed by the Plaintiff When the Plaintiff lodged an application to this court for detaining M/V “Tian Shen” as a measure of maritime preservation prior to proceedings, requiring the owner or the operator of M/V “Tian Shen” to provide a security of RMB15,000,000. The applicant was granted by this court according to law by a ruling. Later, subject to the agreement and approval of the Plaintiff and Yuyang Co. after negotiations, the amount of security was lowered to RMB8,000,000. After Yuyang Co. provided the security of RMB8,000,000 and this court lifted the arrest of M/V “Tian Shen”, Yuyang Co. provided an Evaluation Report on the Value of M/V “Tian Shen” issued by China Classification Society. The Report considers that the market value of M/V “Tian Shen” is about RMB5,400,00-RMB5,800,000. After Yuyang Co. paid the evaluation fee of RMB10,000 for this report, it obtained the invoice for the evaluation fee issued by Nanjing Yangzi Marine Technology Service Ltd.. Yuyang Co. also provided a certificate issued by CITIC Industrial Bank, Yangzhou Branch, which stated that Yuyang Co. had paid the interest RMB13,068 arising from the security RMB2,000,000 and for delay from July 2 to August 7, 2001, and a copy of the receipt for paying the sum of RMB2,000 as commission charge for the security. Yuyang Co. held that according to the evaluation report on the value of M/V “Tian Shen”, the Plaintiff could only request Yuyang Co. to provide the security of RMB6,000,000. The said evaluation fee, interest and commission totaling RMB25,068 was the loss resulting from the too high security damanded by the Plaintiff, which should be indemnified by the Plaintiff according to law. The Plaintiff held that the unit collecting the said evaluation fee was not the one conducting the evaluation, such expense was incurred from Yuyang Co.’s exercising of the its right of defence. Similar to the said interest and commission, it was irrelevant to the dispute in this case. The collegiate bench holds that: according to Article 75 of the Maritime Procedure Law of the PRC, the type and amount of the security to be provided by a person against whom a claim is made shall be jointly determined by the maritime claimant and the person against whom the claim is made through negotiation, failing which the amount shall be determined by the maritime court. The amount of maritime security, which was provided by Yuyang Co. was determined by the Plaintiff and Yuyang Co. through negotiation, is in line with the said provisions of the law and is legally effective. Furthermore, as the amount of security could be determined through negotiation, it is possible that it is higher or lower than the value of the preserved property. There is no relevant provision in the current Chinese laws and regulations regarding the standard for judging whether the amount of security is too high or too low. Therefore, it is baseless for Yuyang Co. to request for lowering the amount of security and claiming for the loss resulting from the too high security after providing the security on the ground that the value of the vessel was lower than the amount of security, therefore it will not be supported by this court. To sum up, based on the majority opinions of the collegiate bench, the loss sustained by the Defendant Yuyang Co. due to the collision of M/V “Tian Shen” amount to RMB456,710.70 in total. The collegiate bench unanimously hold that: this case is a dispute over damages arising from ship collision, for which the International Regulations for Preventing Collisions at Sea, 1972 shall be applicable to apportion the blame that should be undertaken by both parties. Sailing in fog and under the restricted visibility, both M/V “Tong Tian Shun” and M/V “Tian Shen” did not post a lookout and were negligent in keeping a proper lookout by sight, thus Article 5 of the International Regulations for Preventing Collisions at Sea, 1972 regarding look-out has been violated. The two vessels sailed at full speed in the navigational environment that the visibility was seriously restricted and there were many fishing boats around. M/V “Tong Tian Shun” sailed at full speed until the collision took place, while M/V “Tian Shen” had not changed for using the diesel oil for the main engine resulting that it was not easy for manoeuvring the machine, and finally the vessel could not be halted even by stopping engine and running full stern. The two vessels have not sailed at the safe speed, therefore Article 6 and Article 19 of the International Regulations for Preventing Collisions at Sea, 1972 have been violated. After detecting the opposite vessel in radar, neither vessel had made a plotting. M/V “Tong Tian Shun” had the judgement that the coming vessel was sailing at a faster speed and nearly on the contrary course merely on basis of the trail of the radar echo, but failed to sense that the two vessels were at risk of collision. She blindly kept the course and speed, did not take actions until there was only 0.4 nautical mile between the two vessels. M/V “Tian Shen” also made the judgement that the coming vessel was sailing nearly on the contrary course at the similar speed and the distance of approach would be about 0.2 nautical mile on basis of the trail of the radar echo. She did not sense the risk of collision between the two vessels but blindly kept the course and speed and did not take actions until she found the coming vessel turned to port at a large angle. Both the two vessels did not fully sense the risk of collision existing between the two vessels, therefore Article 7 of the International Regulations for Preventing Collisions at Sea, 1972 regarding risk of collision has been violated. The two defendants alleged that M/V “Tian Shen” had made the radar plotting of M/V “Tong Tian Shun”. However, the allegation is not consistent with the statement of the crewmembers of M/V “Tian Shen”, therefore it will not be supported. Neither M/V “Tong Tian Shun” nor M/V “Tian Shen” has taken measure of preventing collision at an early stage. They both alleged that the fishing boats around had influenced their decision on turning the course to avoid the coming vessel, so that they had not reduced the speed of this vessel and stopped the engine at an early stage. M/V “Tong Tian Shun” turned to port at a large angle to avoid M/V “Tian Shen” only until there was about 0.4 nautical mile between the two vessels. However, in the circumstance that M/V “Tong Tian Shun” was found all the time lying near “Tian Shen”’s heading course, M/V “Tian Shen” turned the course to starboard after it found M/V “Tong Tian Shun” turned the course to port at a large angle, so that the situation of danger could not be avoided. The two vessels both violated Article 19 of the International Regulations for Preventing Collisions at Sea, 1972 regarding conduct of vessels in restricted visibility. M/V “Tong Tian Shun” and M/V “Tian Shun” both committed fault for the occurrence of the ship collision. However, in view that the master of M/V “Tong Tian Shun” did not attend the bridge to give steering command under restricted visibility and turned the course to port in violation of the rules of conduct, it shall undertake larger responsibility for the faults resulting in the collision. Therefore, according to the degree of fault committed by M/V “Tong Tian Shun” and M/V “Tian Shen”, both vessels should undertake 60% and 40% of the responsibilities respectively for their faults. As the owner of M/V “Tong Tian Shun”, the Plaintiff shall undertake the compensation liability for the loss resulting from the fault of M/V “Tong Tian Shun” in the collision. The Defendant Tian Shen Co. is the owner of M/V “Tian Shen”. Although it demise chartered the vessel to the Defendant Yuyang Co. before the collision accident, the collision accident took place during the period of demise charter, and Tian Shen Co. did not complete the registration formalities at the ship registration authority when it demise chartered the vessel to Yuyang Co.. According to Article 6 of the Regulations on Registration of Vessels of the PRC, the demise charter shall not be operating against third parties. Therefore, the demise charter of M/V “Tian Shen” from Tian Shen Co. to Yuyang Co. does not affect the liability that Yuyang Co. should be held liable to the Plaintiff as the third party. Tian Shen Co., as the owner of M/V “Tian Shen”, should still undertake the compensation liability for the loss incurred by the loss arising from the fault of M/V “Tian Shen” in the collision. The Defendant Tian Shen Co. raised that the collision accident took place during the period that Yuyang Co. demise chartered M/V “Tian Shen”. After the collision, it was Yuyang Co. who negotiated the aftermath with the Plaintiff and provided the security all the while. The collision liability of M/V “Tian Shen” should be undertaken by Yuyang Co. and the allegation that liability of “Tian Shen” was not relevant to Tian Shen Co. is without legal basis and will not be supported by the court. At the time of demise chartering M/V “Tian Shen”, although Yuyang Co. has not performed registration at the ship registration authority, it exercised and performed the rights and obligations in the demise charter as the charterer. Therefore, it shall be responsible for the damage caused by M/V “Tian Shen” during the period of demise charter. After the collision accident, Yuyang Co. handled the affairs of the collision in the identity of the demise charterer of M/V “Tian Shen” and undertook and paid the expenses for the loss of M/V “Tian Shen”, and provided security for the loss incurred by the collision of M/V “Tian Shen”. Furthermore, it responded to the action and lodged a counter-claim in the proceedings as the subject of the liabilities of M/V “Tian Shen”, and it was willing to undertake the liability for the collision of M/V “Tian Shen” as the demise charterer. Therefore, Yuyang Co. should be liable for compensating the loss arising from the fault of M/V “Tian Shen” in the collision according to law. Though Yuyang Co. should be liable for the fault of M/V “Tian Shen” in the collision, it could not deny or repel the liability that Tian Shen Co. should undertake according to law as the shipowner. In the circumstance that the Defendant Tian Shen Co. and Yuyang Co. should both be responsible for the loss incurred by the fault of M/V “Tian Shen” in the collision, the two defendants shall undertake the liability jointly and severally. In the circumstance that Yuyang Co. should perform the obligations as the demise charterer of M/V “Tian Shen” and undertake the liability for compensating the loss incurred by the fault of M/V “Tian Shen” in the collision, it has the right to lodge a counterclaim for the loss sustained by M/V “Tian Shen” resulting from the fault of M/V “Tong Tian Shun” in the collision. The mutual recovery between Yuyang Co. and Tian Shen Co. for the loss arising from the fault of M/V “Tian Shen” in the collision can be settled through analyzing the legal relationship between the two parties. M/V “Tong Tian Shun” carried the cargo in 7,390 tons. After colliding with M/V “Tian Shen”, M/V “Tong Tian Shun” had a crack of 6-6.5m long and 10-46cm wide in her Cargo Hold No.2, resulting in serious ingress of water into Cargo Hold No.2, Topside Tank No.2 and Double-bottom Ballast Tank No.4. The master of M/V “Tong Tian Shun” alleged that at that moment the vessel listed to starboard quickly and there was the danger of capsizing, therefore he decided to get the vessel stranded to prevent it from sinking. The two defendants alleged that M/V “Tong Tian Shun” did not suffer major damage after the collision, and the measure of getting the vessel stranded was attributed to the reason that the crew did not have good seamanship, but they have not provided sufficient evidences in this regard. Therefore, in the circumstance of immediate danger and no safety protection at the material moment, it was appropriate for the master of M/V “Tong Tian Shun” to take the measure of getting the vessel stranded for purpose of the safety of the vessel, the goods and the life on board. M/V “Tong Tian Shun” sunk after she got stranded, which could not be foreseen by the crewmembers of the vessel and unavoidable. Therefore, the allegation of the two defendants that sinking of the vessel was due to the fault of the crewmembers and the enlarged loss should be undertaken by the Plaintiff is without legal and factual basis. Such allegation will not be supported by this court. M/V “Tong Tian Shun” sunk after the collision, but the Plaintiff and the two defendants had no objection to the cost for salvaging and repairing the vessel being higher than the value of the vessel, therefore constructive total loss of the vessel shall be established. The two defendants also submitted that the sealing expenses and anti-pollution fee claimed by the Plaintiff was incurred by the fault of the crew of M/V “Tong Tian Shun”, which should be undertaken by the Plaintiff itself. As M/V “Tong Tian Shun” sunk very quickly after it got stranded, and the two defendants have not provided sufficient evidences proving that the crew of M/V “Tong Tian Shun” committed a fault for not taking measures to prevent the oil pollution, such claim of the two defendants will not be supported either. As to the losses of the vessel and other properties arising from the faults of M/V “Tong Tian Shun” and M/V “Tian Shen” in the collision, according to paragraphs 1 and 2 of Article 169 of the Maritime Code of the PRC, each vessel shall be liable in proportion to the extent of its fault. Therefore, for the loss incurred to the Plaintiff due to the ship collision in amount of RMB7,047,707.57, the two defendants shall jointly and severally undertake 40% of the compensation liability, i.e. RMB2,819,083.03; for the loss of RMB456,710.70 incurred to the Defendant Yuyang Co., the Plaintiff shall undertake 60% of the compensation liability, i.e. RMB274,026.42. As to the loss of interest claimed by the Plaintiff and the Defendant Yuyang Co., according to Article 13 of the Regulations of the Supreme People’s Court on Adjudication of Ship Collision and Contact Cases Related to Property Damages, the interest on the loss of the ship value shall be calculated from the date when the calculation on the loss of earnings of the vessel is suspended, and the interest on other losses and expenses shall be calculated from the date of the arising of the losses or the expenses. Therefore, it is baseless for the Plaintiff and the Defendant Yuyang Co. to request that the interest on all the losses shall be calculated from June 21, 2001, which is the date of the occurrence of the collision. The request will not be supported by this court. In the expenses and losses claimed by the Plaintiff and the Defendant Yuyang Co., except that a very small part was incurred on the date of the collision, other parts were all incurred at different time after the collision. The exact time of the arising of some expenses and losses even could not be ascertained. In consideration that most losses and expenses occurred within two months after the collision, for the convenience of calculation, the interest on all the losses claimed by the Plaintiff and the Defendant Yuyang Co. could all be calculated from August 21, 2001 until the date of payment ascertained in this judgement at the loan interest rate for current funds of Renminbi published by the People’s Bank of China for the same period. As to the allegation of the Plaintiff requesting the two defendants to undertake the compensation liability for the oil pollution, as the relevant parties have lodged an action against the Plaintiff and the two defendants in another case, it is not within the judicial scope of this case. The Plaintiff and the two defendants may settle the dispute in another case. According to Article 5, Article 6, Article 7 and Article 19 of the International Regulations for Preventing Collisions at Sea, 1972, and paragraphs 1 and 2 of Article 169 of the Maritime Code of the PRC, the judgement is rendered as follows: I. The defendants Yuyang Co. and Tian Shen Co. shall undertake the joint and several liability to compensate the Plaintiff for the loss of RMB2,819,083.03 and the interest from August 21, 2001 to the date of payment ascertained in this judgement on basis of the loan interest rate for current funds published by the People’s Bank of China for the same period; II. The Plaintiff shall compensate the Defendant Yuyang Co. for the loss of RMB274,026.42 and the interest from August 21, 2001 to the date of payment ascertained in this judgement on basis of the loan interest rate for current funds published by the People’s Bank of China for the same period; III. Other litigation requests of the Plaintiff and the Defendant Yuyang Co. shall be rejected. The case acceptance fee in this case amounts to RMB103,384, for which the Plaintiff shall undertake RMB79,622, the Defendants Yuyang Co. and Tian Shen Co. shall jointly and severally undertake RMB23,762. The acceptance fee for the counterclaim case amount to RMB15,852, for which the Plaintiff shall undertake RMB6,107, and the Defendant Yuyang Co. shall undertake RMB9,745. The application fee for maritime preservation in RMB5,000 and the execution fee in RMB20,000 shall be jointly undertaken by the Defendants Yuyang Co. and Tian Shen Co.. The charge for investigation and evidence collection is RMB3,000, for which the Plaintiff shall undertake RMB1,500, the Defendants Yuyang Co. and Tian Shen Co. shall undertake RMB1,500. The case acceptance fee, application fee and execution fee for maritime preservation and the charge for investigation and evidence collection respectively prepaid by the Plaintiff and the Defendant Yuyang Co. will not be refunded by this court. The Plaintiff and the two defendants shall return the prepaid charges, which should be undertaken on its own account, directly to the relevant parties. The obligation of payment as mentioned above shall be accomplished within 10 days after the date this judgement takes effect. If any party has an objection to this judgement, it may submit a statement of appeal to this court within 15 days after the service of the judgement, together with the copies according to the number of the opposite parties. The appellate court is the Higher People’s Court of Guangdong Province. Presiding Judge: Chen Weiguo Judge: Xu Yuanping Judge: Cheng Shengxiang July 24, 2002 Judge’s Assistant: Zhang Xianwei Court Clerk: Zhu Mingfang

Guangzhou Maritime Court Civil Ruling (2003)GHFCZ No.293 Applicant: Zhanjiang Cang Hai Shipping Co. Ltd. Address: 1/F, Fishing Company Office Building, Ren Min Dong Er Road, Xiashan District, Zhanjiang Agents ad Litem: Xu Guangyu, Long Yulan, lawyers of Guangdong Zhong Xin Law Firm Dissenter: Guangzhou Gang Xin Shipping and Industrial Co. Ltd. Address: Room 210, 2/F, Feng Le Commercial Building, Feng Le Zhong Road, Huangpu District, Guangzhou Legal Rep.: Chen Jun, general manager Agent ad Litem: Feng Jiancheng, lawyer of Guangdong Green Law Firm Agent ad Litem: Lin Wei, lawyer’s assistant of Guangdong Green Law Firm Dissenter: Lin Hongchuan, male, born on May 15, 1958, Han Nationality, residing in No.64, Hai Xiu Da Dao, Haikou, Hainan Province Agent ad Litem: Yang Yunfu, lawyer of Guangdong Heng Yuan Law Firm Agent ad Litem: Huang Hui, staff of Guangzhou Heng Yun Law Firm The applicant Zhanjiang Cang Hai Shipping Co. Ltd. lodged an application for limitation of liability for maritime claims to this court on June 5, 2003 and applied for establishing a limitation fund for maritime claims. After accepting the case, this court issued a notice to the relevant interested parties, and issued the public notice in Nanfang Daily from June 23 to June 25. The Dissenters, Guangzhou Gang Xin Shipping and Industrial Co. Ltd. and Lin Hongchuan, filed dissension to this court respectively on June 24 and June 26. On August 5, this court summoned the Applicant and the dissenters for a cross-examination of evidences in respect of the facts involved in this case. The Applicant Zhanjiang Cang Hai Shipping Co. Ltd. stated that: M/V “Yin Hong” owned by the Applicant carried 37 containers of cargoes from Haikou to Huangpu, Guangzhou. On March 13, 2003, she collided with M/V “Sui Gang Xin 202” at the waters near to Anchorage S9 off Shajiao, Humen, Dongguan. As a result, M/V “Yin Hong” sunk and the containers carried on board fell overboard. According to Chapter XI of the Maritime Code of the PRC, as the owner of M/V “Yin Hong”, the applicant has the right to limit its liability for compensation. M/V “Yin Hong” is a vessel with gross tonnage 480 tons engaged in domestic trade between Chinese ports for transportation of goods. According to Article 210 of the Maritime Code of the PRC and Article 4 of the Decision on the Limitation of Maritime Claims for Ships with Gross Tonnage Less Than 300 and Ships Engaged in Coastal Transportation and Coastal Operation, the limitation of liability for maritime claims for M/V “Yin Hong” is 83,500 SDR, equal to RMB936,536. The Applicant filed an application for limitation of liability for maritime claims in respect of this accident, and applied for establishing the limitation funds for maritime claims in sum of 83,500SDR (equivalent to RMB936,536). The Applicant submitted the following evidences: 1. Business License for the Enterprise as Legal Person (copy) of Zhanjiang Cang Hai Shipping Co. Ltd.; 2. Certificate of Registry of Vessel’s Ownership; 3. Certificate of Vessel’s Nationality; 4. Ship Inspection Certificate Book, Certificate of Seaworthiness of Cargo Ships, Tonnage Certificate, Load Line Certificate; 5. Certificate of Lowest Safety Manning of Coastal Vessels; 6. Certificate of Competence of Crew’s Duty, Certificate of Competency of Training, Crew’s Service Book; 7. Outpatient Handbook of Guangdong Provincial Nongken Central Hospital; 8. Certificate of Medical Diagnosis of Guangdong Provincial Nongken Central Hospital; 9. Certification issued by the ship-master Li Liangtong; 10. Certification issued by Zhanjiang Cang Hai Shipping Co. Ltd.; 11. Certificate for Vessels’ Engagement in Transportation of M/V “Yin Hong”; 12. Civil Judgement (2002)GHFCZ No.252; 13. Civil Judgement (2003)YGFMSZZ No.25; 14. Certificate Book of Survey for Sea-going Vessels; 15. List of the Exchange Rate of SDR. The Dissenter Guangzhou Gang Xin Shipping and Industrial Co. Ltd. stated that: 1. M/V “Yin Hong” was not seaworthy. As her Certificate of Registry of Vessel’s Tonnage has no statement on the volume (v1) of the closed-in spaces below tonnage deck and the volume (v2) of the closed-in spaces above tonnage deck, her gross tonnage is illegal; 2. In the voyage at issue, M/V “Yin Hong” was not manned with sufficient and qualified crewmembers. The Certificate of Vessel’s Lowest Manning prescribes that the number of the manned crew is 11, while there was only 8 crewmembers on the vessel at the time of the accident; 3. M/V “Yin Hong” was seriously overloaded. The actual quantity of goods loaded on board, 831.156 tons, far exceeded the referential cargo carrying capacity 500 tons stated in Ship Survey Certificate 1998; 4. The applicant seriously violated the navigational rules and regulations. Therefore, pursuant to Article 209 of the Maritime Code of the PRC, the applicant has no right to enjoy the limitation of liability for maritime claims and has no right to apply for establishing limitation funds for maritime claims. The court is requested to dismiss the applicant’s application according to law. The dissenter Guangzhou Gang Xin Shipping and Industrial Co. Ltd. submitted the following evidences: 1. Ship Survey Certificate 1998 of M/V “Yin Hong”; 2. Ship Survey Certificate 2001 of M/V “Yin Hong”; 3. Certificate of Lowest Safety Manning; 4. Written Record of Inquiry by Shajiao Maritime Office to Li Liangtong; 5. Reply of Register of Shipping of the PRC, Zhanjiang to Issues Relevant to M/V “Yin Hong”; 6. Statement of Defence by Zhanjiang Cang Hai Shipping Co. Ltd.. The Dissenter Lin Hongchuan stated that: the precondition for establishing the limitation funds is that the relevant party applies for limitation of liability for maritime claims and has the right to enjoy limitation of liability for maritime claims according to law. The applicant has not applied to the court for the limitation of liability, but only applied for establishing the limitation funds. The court has not yet examined whether the applicant can enjoy the limitation of liability. Therefore, the applicant shall have no right to apply for establishing the limitation funds for maritime claims. For the reasons as follows, the applicant has no right to enjoy the limitation of liability for maritime claims: 1. M/V “Yin Hong” was not seaworthy; 2. Her Certificate of Vessel’s Tonnage states that as the original ship survey certificate has no statement on the data of v1 and v2, the relevant drawings and data shall be submitted within two months for re-verification. However, up to date the applicant has neither provided to the Register of Shipping of the PRC, Zhanjiang with the relevant drawings and data, nor applied for a verification again. The gross tonnage of 480 stated in her certificate is invalid. Therefore, the amount of the limitation funds for maritime claims calculated on this basis is invalid; 3. The certificate of lowest safety manning held by M/V “Yin Hong” has lost the effect; 4. M/V “Yin Hong” did not sail within the prescribed navigational area; 5. In the voyage at issue, M/V “Yin Hong” was not manned with sufficient and qualified crewmembers; 6. In the voyage at issue, M/V “Yin Hong” was seriously overloaded, the cargo was improperly stowed, the stability of the vessel did not meet with requirements. The unseaworthiness of M/V “Yin Hong” has causal relationship with the cause of the accident. The accident was caused due to the imprudent action or inaction of the applicant though it was fully aware of the possibility of the accident. Pursuant to Article 209 of the Maritime Code of the PRC, the applicant shall not be entitled to limit his liability for maritime claims and to establish the limitation funds for the maritime claims. The Dissenter Lin Hongchuan submitted the following evidences: 1. Certificate Book of Ship Survey No.5171C71010 of M/V “Yin Hong”, 1998; 2. Certificate Book of Ship Survey No.1971M5100037 of M/V “Yin Hong”, 2001; 3. Certificate of Lowest Safety Manning of M/V “Yin Hong”; 4. Regulations on Vessel’s Lowest Safety Manning of the PRC; 5. Certificate of Tonnage; 6. Reply of the Register of Shipping of the PRC, Zhanjiang to the Relevant Issues of M/V “Yin Hong”; 7. Written Record of Inquiry by Shajiao Maritime Office to Li Liangtong; 8. Written Record of Inquiry by Shajiao Maritime Office to Wu Keqing; 9. Written Record of Inquiry by Shajiao Maritime Office to Chen Shanjiao; 10. Crew List of M/V “Yin Hong”; 11. Nanfang Daily dated March 14, 2003 and Guangzhou Daily dated March 15, 2003; 12. Report on Maritime Traffic Accident of M/V “Yin Hong”; 13. Waybill of Container Cargoes of Haikou Jinlun Freight Forwarding Co. Ltd.. Upon cross-examination at the court hearing, all relevant parties confirmed the following facts: according to the Certificate of Registry of Ownership submitted by the Applicant in respect of M/V “Yin Hong”, the owner of the vessel was Zhanjiang Cang Hai Shipping Co. Ltd.. In addition, according to the Business License for the Enterprise as Legal Person (copy) of Zhanjiang Cang Hai Shipping Co. Ltd. submitted by the Applicant, the Applicant was an enterprise as legal person incorporated according to law. On March 13, 2003, a collision occurred between M/V “Sui Gang Xin 202” and M/V “Yin Hong” at the waters off Shajiao, Humen, Dongguan, resulting in the sinking of the vessel “Yin Hong” and the cargoes carried on board. Upon examination, the judge holds that: this is a case concerning application for establishing limitation funds for maritime claims. The Applicant is the owner of M/V “Yin Hong”. After the collision, the Applicant applied to this court for limiting her liability and for establishing the limitation funds for maritime claims. As the application is in compliance with paragraph 1 of Article 101 of the Maritime Procedure Law of the PRC, therefore, the Applicant is the qualified subject to the action. The request for compensation of loss of and damage to M/V “Yin Hong” arising from the collision with M/V “Sui Gang Xin 202” during the course of her operation and the claim for the relevant loss resulting therefrom are the limited liability as provided in Item (1) of paragraph 1 of Article 207 of the Maritime Code of the PRC. The amount of the limitation fund that the Applicant applied to constitute is the limit of liability for maritime claims for non-personal injuries arising from this accident. Such amount is calculated according to paragraphs 1 and 2 of Article 210 of the Maritime Code of the PRC and Article 4 of the Decision of the Ministry of Communications on Limitation of Liability for Maritime Claims for Vessels with Gross Tonnage of Less Than 300 Tons and Vessels Engaged in Coastal Transportation and Operation. The Certificate of Tonnage of Ocean Vessels for M/V “Yin Hong” submitted by the two defendants states that: “as the original ship survey certificate has no statement on the data of v1 and v2, the relevant drawings and data shall be submitted within two months to apply for a verification again.” However, up to now the applicant has not yet provided the two data. Therefore, what the Applicant is alleged as the gross tonnage on basis of which the amount of the limitation fund for M/V “Yin Hong” is calculated should be invalid. This judge holds that: as the certificate states that the gross tonnage is 480 tons. The above statement only requires the Applicant to provide the relevant drawings and data and to apply for a verification again on the data of v1 and v2. It does not mean to deny the gross tonnage of the vessel. The two dissenters have not provided contrary evidences to deny the gross tonnage stated in the certificate either. Therefore, the gross tonnage on basis of which the Applicant calculated the amount of limitation funds is valid. According to Article 83 of the Explanation of the Supreme People’s Court on Certain Issues Concerning the Application of the Maritime Procedure Law of the PRC, when the interested parties have an objection to the Applicant’s constitution of the limitation funds for maritime claims, this court shall carry out examination on the qualification of the subject of the application, the nature of creditor’s right involved in the accident and the amount of limitation funds to be established. Other objections raised by the Dissenters are an issue of substantive right concerning whether the Applicant may enjoy the limitation of liability for the maritime claims. It is not an issue of procedure to be settled by this court for the Applicant’s constitution of the funds, but it shall be handled in another case. Therefore, the Dissenter’s dissension is not tenable. To sum up, according to Article 106 and Article 108 of the Maritime Procedure Law of the PRC and Article 84 of the Explanation of the Supreme People’s Court on Certain Issues Concerning Application of the Maritime Procedure Law of the PRC, the ruling is given as follows: I. The objection raised by the Dissenters Guangzhou Gang Xin Shipping Industrial Co. Ltd. and Lin Hongchuan shall be dismissed; II. The application for constituting the limitation fund raised by the Applicant Zhanjiang Cang Hai Shipping Co. Ltd. shall be granted; III. The Applicant Zhanjiang Cang Hai Shipping Co. Ltd. shall constitute in this court the limitation fund in the amount of 83,500 Units of Account within three days after this ruling takes effect (the Unit of Account referred herein is the Special Drawing Right as defined by the International Monetary Fund) and the loan interest on rate for current funds of the People’s Bank of China from the day on which the collision occurred (i.e. March 13, 2003) until the day of constitution of the limitation fund. The application fee for this case in RMB937 and the public notice fee in RMB23,900 shall be undertaken by the Applicant Zhanjiang Cang Hai Shipping Co. Ltd.. If any party has an objection to this ruling, it may submit a statement of appeal to this court within 15 days after the service of the ruling, together with the number of copies corresponding to the number of the opposite parties. The appellate court is the Higher People’s Court of Guangdong Province. Judge: Zhan Weiquan August 6, 2003 Judge’s Assistant: Li Yiyi Court Clerk: Chen Qiuxia

Guangzhou Maritime Court of the PRC Civil Judgement (1999)GHFSZ No.71 Plaintiff: Guangzhou Maritime Rescue and Salvage Bureau Address: No.536, Bin Jiang Dong Road, Guangzhou Legal Rep.: Zhao Jiaqi, director Agent ad Litem: Liu Lei, lawyer of Guangzhou Zhongcheng Law Firm Agent ad Litem: Zhang Yixin, deputy manager of No.1 Fleet Commerce Department of Guangzhou Maritime Rescue and Salvage Bureau Defendant: Ju Ye Far East Ltd. Address: 11/F, Feng Shun Commercial Building, No.591, Nathan Road, Mongkok, Kowloon, Hong Kong Legal Rep.: Liu Zhenming, director and general manager Agent ad Litem: Xu Guangyu, lawyer of Guangdong Maritime Law Firm With respect to the case concerning the dispute over the towage service contract between the Plaintiff Guangzhou Maritime Rescue and Salvage Bureau and the Defendant Ju Ye Far East Ltd., this court accepted the case on July 16, 1999 and constituted the collegiate bench according to law. The court summoned the relevant parties to conduct exchange of evidences prior to trial respectively on May 8 and May 15, 2000 and held open court hearing on July 6. Liu Lei and Zhang Yixin, agents ad litem of the Plaintiff, Liu Zhenming, the legal representative of the Defendant, Xu Guangyu, the agent ad litem of the Defendant, attended the court hearing. Now the case has been finalized. The Plaintiff Guangzhou Maritime Rescue and Salvage Bureau alleged that: on December 23, 1998, the Plaintiff and the Defendant concluded a Towage Contract, which stipulated that the Plaintiff would dispatch a tugboat to tow the Floating Crane “OHI5000” owned by the Defendant from Shanghai to Guangzhou with the commencing date from January 15 to 18, 1999, and the port demurrage charge was USD7,000 per day. At 1920 hours on January 15, the tugboat dispatched by the Plaintiff arrived at Shanghai. At 2315 hours on January 19, the tugboat towing the Floating Crane “OHI5000” departed from Shanghai. According to the contractual provisions, the Defendant delayed commencement of the towage for 3 days 3 hours and 55 minutes, therefore it should pay the Plaintiff the demurrage charge of USD37,956. On January 27, the Plaintiff towed the Floating Crane “OHI5000” to the destination Guangzhou and requested the Defendant to pay the balance of the towage fee in USD91,200, the demurrage charge in USD37,956 and the cost of the accompanying crew members in USD960, but the Defendant refused the request. On the same date, the Defendant requested the Plaintiff to dispatch a tugboat and four crew members to guard the Floating Crane “OHI5000”, and confirmed the guard fee of the tugboat was USD1,800/day and that of the crew members USD30/day/person. On March 31, the Defendant requested the Plaintiff to additionally supply four crew members to guard the Floating Crane “OHI5000”. Up to June 11 when the Defendant took over the Floating Crane, the Defendant owed the Plaintiff the ship guard fee in USD243,000 and the crew guard fee in USD24,720. During the ship guard period, as confirmed by the Defendant, the Plaintiff replenished 150 tons of oil and 50 tons of fresh water to the Floating Crane “OHI5000” worthy of RMB315,000 plus USD450. The Plaintiff urged the Defendant to pay for the above expenses many times, but the Defendant refused payment. The court was requested to order the Defendant to pay: 1. The towage fee of USD91,200, the demurrage fee of USD37,956, the crew guard fee of USD960 and the interest on the demurrage in arrears (calculated from January 28, 1999 to the date of actual payment at the annual rate of 8.5%); 2. The ship guard fee of USD243,000, crew guard fee of USD24,720, replenished oil fee of RMB315,000, replenished water fee of USD450 and the interest on the above expenses (calculated from June 12, 1999 to the date of actual payment at the rate of 0.04% daily), and to undertake the court fees in this case. The Defendant Ju Ye Far East Ltd. contended that: the Plaintiff released the tow lines after having towed the Floating Crane “OHI5000” to the anchor position 22o07’N/113o47’E (in the vicinity of Guishan Anchorage). The said anchor position was neither the destination as agreed in the contract – Guangzhou, nor the destination expressly stated in the contract – 22o10’N/114o07’E (Nanya Anchorage of Hong Kong). To mitigate any loss, on February 25, 1999, the Defendant suggested the Plaintiff to move the Floating Crane “OHI5000” some 2 nautical miles southeastward (22o06’N/113o49’E), so that the tugboat “Mai Po” owned by HONGKONG SALVAGE & ASSOCIATION arranged by the Defendant could take over and continue the towing operation. The Defendant also agreed with the Plaintiff’s request to pay the relevant expenses in sum of USD182,400. However, the Plaintiff refused the suggestion and insisted that it had fully performed the Towage Contract, therefore it had the right to charge for all the expenses without recourse to any pre-conditions. On June 11, the Plaintiff moved the Floating Crane “OHI5000” some 4 nautical miles southeastward (22o06’N/113o51) and delivered it to the Defendant. To sum up: 1. The Plaintiff did not tow the Floating Crane “OHI5000” to the destination as agreed in the contract, therefore it has no right to request the Defendant to pay for the balance of the towage fee; 2. There does not exist the legal relationship of ship guard between the Plaintiff and the Defendant, therefore the Defendant shall not undertake the guard fee, water and oil replenishment fees arising from the Plaintiff’s breach of contract and unjustifiably refusing the Defendant’s reasonable suggestion for mitigating the loss; 3. The Defendant has not notified the Plaintiff of the commencing date of towing the Floating Crane “OHI5000”, therefore the last date of the time limit for the towing operation prescribed in the contract, i.e. January 18, is the commencing date of towing the Floating Crane. Plus considering one cost-free day at the place commencing the towage as agreed in the contract, therefore departure of “OHI5000” under tow on Jan. 19 from the above place did not exceed the date of commencing the towage as allowable in the contract. The demurrage claimed by the Plaintiff is factually baseless. The court is requested to reject the litigation requests filed by the Plaintiff. Upon trials, it has been ascertained that: (I) With regard to the conclusion of the contract After cross-examination at the court hearing, the Plaintiff and the Defendant had no objection to the following facts: in December, 1998, through negotiations with Fuji Trading (Marine) BV, Guangzhou Office, the Defendant intended to entrust the Plaintiff to tow the Floating Crane “OHI5000” owned by the Defendant. Finally, both parties concluded a Towage Contract. The contract states that: the contract was concluded on December 23, 1998, the tugowner is the Plaintiff, the tow party is the Defendant, the tugs are “De Shun”, “Sui Jiu 206” and “Sui Jiu 209”, the tow is the Floating Crane “OHI5000” owned by the Defendant; the place of commencement of towage is 30o40’N/122o45’E, Shanghai, the destination is 22o10’N/114o07’E, Guangzhou; the exact place of destination should be the place where the tug and the tow could safely and easily enter, maneuver and the tug could safely depart, and where the tug is allowed to deliver the tow according to the local or other regulations; it should be approved by the tugowner and should not be rejected without justifiable reasons; the period of commencement of the towage is from January 15 to 18, 1999, the tow party should get prepared to leave the place of commencement of the towage within such period. The tow party should give a three-day prior notice to the tugowner with regard to the commencement of the towage. Otherwise, the date of commencement of the towage should be the last day of the period of commencement; the cost-free day at the place of commencement of the towage and the destination was one day respectively, and such cost-free time was granted for the purpose of connecting and releasing the tug and other relevant purposes. The cost-free time should be calculated from the time the tug arrives at the pilot station at the place of commencement of the towage, or the tug and the tow arrive at the pilot station or anchorage at the destination, or arrive at the usual waiting waters outside the said places. If the cost-free time is exceeded, port demurrage shall be calculated on basis of USD7,000 per day for the time after the tug and the tow depart from the place of commencement or before the tug, after releasing the tow line and departs from the destination. The tow party shall pay the demurrage under the contract to the tugowner immediately after the tugowner issues the invoice; the lumpsum award for the towage service was agreed at USD228,000, the tow party shall pay USD45,600 at the time of signing the contract, pay USD91,200 when the towage commences, and pay USD91,200 when the tug and the tow arrive at the destination. If the tugowner man accompanying crew on the tow, all the expenses shall be undertaken by itself. If the crew on the tow are manned by the tow party, all the expenses shall be undertaken by the tow party; the tow party shall provide the tugowner with all licenses, letters of authorization and permits necessary for the tug and the tow to undertake and accomplish the contractual voyage as well as the necessary certificates when the tow enters or leaves all ports of call or ports of refuge during the planned voyage. Otherwise, any losses and expenses sustained by the tugowner for this reason shall be indemnified by the tow party. The tow party shall additionally compensate the tugowner for any demurrage for any delayed time arising therefrom. If the payments prescribed in the contract fail to be fulfilled within the time limit, an interest shall be calculated at the annual rate of 8.5% from the maturity date. This contract shall be construed according to the English laws and governed thereby. The above facts have been ascertained by the collegiate bench. (II) With regard to performance of the contract After cross-examination at the court hearing, the Plaintiff and the Defendant had no objection to the following facts: after the Towage Contract was concluded, “Sui Jiu 206”, “Sui Jiu 209”, “De Shun” departed from Guangzhou and arrived at the place of commencement of the towage, i.e. 30o40’N/122o45’E(Shanghai), at 1200 hrs of January 14, 1999, 1627 hrs of January 15 and 1900 hrs of January 15 respectively, and got ready for the operation. At 2315 hrs of January 19, the said tugs actually started the towage service for the Floating Crane “OHI5000” and towed it away from the place of commencement. At 2230 hrs of January 27, “Sui Jiu 209” towed the Floating Crane to 22o07’N/113o47’E (in the vicinity of Guishan Anchorage) and released the tow lines. At 1635 hrs of June 11, “De Shun” moved the Floating Crane some 4 nautical miles southeastward (22o06’N/113o51’E) and delivered it to the Defendant. The Defendant has not paid the last installment of the towage fee in USD91,200 to the Plaintiff. The above facts have been ascertained by the collegiate bench. The Plaintiff alleged that after receiving the notice of commencing the towage service from the Defendant, it dispatched tugs to the place of commencement. However, the Plaintiff has not submitted the relevant evidences. The Defendant raised dissention in this respect and held that the Defendant had never issued the notice of commencing towage service to the Plaintiff. The collegiate bench holds that: the Plaintiff has not adduced evidences to prove that it has received the commencing notice from the Defendant, therefore it should be ascertained that the Defendant has not issued the notice of commencing the towage service to the Plaintiff before the tugs dispatched by the Plaintiff arrive at the place of commencement. The Plaintiff and the Defendant respectively submitted 59 copies and 33 copies of the faxes exchanged between them from the time of signing the contract to the time of delivering the Floating Crane. Both parties had no objection to the truthfulness of the said faxes. The said faxes can attest to the following facts: on January 20, 1999, the Defendant requested the Plaintiff to tow the Floating Crane “OHI5000” to the No.5 Anchorage of Shajiao, Guangzhou. On January 21, the Plaintiff suggested the Defendant to release the tow lines and delivered the tow at 22o07’N/113o47’E (in the vicinity of Guishan Anchorage). On January 25, the Defendant faxed the relevant certificates of towworthiness of the Floating Crane, such as the registration certificate, insurance certificate and ship survey report, to the Plaintiff. On January 27, the Plaintiff towed the Floating Crane “OHI5000” to the position 22o07’N/113o47’E (in the vicinity of Guishan Anchorage) and released the tow lines, and requested the Defendant to pay the balance of the towage fee, the demurrage and the cost for the accompanying crew in line with the commercial invoice posted by the Plaintiff. The Defendant was also requested to confirm whether it needed the tugs to guard the Floating Crane. The tug guard fee was USD1,800/day and the crew guard fee was USD30/day/person. On the same day, the Defendant confirmed acceptance of the price for the guard service of the tugs, and requested the Plaintiff to tow the floating crane to 22o46’N/113o37’E (Shajiao Anchorage) and to drop her anchor and release the tow lines. With regard to the Defendant’s requests, the Plaintiff informed the Defendant that the Plaintiff had fulfilled the Towage Contract, therefore the towage service from Guishan Anchorage to Shajiao Anchorage should be contracted anew on basis of new quotation. On January 29 and 30, the Defendant insisted that the Plaintiff should tow the Floating Crane to Shajiao Anchorage as Guishan Anchorage was not the destination stipulated in the contract. The Plaintiff was also requested by the Defendant to file the application and submit the tow plan to the customs on its behalf. On February 1, the Plaintiff informed the Defendant that the Plaintiff was only obliged to tow the Floating Crane to the pilot station or the anchorage at the destination; as Guishan was the anchorage within Guangzhou, so the Plaintiff had fulfilled the contract; furthermore, the formalities for the Floating Crane to enter the port had not been completed, therefore it could not be towed to Shajiao Anchorage; furthermore, the Plaintiff had no obligation to file application to the customs for the continued tow operation on the Defendant’s behalf, as the contract provided that the Defendant should free of charge provide the Plaintiff with all licenses, letters of authorization and permits necessary for the tugs and the tow to undertake and accomplish the contractual voyage. On February 2, the Defendant informed the Plaintiff that the Defendant had entrusted Penavico Guangzhou Nansha Branch to handle the customs formalities for in-going of the Floating Crane on its behalf and the Plaintiff could contact with Liang Dezhao, deputy general manager of Penavico Guangzhou Nansha Branch. The Plaintiff was also requested to quote price for the towage service from Guishan Anchorage to Shajiao Anchorage as soon as possible. On February 3, the Plaintiff quoted the towage award at RMB580,000 (including the cost for auxiliary tugs) or RMB400,000 (not including the cost for auxiliary tugs; such cost would be charged according to the fact). On February 5, the Defendant informed the Plaintiff that: before the Floating Crane “OHI5000” was towed to Guishan, the Defendant had entrusted Penavico Guangzhou to apply for the Anchorages 5 and 7 at Shajiao for berthing the crane there; as when the Plaintiff’s tugs proceeded from Guangzhou to Shanghai to tow the Floating Crane, the Plaintiff had not completed the out-going formalities at Guangzhou so that it could not directly tow the Floating Crane into Guangzhou, and the tugs had to drop anchor at Guishan Anchorage; the Plaintiff should complete the customs formalities for the tugs as soon as possible, and tow the Floating Crane to Shajiao Anchorage designated by the Defendant or to the location stipulated in the contract – 22o10’N/114o07’E (Nanya Anchorage of Hong Kong). The Plaintiff refused the Defendant’s request. On February 22, the Defendant once and again requested the Plaintiff to tow the Floating Crane “OHI5000” to the location stipulated in the contract, i.e. 22o10’N/114o07’E, and requested the Plaintiff to fax the customs clearance paper of the tugs, which the Defendant’s agent would need for the use of in-going declaration. On February 24, the Plaintiff sent a fax to the Defendant, stating that the Plaintiff towed the Floating Crane “OHI5000” to Guangzhou as per the Defendant’s requests; now that Guishan Anchorage was the anchorage belonging to Guangzhou for pilotage, quarantine inspection and joint inspection, so the Plaintiff had accomplished the carriage contract; the Plaintiff’s tugs were on a domestic voyage when they proceeded from Guangzhou to Shanghai, therefore the joint inspection with the customs was unnecessary; the Defendant failed to complete the formalities for in-going the Floating Crane and even did not obtain the certificates for the export from Japan, much less go through the relevant formalities for the Plaintiff’s tugs, so that the Floating Crane failed to enter into Guangzhou port. On February 25, without prejudice to the right to claim against the Plaintiff for the relevant losses, the Defendant suggested the Plaintiff to move the Floating Crane some 2 nautical miles southeastward (22o06’N/113o49’E) from Guishan Anchorage, so that the Tug “Mai Po” owned by HONGKONG SALVAGE & ASSOCIATION arranged by the Defendant could continue towing, and agreed to pay USD182,400 to the Plaintiff in the form of bank check according to the Plaintiff’s fax dated February 24. On February 26, the Plaintiff refused the Defendant’s suggestion, and insisted that it had fully performed the Towage Contract. Therefore, it had the right to charge for all the expenses without recourse to any pre-conditions. On March 29, the Plaintiff suggested sending four more crew members to join the four on board so as to ensure the safety of the Floating Crane. The cost for the crew’s guarding service would still be calculated on basis of USD30/day/person. On March 31, the Defendant sent a written confirmation on the guarding service of the Floating Crane by eight crew members. On June 7, the Plaintiff informed the Defendant that, to mitigate the loss of both parties, the Plaintiff requested the Defendant to confirm the new and reasonable place of handover as soon as possible. On June 10, the Plaintiff and the Defendant decided to move the Floating Crane “OHI5000” some 4 nautical miles southeastward (22o06’N/113o51’E) for the handover. The above faxes and the facts supported thereby have been ascertained by the collegiate bench. The Customs Clearance List for the Floating Crane “OHI5000” issued by the Japanese customs on January 9, 1999 and submitted by the Defendant stated that: the Floating Crane “OHI5000” departed from Furusawa Steel Nohmi, Japan at 1120 hrs. on January 9, and sailed to Shanghai, China finally. The Defendant alleged that before it entrusted the Plaintiff to tow the Floating Crane “OHI5000” from Shanghai to Guangzhou, the crane was exported from Japan to Shanghai, and the Defendant had completed the customs clearance formalities in Japan. The Plaintiff had no objection to the truthfulness of the Customs Clearance List for the Floating Crane “OHI5000”. This evidence and the facts supported thereby have been ascertained by the collegiate bench. The fax of Guangzhou United International Shipping Agency Co. Ltd. to the Defendant on January 19, 1999 submitted by the Defendant states that: at the entrustment of the Defendant, Guangzhou United International Shipping Agency Co. Ltd. completed the joint inspection formalities for in-going of the Floating Crane “OHI5000” on the Defendant’s behalf; the port would arrange the Floating Crane to drop anchor at the Anchorage No.5 at Shajiao; the Defendant should pay the expenses such as the berthage, port charges and quarantine fee to the account designated by Guangzhou United International Shipping Agency Co. Ltd.. The Defendant alleged that it transferred the said fax to the Plaintiff on January 20, informing the Plaintiff that the Anchorage No.5 of Shajiao had been arranged for the Floating Crane “OHI5000”. The Plaintiff confirmed receipt of the said fax and had no objection to its truthfulness. However, it held that the fax could only prove that the port approved of the Floating Crane’s dropping anchor at Anchorage No.5, but it could not support that the customs also approved of the action. Furthermore, the Defendant could not prove that it had paid the berthage, port charges and quarantine fee etc. and had completed the formalities at the port authorities and customs. However, the Plaintiff has not submitted any contrary evidences. The collegiate bench holds that: under the circumstance that the Plaintiff has not provided evidences to the contrary of the above, it shall be deemed that Guangzhou Port Authority has approved of the Floating Crane’s dropping anchor at the Anchorage No.5 of Shajiao. The Witness Statement issued by Zhang Zhan, the staff member at the Guangzhou Office of Fuji Trading (Marine) BV and submitted by the Plaintiff states that: approximately on January 25, 1999, the Defendant orally agreed with the Plaintiff to tow the Floating Crane “OHI5000” to the position 22o07’N/113o47’E, i.e. the Guishan Anchorage, for handover. The Plaintiff claimed that during the course of performance of the contract, the Plaintiff and the Defendant had an oral agreement that the destination of the towage service was the Guishan Anchorage of Guangzhou. In this regard, the Defendant raised dissension, alleging that the Defendant had never approved the Guishan Anchorage of Guangzhou as the destination and the so-called “oral agreement” alleged by the Plaintiff had no factual basis. The collegiate bench holds that: according to Article 70 of the Civil Procedure Law of the PRC, witness has the obligation to testify at the hearing; where the witness has difficulty to appear at a hearing, he may present written testimony upon the permission of the people's court. The Plaintiff could not prove that Zhang Zhan had actual difficulty to appear at the court hearing, therefore, in the circumstance that there is not other supporting evidence, his Witness Statement submited without the permission of the people’s court could not be taken as the basis for adjudicating the case. In view that the faxes between the Plaintiff and the Defendant cannot prove that the Defendant has approved the Guishan Anchorage of Guangzhou as the destination, the above allegation of the Plaintiff will not be confirmed. The Plaintiff alleged that as the Floating Crane “OHI5000” had a deep draught, it was not safe to drop anchor at the Shajiao Anchorage. However, the Plaintiff did not provide the relevant evidences. The Defendant held dissension in this respect. The collegiate bench holds that the Plaintiff has not provided the relevant evidences to support its allegation. Under the circumstance that the Defendant holds the dissension, the Plaintiff’s allegation will not be adopted. The Plaintiff alleged that during the period the Floating Crane “OHI5000” was at anchor at Guishan Anchorage, to ensure safety, the Plaintiff requested the Defendant to provide a written confirmation on entrusting the Plaintiff to provide oil and water to the Floating Crane. The Defendant confirmed respectively on January 28, February 11, February 25, March 19, April 17, May 14, 1999 that it entrusted the Plaintiff to provide oil to the Floating Crane respectively in the amount of 20 tons, 20 tons, 20 tons, 30tons, 30 tons, 30 tons at price RMB2,100/ton, that is, RMB315,000 in total; and it confirmed on April 20 that it entrusted the Plaintiff to provide 50 tons water to the Floating Crane at USD9/ton, that is, USD450 in total. The Defendant had no dissension on the above fact, but alleged that the above confirmation was to ensure the safety of the Floating Crane and the crew members and to mitigate the loss, and that the Plaintiff could not provide evidence to prove that it had actually provided oil and water to the Floating Crane. For this reason, the Plaintiff provided the List of Internal Transfer of Material of Guangzhou Maritime Rescue and Salvage Bureau in order to prove that it had provided oil and water to the Floating Crane. The Defendant held that the evidence unilaterally produced by the Plaintiff may not be taken as the basis for adjudicating the case. The Defendant has not provided contrary evidences. The collegiate bench holds that: under the circumstance that the Defendant has not provided the contrary evidences, it shall be deemed that during the period the Floating Crane was at anchor at Guishan Anchorage, upon approval of the Defendant, the Plaintiff has provided oil in 150 tons and water in 50 tons to the Floating Crane. The Plaintiff has not adduced evidence within the prescribed time limit to prove that the Defendant should pay USD960 to the Plaintiff as the cost for the accompanying crew members. (III) Other facts The Defendant raised dissension from jurisdiction during the period of defence, requesting for rejecting the claim filed by the Plaintiff. On August 27, 1999, this court rendered the Civil Ruling (1999)GHFSZ No.71, ruling that the dissension raised by the Defendant be dismissed. The Defendant was unsatisfied with the result and lodged a claim with Guangdong Provincial Higher People’s Court. Guangdong Provincial Higher People’s Court handed down the Final Instance Ruling (2000)YFJEZZ No.18 to dismiss the appeal filed by the Defendant and maintain the ruling of first instance. On the ground that the Towage Contract was governed by the English laws, the Defendant insisted that the English laws should be applied to handle the dispute in this case. However, it did not provide the relevant English laws within the time limit prescribed by the court. On December 18, 2000, this court decided to engage Chinese and foreign legal experts to provide relevant English laws for the dispute in this case, and issued the Civil Notice (1999)GHFSZ No.71, informing the Defendant to prepay the relevant expenses for the experts’ legal service to this court within 5 days upon receipt of the notice. The Defendant did not prepay the above expenses within the time limit prescribed by this court. The collegiate bench holds that: this is a case concerning the dispute over towage contract. In this case, the Towage Contract provides that the contract shall be interpreted and governed by the English laws. During the course of the trial, the Plaintiff was willing to choose Chinese laws as the governing law. The Defendant insisted that this case should apply the governing law stipulated in the Towage Contract, that is, the English laws. Pursuant to Article 193 of Opinions of the Supreme People’s Court on Certain Issues Concerning Implementation of General Principles of the Civil Law of the PRC, the Defendant is obliged to provide the English laws to this court, but it has not provided the same to this court within the prescribed time limit. Therefore, it is in compliance with the law for the court to invite Chinese and foreign legal experts to find out the relevant English laws for settling the dispute in this case. In view that the Defendant has not prepaid the relevant expenses for the legal service provided by the Chinese and foreign legal experts within the prescribed time limit, this court decided to apply the laws of the PRC to settle the substantive dispute in this case. The Towage Contract concluded between the Plaintiff and the Defendant is the true and unanimous expression of will between the Plaintiff and the Defendant. It does not run against the current legal provisions, therefore, it is legally effective and binding upon both parties. In this case, there are two destinations in the Towage Contract: one is 22o10’N/114o07’E (Nanya Anchorage of Hong Kong), the other is Guangzhou. According to the contract, the Defendant has the right to choose the exact location of the destination on the precondition that it undertakes that the tugs and the tow can safely and easily enter and maneuver therein, the tugs can safely depart therefrom, and the tugs are allowed to hand over the tow at the location. The Plaintiff shall not reject it without justifiable reasons. In this case, on the next day after the Plaintiff’s tugs towing the Floating Crane departed from the place of dispatch, the Defendant notified the Plaintiff that the destination of the voyage in this case was Shajiao Anchorage of Guangzhou. In view that Shajiao Anchorage of Guangzhou is an anchorage beyond the boundary of Guangzhou port for the joint inspection of Guangzhou customs, frontier defence, harbor superintendence and quarantine inspection, therefore the Plaintiff shall not unreasonably refuse the Defendant’s request that the Floating Crane be towed to the Shajiao Anchorage of Guangzhou. The Shajiao Anchorage of Guangzhou is actually the destination of the voyage in this case. It is without factual basis for the Plaintiff to have alleged that the Plaintiff and the Defendant had an oral agreement on changing the destination to Guishan Anchorage of Guangzhou, therefore the allegation will not be adopted. The Plaintiff’s tugs released the tow lines after towing the Floating Crane to Guishan Anchorage. It shall be deemed that the Plaintiff failed to fulfill the Towage Contract and has violated the contract. During the course of the dispute settlement proceeding, the Defendant confirmed to pay the tugs’ guarding fee, crew’s guarding fee, replenished oil and water expenses, and requested the Plaintiff to quote price for the towage service from Guishan Anchorage to Shajiao Anchorage. However, it was the Defendant’s choiceless declaration of will in the circumstance that the Floating Crane had been released by the Plaintiff. The declaration was to ensure the safety of the Floating Crane and to prevent the loss from enlarging. Merely on basis of the above declaration which was not the true expression of will of the Defendant, it cannot be ascertained that the Defendant has agreed to change the port of destination to the Guishan Anchorage of Guangzhou. On the contrary, in the fax addressed to the Plaintiff, the Defendant once and again insisted that the Plaintiff should tow the Floating Crane to the Shajiao Anchorage of Guangzhou. The Shajiao Anchorage of Guangzhou only was the destination of this voyage. The Plaintiff held that the Defendant neither completed the customs clearance formalities for the export of the Floating Crane from Japan nor went through the relevant formalities for the tugs towing the Floating Crane to Shajiao Anchorage, so that the Plaintiff could not tow it to the Shajiao Anchorage of Guangzhou. In view that the Defendant has provided evidence to prove that the Japanese customs has approved of the departure of the Floating Crane and Guangzhou Harbor Bureau has agreed with the Floating Crane to drop anchor at Shajiao Anchorage of Guangzhou, the above allegation of the Plaintiff will not be supported. According to the Towage Contract in this case, the tow reward that the Defendant should pay to the Plaintiff is a lumpsum. Before the Floating Crane towed by the Plaintiff arrived at the destination – Shajiao Anchorage of Guangzhou, the Plaintiff had the obligation to ensure the safety of the Floating Crane and had no right to request the Defendant to undertake the expenses that the Plaintiff had paid for the safety of the Floating Crane before it arrived at the destination. Therefore, the claim filed by the Plaintiff in respect of the ship guarding fees as well as oil and water expenses shall be rejected. Before the Plaintiff’s tugs arrived at the place of commencement, the Defendant had not given notice to the Plaintiff for the commencement of the towage service. According to the Towage Contract, the date when the towage service was commenced in this case shall be the last day of the time limit of the commencement, that is, January 18, 1999. In view that the Plaintiff’s tugs commenced the tow operation on January 19, 1999, which has not exceeded the one cost-free day, the Plaintiff’s claim for the port demurrage charge is without factual basis and shall be rejected. The Plaintiff has not provided evidence within the prescribed time limit to prove that the Defendant should pay the Plaintiff the cost of the accompanying crew members in amount of USD960, therefore such claim of the Plaintiff shall be rejected. Through negotiations between the Plaintiff and the Defendant, on June 10, 1999, both parties finally decided to move the Floating Crane some 4 nautical miles southeastward (22o06’N/113o51’E) for the handover. Such fact has constituted the change of the destination of the voyage in this case. On June 11, 1999, the Plaintiff moved the Floating Crane to 22o06’N/113o51’E and delivered it to the Defendant, thus the Plaintiff fulfilled the Towage Contract. The Defendant should pay the Plaintiff for the outstanding the towage reward in amount of USD91,200. The Plaintiff’s claim with respect to the towage reward of USD91,200 shall be supported. According to the Towage Contract, the loss of interest shall be calculated and paid at the annual rate of 8.5% from June 11, 1999. To sum up, according to Article 57 of the General Principles of the Civil Law of the PRC and Article 64 of the Civil Procedure Law of the PRC, the judgement is given as follows: I. The Defendant Ju Ye Far East Ltd. shall pay the towage reward of USD91,200 and the accrued interest (at the annual rate of 8.5%, starting from June 11, 1999 until the date this judgement takes effect) to the Plaintiff Guangzhou Maritime Rescue and Salvage Bureau; II. Other litigation requests raised by the Plaintiff Guangzhou Maritime Rescue and Salvage Bureau against the Defendant Ju Ye Far East Ltd. shall be rejected. With regard to the case acceptance fee in this case in sums of USD12,260.24 and RMB7,240, the Plaintiff shall undertake USD8,780.24 and RMB7,240, and the Defendant shall undertake USD3,480. The said costs prepaid by the Plaintiff will not be refunded by this court. The Defendant shall directly pay to the Plaintiff the part that it should undertake. The above payment obligation shall be fulfilled within 10 days after this judgement takes effect. If any of the parties objects to this judgement, the party concerned shall submit the statement of appeal to this court within 15 days from the day when this judgement is served, together with the quantity of copies corresponding to the number of the opposite party. The appellate court shall be Guangdong Provincial Higher People’s Court. Presiding Judge: Zhan Weiquan Acting Judge: Huang Qingnan Acting Judge: Song Weili December 26, 2000 Court Clerk: Yu Liqiong

【Case of Dispute over Financing and Lease of Ship filed by Guangdong Guangfa Industry and Investment Company against the Defendant Dongguan Dongxin Small Craft Company and Dongguan Xinyi Industry Corporation 】 Guangzhou Maritime Court of the People’s Republic of China Civil Judgment (2003)GHFCZ No. 287 Plaintiff: Guangdong Guangfa Industry and Investment Company Domicile: 34F, No.713 Dong Feng Dong Road, Guangzhou, Guangdong Province Legal representative: Liu Hang, General Manager Agents ad litem: Du Chenghua, Zhang Yitao, employees of Guangdong Guangfa Industry and Investment Company Defendant: Dongguan Dongxin Small Craft Company Domicile: No.15, Botou Road, Humen Town, Dongguang, Guangdong Province Legal representative: Liu Zhiqiang, General Manager Agent ad litem: Zhang Qingxiang, lawyer of Guangdong Ren Ren Law Firm Defendant: Dongguan Xinyi Industry Corporation Domicile: Yunhe Road North, Humen Town, Dongguan, Guangdong Province Legal representative: Liu Zhiqiang, General Manager Agent ad litem: Zhang Qingxiang, lawyer of Guangdong Ren Ren Law Firm On 27 May 2003, this court accepted the case about a dispute over financing and lease of ship filed by the Plaintiff Guangdong Guangfa Industry and Investment Company against the Defendant Dongguan Dongxin Small Craft Company (hereinafter referred to as “Small Craft Co.”) and the Defendant Dongguan Xinyi Industry Corporation (hereinafter referred to as “Xinyi Co.”) and constituted a collegial bench in accordance with law. On 15 July, the parties were convened for exchange of evidences before the court. On 15 July and 22 August, open court hearings were held for trials of this case. Du Chenghua, the agent ad litem of the Plaintiff, and Zhang Qingxiang, the agent ad litem for both Defendants, the Small Craft Co. and Xinyi Co., attended the court hearings. This case has now been concluded. The Plaintiff Guangdong Guangfa Industry and Investment Company complained that: On 21 November 1994, the Plaintiff and the Defendant Small Craft Co. entered into a Charter Party, whereby it was agreed that the Plaintiff would provide a fund of RMB10,000,000 to purchase three Russian hydrofoils for chartering out to Small Craft Co.; Small Craft Co. would pay the hire in an aggregate amount of RMB14,800,000 to the Plaintiff by 24 installments from 22 November 1994 to 22 November 1996; after paying off the above hire, Small Craft Co. may purchase the three hydrofoils at a nominal price of RMB1,000. The Defendant Xinyi Co. guaranteed Small Craft Co.’s performance of the charterparty. The Plaintiff then purchased the said three hydrofoils and leased them out to Small Craft Co., but Small Craft Co. has up to date effected only RMB1,000,000 to the Plaintiff. The Plaintiff requested the court to order Small Craft Co. to refund the remaining hire in the sum of RMB13,800,000 and Xinyi Co. to be severally and jointly liable for the above debts. The Plaintiff furnished the following evidences within the period for adducing evidence: 1. Charter Party; 2. the bank slips evidencing the remittances made by the Plaintiff and the receipts of payments; 3. confirmations of payments effected by Small Craft Co.; 4. the application reports, the application for reducing/exemption of bank loan interest, the proposal of setting off debts against share right, etc., issued by the two defendants; and 5. the notice urging for payment of principal and proceeds of investment due/overdue. The Defendant Small Craft Co. responded that the Charterparty between it and the Plaintiff was lawful and effective and that the facts stated in the Statement of Complaint of the Plaintiff were true, but during the period when it chartered in the three hydrofoils from the Plaintiff the volume of carriage was plunged and great losses in operations were resulted, so Small Craft Co. could not pay the hire as per the charterparty. Therefore, Small Craft Co.’s failing to perform its obligations under the charterparty was caused by force majeure. The three hydrofoils chartered in and managed by Small Craft Co. has since 1997 been detained by the People’s Court of Dongguan and other courts. The Plaintiff should have asserted its rights with the relevant courts. The Defendant Xinyi Co. had no objections to the facts stated in the Statement of Complaint of the Plaintiff and confirmed that it did guarantee for Small Craft Co., but argued that as per the charterparty Xinyi Co. was liable for paying the hire for Small Craft Co. only when Small Craft Co. failed to pay the hire as scheduled and under the circumstance that the objects of lease was not lost or sustained no damages. Now, however, the objects of lease in question, the hydrofoils, has been arrested since 1997 by the People’s Court of Dongguan and other courts. Therefore, the Plaintiff should have claimed its ownership of the hydrofoils against the People’s Court of Dongguan, etc.. Xinyi Co. should not bear the guaranty liabilities beyond the scope of the charterparty. Therefore, Xinyi Co. requested the court to dismiss the Plaintiff’s claims against it. The two Defendants jointly produced the following proofs within the period for evidence adducing: 1. the Civil Ruling issued by the People’s Court of Dongguan; 2. the list of properties seized/detained; 3. the ship registration certificates of m/v “Dong An” and “Dong Xin”; 4. sales contracts related to m/v “Xi Chang” and “Dong An”. At the application of Small Craft Co. and Xinyi Co., this court obtained some of the documents related to this case from the People’s Court of Dongguan and the Intermediate People’s Court of Guangzhou, and the two defendants paid the fees for collection of evidence in amount of RMB500 to this court. After examination and cross examination at the court hearing, the Plaintiff, Small Craft Co. and Xinyi Co. had no objections to the following evidences and facts, and the collegial bench ascertained and accepted the following: On 21 November 1994, the Plaintiff and Small Craft Co. concluded a Charter Party, which stipulates that the Plaintiff was to provide a fund of RMB10,000,000 to purchase three Russian “Bolixiye” hydrofoils for leasing out to Small Craft Co.; the boats were to be chosen by Small Craft Co. in accordance with its needs; the Plaintiff provided the necessary approvals or certificates of consent and entrusted Small Craft Co. to purchase the boats; the period of lease started from 22 November 1994 to 22 November 1996 with the total hire being RMB14,800,000; the Small Craft Co. was to pay the hire to the Plaintiff on 22nd of each month by 24 installments; during the period of lease, the ownership of the boats belonged to the Plaintiff and Small Craft Co. obtained the right to use the boats only; without the consent of the Plaintiff, Small Craft Co. was not allowed to sell, transfer, sub-charter, mortgage the boats or take any other actions that would prejudice the ownership of the boats; Small Craft Co. was to be responsible for inspection and outfitting the boats, trial running, maintenance, as well as the insurance matters during the period of lease for the boats and bear all costs and expenses so incurred; if due to reasons on the part of Small Craft Co., the boats were lost or sustained damages, Small Craft Co. was to bear liabilities for compensation and to continue to pay the hire to the Plaintiff as per the agreed schedule till the period of lease expired; upon the expiration of the period of lease and after Small Craft Co. paying off all the hire as well as the nominal price of RMB1,000 to the Plaintiff, the ownership of the objects of lease should automatically be transferred to Small Craft Co.. It is also agreed under the charterparty that Xinyi Co., as the guarantor, should guarantee and be responsible for the actual performance of the charterparty; should Small Craft Co. fail to pay the hire to the Plaintiff as per the schedule, Xinyi Co. should, within 3 days upon receipt of the written notice from the Plaintiff, pay to the Plaintiff the outstanding hire inclusive of the delay penalty without any objection. In the event that Small Craft Co. breaches the contract or causes the loss of or damages to the boats due to its fault and is incapable of compensation, Xinyi Co. should, as per the charterparty, be responsible for sorting out and liquidating all debts of Small Craft Co.. The Plaintiff, Small Craft Co. and Xinyi Co. all signed and affixed their respective chops on the charterparty. The appendix to the charterparty, the Agency Agreement for Custody stipulates that the original invoices of the boats belong to the Plaintiff; Small Craft Co., under the entrustment of the Plaintiff, shall keep the original invoices of the boats for the Plaintiff during the leasehold. After the conclusion of the charterparty, the Plaintiff, paid the investment sums to Small Craft Co. in amount of RMB3,000,000 on 21 & 28 November 1994 respectively. Out of the sum effected on 28 November 1994 RMB200,000 was the interest accrued on other sums payable to the Plaintiff by Small Craft Co. but the Plaintiff added it to the investment fund provided to the latter. Plus the sums of RMB3,000,000 and RMB1,000,000 paid by the Plaintiff on August 15 and November 7 respectively before the signing of the charterparty, the Plaintiff had altogether paid RMB10,000,000 to Small Craft Co.. Upon receipt of the above sum, Small Craft Co. signed sales contracts with Helongjiang Channel Economic and Trading Co. from the end of 1994 to the first half of 1995, purchasing three Russian “Bolixiye” hydrofoils. Thereafter, Small Craft Co. went through registration formalities for the three boats in its own name. The three boats were named “Dong Xin”, “Dong An” and “Xi Chang”, with Small Craft Co. being the owners of all of the three boats. During the period when the “Dong Xin”, “Dong An” and “Xi Chang” were chartered to Small Craft Co., the company mortgaged the three boats separately to others for loans. During 28 January 1997 to 4 December 2000, the three boats were respectively seized by Guangzhou Intermediate People’s Court and the People’s Court of Dongguan and were finally sold by auction or at a discount to liquidate the debts of Small Craft Co.. So far Small Craft Co. has not paid any hire except the RMB1,000,000 effected on 9 June 1995. On 18 April 1997, Small Craft Co. and Xinyi Co. sent a letter to the Plaintiff, stating that in 1994 the Plaintiff invested RMB13,500,000 into Small Craft Co. for purchasing boats to engage in high speed passenger liner and transport along the Pearl River, but due to the recession of the water passenger transportation business, Small Craft Co. fails to refund the principal and proceeds of the investment to the Plaintiff as per the charterparty. The two defendants requested the Plaintiff to suspend the accounts of the principal in amount of RMB13,500,000 as well as to stop the outstanding and part of proceeds accrued from the investment proceeds from accruing any more from Jan. 1, 1997 to Dec. 12, 1997 after checking and confirming by both sides. Besides, the above debts were to be refunded with the properties of Small Craft Co.. As Xinyi Co. was the party guaranteeing the performance of the contract by Small Craft Co. with the proceeds from its new investment so as to ensure the realization of its promise, and hope the Plaintiff could continue to support them with funds. On 5 April 1999, Small Craft Co. and Xinyi Co. sent another letter to the Plaintiff, saying that with respect to the contracts between the Plaintiff and Small Craft Co. dated 21 November 1994 and 2 June 1997 respectively, the outstanding sums payable by Small Craft Co. to the Plaintiff included the principals of RMB9,000,000 and RMB850,000 and the corresponding proceeds from the investment; except the corresponding pawns for the two contracts, and that Xinyi Co. guaranteed the performance of both contracts by Small Craft Co.; whereas Small Craft Co. had stopped operations and Xinyi Co. could not materialize its promise with cash, it was suggested that part of the shares of Xinyi Co. in Xishuangbanna Tai Nationality Garden Co. Ltd. be used to offset part of the debts of Small Craft Co. owed to the Plaintiff. On April 6, the Planitiff sent a notice to Small Craft Co. and Xinyi Co. urging for payment of principal and proceeds of investment due/overdue, demanding the two defendants to refund the principal of investment in the sum of RMB9,000,000. On 25 March 2002, Small Craft Co. and Xinyi Co. addressed a letter to the Plaintiff, petitioning the Plaintiff to release them from the interest of the loan in amount of RMB300,000 on account of their financial difficulty. The Plaintiff did not reply. Furthermore, it has been astertained that the Plaintiff is a holding enterprise. Its business license before 28 November 2002 stated that the scope of business covered investment, development, running industry enterprises introduced from abroad or of domestic joint co-operating nature, real estate, tourism, leasing and selling of factory premises and equipment related to investment, etc.. However, its business license after 28 November 2002 shows that its scope of business is for purposes of liquidating the creditor’s rights and debts of this enterprise only. The Plaintiff admitted that it had no permit to run financial business or to engage in financing and leasing business in its scope of business and qualification. The collegial bench unanimously hold that the charterparty stipulates that the Plaintiff, based on Small Craft Co.’s specific requirements about the boats, provides the funds and entrusted Small Craft Co. to purchase the boats and then chartering them out to Small Craft Co. while Small Craft Co. pay the hire to the Plaintiff as agreed under the charterparty and upon the expiration of the charterparty obtain the ownership of the boats in the way agreed. The charterparty is in conformity with the main legal characteristics of a financing and leasing contract. Therefore, the dispute between the Plaintiff and the Defendant arising out of the said contract should be categorized as dispute over financing and leasing contract. Since the conclusion of this charterparty and the agreed period of performance were all prior to the promulgation of the Contract Law of the People’s Republic of China, in accordance with Article 1 of the Interpretations of the Supreme People’s Court on Some Issues concerning the Application of the Contract Law of the People’s Republic of China (I), the present dispute over financing and leasing contract between the Plaintiff and Small Craft Co. shall be regulated by the laws, regulations and judicial interpretations effective at the time when the charterparty was concluded. In the light of the provisions of Article 4 & 6 of the Regulations of the People’s Bank of China on Administration of Financial Organizations, financing and leasing should be categorized as financial business which could only be run by financial organizations holding the Permit for Corporate Financial Organization or the Business License for Financial Organization. Any person or company without the permit or license is not allowed to run financial business. The Plaintiff did not obtain the Permit for Corporate Financial Organization or the Business License for Financial Organization and was thus not qualified to engage in financing and leasing business. The Plaintiff’s doing financing and leasing business without qualification by entering into the charterparty with Small Craft Co. had breached the relevant provisions of the laws and regulations of the PRC concerning management of financing. In pursuance of paragraph 1 of Article 7 of the Law of the PRC on Economic Contracts and Article 6 of the Provisions of the Supreme People’s Court on Some Issues Regarding Trials of Disputes over Financing and Leasing Contracts, the charter party between the Plaintiff and Small Craft Co. is null and void and has no legal binding force. The Plaintiff should be held at fault and liable for the nullity of the charterparty resulting from its engaging in financial business illegally; Small Craft Co. should have known or been aware of the Plaintiff’s lack of permission and qualification in running financing and leasing business at the time when the charterparty was concluded, therefore Small Craft Co. should also be held at fault for the nullity of the charterparty. Article 16 of the Law of the PRC on Economic Contracts prescribes that after an economic contract is confirmed null, the party that obtained properties from the other as per the contract should return such properties to the owner; if both parties are at fault, each should bear his respective liability. In the present case, the Plaintiff invested RMB10,000,000 as agreed under the charterparty and entrusted Small Craft Co. to purchase three hydrofoils as the objects of lease to be used by Small Craft Co.. Small Craft Co. should have returned the three hydrofoils to the Plaintiff pursuant to the said legal provisions. But as the three boats were registered by Small Craft Co. in its own name and then mortgaged to others for purpose of loans, in consequence of which the boats were auctioned by the relevant courts to liquidate the debts of Small Craft Co., it is impossible for Small Craft Co. to return the three boats. Moreover, Small Craft Co. has failed to prove the current market prices of the three boats, therefore Small Craft Co. should return to the Plaintiff the investment for purchasing the three boats. The hire in amount of RMB1,000,000 already paid by Small Craft Co. to the Plaintiff should be returned to the former and be deducted from the investment to be returned by Small Craft Co. to the Plaintiff. That is to say, the investment payable by Small Craft Co. to the Plaintiff are RMB9,000,000. As regards the claims of the Plaintiff against Small Craft Co. in the amount of RMB13,800,000, RMB3,800,000 out of which is investment proceeds payable to the Plaintiff as per the charterparty. Now that the charterparty has been ascertained to be null and void, for which the Plaintiff is responsible, the Plaintiff’s claim for investment proceeds is baseless and should not be supported. The Plaintiff and Xinyi Co. have reached an agreement on the guaranty matters as specified under the charterparty. After Xinyi Co., as the guarantor, signed and affixed its stamp on the charterparty, the guaranty contract between the Plaintiff and Xinyi Co. was established. As the guaranty of Xinyi Co. was provided on 21 November 1994 when the Guaranty Law of the PRC had not been put into force, pursuant to paragraph 1 of Article 133 of the Interpretations of the Supreme People’s Court on Some Issues concerning the Application of the Guaranty Law of the People’s Republic of Chian, the guaranty agreement between the Plaintiff and Xinyi Co. shall apply the relevant laws, regulatiosn and judicial interpretations in force at the time when the guaranty was provided. The Plaintiff and Xinyi Co. agreed in the charterparty that if Small Craft Co. failed to pay the hire as scheduled, Xinyi Co. should perform the obligation of payment of hire instead. According to Article 5 of the Provisions of the Supreme People’s Court on Some Issues concerning Ascertainment of Guaranty in Cases of Disputes over Economic Contracts, the form of guaranty agreed between the Plaintiff and Xinyi Co. is a general guaranty. Because the main contract, the charterparty, is null and void, the guaranty contract between the Plaintiff and Xinyi Co. is also invalid and has no legal binding effect. But when entering into the guaranty contract with the Plaintiff, Xinyi Co. should have known that a license is indispensable in China for any enterprise to engage in financing and leasing business, but the Plaintiff did not have such license, so the charterparty between the Plaintiff and Small Craft Co. was invalid by law because the Plaintiff was engaging in financing and leasing business without permission. However, the Plaintiff still provided guaranty for Small Craft Co. for its performance of the charterparty. In compliance with Article 20 of the Provisions of the Supreme People’s Court on Some Issues concerning Ascertainment of Guaranty in Cases of Disputes over Economic Contracts, when the charterparty becomes null and void, Xinyi Co. should bear joint and several liabilities together with Small Craft Co.. To sum up the above, in accordance with Articles 7 & 16 of the Law of the People’s Republic of China on Economic Contracts, Article 6 of the Provisions of the Supreme People’s Court on Some Issues Regarding Trials of Disputes over Financing Leasing Contracts and Article 20 of the Provisions of the Supreme People’s Court on Some Issues concerning Ascertainment of Guaranty in Cases of Disputes over Economic Contracts, the judgment is hereby given, as follows: 1. The Defendant Small Craft Co. to return RMB9,000,000 to the Plaintiff; 2. The Defendant Xinyi Co. to bear joint and several liabilities with Small Craft Co. for the above debts; 3. Other claims of the Plaintiff are to be dismissed. Of the case acceptance fees in amount of RMB79,010, the Plaintiff shall bear RMB27,482 and the Defendants Small Craft Co. and Xinyi Co. shall jointly and severally bear the remaining RMB51,528. The investigation and evidence collection fees in the sum of RMB500 are jointly born by Small Craft Co. and Xinyi Co.. The case acceptance fees have been paid in advance by the Plaintiff. This court shall not return the same and Small Craft Co. and Xinyi Co. shall pay their respective shares of the fees to the Plaintiff directly. The above payment obligations should be accomplished within 10 days as of the day when this Judgment takes effect. Should there be any objection to this Judgment, a statement of appeal with copy/copies in the number of the opponent party/parties may be submitted to this Court within 15 days upon the service of this Judgment, for appealing before the appellate court Guangdong Higher People’s Court. Presiding Judge: Zhan Simin Judge: Xu Yuanping Judge: Deng Yufeng Secretary: Lai Yukang October 13, 2003

Case of Dispute over a Contract of Assignment of Right and Interests in Bareboat Charterparty filed by ORIX Ship Resources Pte Ltd. against Shenzhen Huaxin Holdings Co. Ltd. and Shenzhen Xingpeng Shipping Enterprises Co. Ltd. Guangzhou Maritime Court of the People's Republic of China Civil Judgment (2001)GHFZ No. 36 Plaintiff: ORIX Ship Resources Pte. Ltd. Domicile: 250 North Bridge Road, No. 19-01 Raffles City Tower, Singapore 179101, Singapore Legal representative: Nagaaki Esaki, General Manager Agents ad litem: Bai Tao, Zhang Guohua, lawyers of China Law Firm Defendant: Shenzhen Huaxin Holdings Co., Ltd. Domicile: Rm. 1001, 1002, 1005 &1020, 10/F, Hua Lian Building, Central Shennan Rd., Futian District, Shenzhen, Guangdong Province Legal representative: Li Zhenhua, Chairman of the Board of Directors Agent ad litem: Yang Yunfu, lawyer of Guangdong Heng Yun Law Firm Agent ad litem: Wu Yaohong, lawyer of Guangdong Heng Tong Cheng Law Firm Defendant: Shenzhen Xingpeng Shipping Enterprises Co., Ltd. Domicile: 24/F, Hua Lian Building, Central Shennan Rd., Futian District, Shenzhen, Guangdong Province Legal representative: Ai Quanqin, Chairman of the Board of Directors Agent ad litem: Liu Guanghai, Deputy Manager of Shenzhen Xing Peng Shipping Enterprises Co., Ltd. With respect to the case about dispute over a contract of assignment of right and interests in a bareboat charterparty filed by the Plaintiff ORIX Ship Resources Pte. Ltd. (hereinafter referred to as “ORIX Singapore”) and the Defendant Shenzhen Huaxin Holdings Co., Ltd. (hereinafter referred to as “Shenzhen Huaxin”) and the second Defendant Shenzhen Xingpeng Shipping Enterprises Co., Ltd. (hereinafter referred to as “Shenzhen Xingpeng”), this court accepted the case on 23 March 2001 and constituted a collegial bench for trying the said case in accordance with law. During the period for submitting the statement of defence, Shenzhen Huaxin and Shenzhen Xingpeng raised dissention from this court’s jurisdiction over the said case. On 3 September, the Higher People’s Court of Guangdong Province rendered a final civil ruling, whereby the jurisdiction of this court over the subject case was maintained. On 13 November, this court convened the interested parties for exchange of evidences before the court, and on 6 January 2002 held an open court hearing for this case. Bai Tao and Zhang Guohua, the agents ad litem of the Plaintiff ORIX Singapore, Yang Yunfu and Wu Yaohong, agents ad litem for the Defendant Shenzhen Huaxin, and Liu Guanghai, agent ad litem for the Defendant Shenzhen Xingpeng, attended the court hearing. The case has now been concluded. The Plaintiff ORIX Singapore stated that: on 8 January 1997, Kapoc Line S.A. and Xingpeng Maritime Inc., Panama (hereinafter referred to as “Xingpeng Panama”) entered into a Loan Agreement. On 28 January, the two parties signed the Supplementary Agreement I to the Loan Agreement. It was agreed in the said Loan Agreement and its supplement that Kapoc Line S.A. shall lend Xingpeng Panama a loan of US$4,380,000, which shall be used by the latter to purchase a general cargo vessel to be registered in Panama in the name of “Xingye”. On 8 January of the same year, Xingpeng Panama and Shenzhen Huaxin entered into a Bareboat Charterparty and on 28 January the two parties signed the Supplementary Agreement I to the Bareboat Charterparty. As agreed in the charterparty and the supplementary agreement, Xingpeng Panama shall charter out the “Xingye” on a bare-boat basis to Shenzhen Huaxin. On 29 January, Shenzhen Huaxin confirmed in writing the delivery of “Xingye” from Xingpeng Panama and agreed that calculation of hire shall be commenced on that day. On the same day, Xingpeng Panama, Shenzhen Huaxin and Kapoc Line S.A. entered into a three-party Agreement on Assignment of Right and interests in a Bareboat Charterparty, agreeing that Xingpeng Panama assigned all of its right, qualification, interests and benefit in the vessel “Xingye” to Kapoc Line S.A., the mortgagee of “Xingye”. After chartering in “Xingye”, Shenzhen Huaxin sub-chartered out the bare-boat to Shenzhen Xingpeng. Shenzhen Xingpeng then time chartered out the vessel to Farenco Shipping S.A., Panama (hereinafter referred to as “Farenco Panama”). Farenco Shipping Co. Ltd., Hong Kong (hereinafter referred to as “Farenco HK”) provided a security to Shenzhen Xingpeng for Farenco Panama’s chartering of the vessel. For each sub-charter, the lessors, the charterers and Kapoc Line S.A. had signed a corresponding agreement on assignment of right and interest, whereby all the lessors assigned their right, qualification, interests and benefit in “Xingye” to Kapoc Line S.A.. On 7 October 1998, Kapoc Line S.A. concluded an Agreement on Assignment of Right and interests in “Xingye” with ORIX Singapore. On the same day, Kapoc Line S.A. notified Shenzhen Huaxin and Shenzhen Xingpeng in writing that from then on all hire or right or interests belonging to “Xingye” had been transferred to ORIX Singapore. On 27 October, the mortgagee of “Xingye” changed from Kapoc Line S.A. to ORIX Singapore. Shenzhen Huaxin and Shenzhen Xingpeng had repeatedly expressed that they would perform their obligations under the charterparties and would effect the relevant payment to Kapoc Line S.A.. In fact, Shenzhen Huaxin and Shenzhen Xingpeng did have effected part of the payment. However, since 21 April 1999, the two defendants have never made any payment to the Plaintiff. In addition, while “Xingye” was on hire, she had been detained for a long time by the Bangladeshi government. In order to set the vessel free, the Plaintiff made great efforts and incurred lawyer’s fees and traveling expenses. Based on the above, the Plaintiff requested the court to order the two defendants, Shenzhen Huaxin and Shenzhen Xingpeng, to jointly and severally compensate the Plaintiff ORIX Singapore for its loss in hire in the sum of US$1,928,202.86 and the default interests calculating from 27 Apirl 1999 to 29 January 2002 in amount of US$448,026.79, loss of lawyer’s fees and legal costs at US$215,497.88 and miscellaneous losses such as traveling expenses in amount of US$156,809.58. Within the period for adducing evidence, the Plaintiff ORIX Singapore provided this court with 40 pieces of documentary evidence and one Opinions on English Law, all of which had been notarized and legalized in Hong Kong. Moreover, the Plaintiff sent one witness to the court hearing to give testimony. The Defendant Shenzhen Huaxin argued that although both the bareboat charterparty and the contract of assignment of right and interests involved in the present case provided that English law should be the governing law thereof, yet the Plaintiff ORIX Singapore didn’t produce the specific provisions of English law or the relevant judicial precedent in the period for adducing of evidence. Therefore, the subject case should be governed by Chinese law. In the light of the relevant stipulations of Chinese law, the said contract should be ineffective. Shenzhen Huaxin did not authorize Ai Quanqin to sign the Bareboat Charterparty or the Agreement on Assignment of Right and interests in Bareboat Charterparty, nor did Shenzhen Huaxin take part in the operation, management or the refunding of the loan in respect of the vessel “Xingye”, therefore it was not bound by any contractual relationship with ORIX Singapore, and it was groundless for ORIX Singapore to sue Shenzhen Huaxin. Furthermore, based on the same facts and requests, ORIX Singapore initiated a lawsuit against Farenco Panama in Hong Kong in 1999 and filed another one against Shenzhen Huaxin and Shenzhen Xingpeng in Hong Kong in September 2000. ORIX Singapore’s lodging a legal action against Shenzhen Huaxin and Shenzhen Xingpeng again was a repeated claim, which should not be supported. As the charterparty involved in this case was null, ORIX Singapore should not calculate its loss in hire on the basis of the agreement in the invalid charterparty. Instead, the loss of hire should be based on the market renting rate of vessels of the same type. Since the market renting rates of vessels of the same type are much lower than those stipulated in the said charterparty, and ORIX Singapore failed to prove the market renting rates of vessels of the same type, the court is requested to dismiss the claims of the Plaintiff ORIX Singapore against the Defendant Shenzhen Huaxin. The Defendant Shenzhen Huaxin produced 15 evidences within the period of adducing evidences. The Defendant Shenzhen Xingpeng admitted that it was responsible for the actual operation and management of “Xingye” as well as her loan-refunding matters since she was purchased in. Except that, Shenzhen Xingpeng raised the same argument as that of Shenzhen Huaxin. The evidences furnished by Shenzhen Xingpeng were identical with those produced by Shenzhen Huaxin. The Plaintiff ORIX Singapore, the Defendants Shenzhen Huaxin and Shenzhen Xingpeng had no objection to the documentary evidences in foreign languages produced by their respective opponent(s), but were not satisfied with some of the Chinese translations of the said documents. With regard to the part of translations disputed by the parties, Shenzhen Huaxin paid in advance translation fees in amount of RMB1,000 and this court appointed professional translators of Guangdong University of Foreign Studies to translate the said part. The parties concerned did not raise any objection to the translations by the professional translators within the time limit. Upon cross-examination of the said documentary evidences, the following facts have been ascertained: On 22 November 1996, Xingpeng Panama and Alfamarin Denizcilik A.S., Turkey (hereinafter referred to as “the Turkish company”) concluded a Memorandum of Ship Purchase Agreement, agreeing that Xingpeng Panama purchased the vessel “Alfamar” from the Turkish company at USD7,430,000, a deposit of 10% of which was to be paid within 3 banking days after the Memorandum was signed. On 8 January 1997, Xingpeng Panama entered into a Loan Agreement with Kapoc Line S.A., which stipulates that: the lender Kapoc Line S.A. lent a loan of not more than USD4,380,000 to the borrower Xingpeng Panama, who should use the loan to purchase the Turkish “Alfamar”, which was to be re-named “Xingye” and to be registered in Panama with Xingpeng Panama as the owner and the mortgage of “Xingye” to Kapoc Line S.A. should be registered in Panama; Xingpeng Panama should pay back the loan and the interests accrued thereon to Kapoc Line S.A. by 16 installments, with the principal of each installment being USD273,750 and the interests to be calculated by an annual interests rate of 1.625% plus the annual USD interests rate of the same amount of London Inter-bank Offered Rate in the corresponding period; if Xingpeng Panama failed to pay the matured debts, the loan and the interests thereon or other payments due under the Letter of Guarantee, it should pay a default interests calculating from the day of non-performance of debts till the day of actual payment; the interests for overdue payments should be refunded as per the demand of Kapoc Line S.A., failing which the interests should be added to the principal and compound interests would be demanded. It is also agreed in the Agreement that Shenzhen Huaxin was the head bareboat charterer, Shenzhen Xingpeng the sub-charterer of the bareboat “Xingye”, Far East Enterprises (Hong Kong) Co. Ltd. the time charterer; Xingpeng Panama and Shenzhen Huaxin were to sign a Bareboat Charter Party; Xingpeng Panama, Shenzhen Huaxin and Kapoc Line S.A. were to sign an Agreement on Assignment of Right and interests in Bareboat Charterparty; Shenzhen Huaxin and Shenzhen Xingpeng to sign an Agreement on Sub-Chartering of Bareboat; Shenzhen Huaxin, Shenzhen Xingpeng and Kapoc Line S.A. to sign an Agreement on Assignment of Right and Interests in Sub-chartering of Bare-boat; Shenzhen Xingpeng and East Enterprises (Hong Kong) Co. Ltd. to sign a Time Charter Party; Shenzhen Xingpeng and Kapoc Line S.A. to sign an Agreement on Assignment of Right and interests in Time Charterparty. The forms of the above agreements were all subject to the demand and approval of the loan-lender, Kapoc Line S.A.. All the foregoing agreements were guaranty documents with Shenzhen Huaxin, Shenzhen Xingpeng and East Enterprises (Hong Kong) Co. Ltd. being the guarantors. Xingpeng Panama warranted that itself and the said guarantors were limited companies legally established and lawfully existing, and that all the above agreements are lawful and valid, and ensured that all the above agreements and all other charterparties or contracts related to the vessel stipulate that all proceeds from the bareboat charters, sub-bareboat charters and time charters should be remitted to the bank account designated by Kapoc Line S.A. timely. Xingpeng Panama also guaranteed to register the said vessel in Panama in its name and Shenzhen Huaxin accepted the vessel in accordance with the Bareboat Charterparty, Shenzhen Xingpeng accepted the vessel as per the sub-bareboat charterparty and East Enterprises (Hong Kong) Co. Ltd. accepted it on the basis of the time charterparty. Failure to perform the obligation under the agreements by Xingpeng Panama and the other guarantors shall constitutes a breach of contract. If breach of contract occurs, Xingpeng Panama shall, without prejudice to the right of Kapoc Line S.A., provide Kapoc Line S.A. with compensation for all costs, expenses and debts and, at the request of Kapoc Line S.A., pay to the latter a sum sufficient to compensate for the said costs, expenses and debts. The agreement shall be governed by English law. Besides, the conditions for a loan, refunding or refunding ahead of schedule, handling charges, etc. were also specified in the Agreement. On the same day, Xingpeng Panama and Shenzhen Huaxin entered into a Bareboat Charterparty, which provides that Xingpeng Panama as the ship owner chartered out the “Xingye” to Shenzhen Huaxin for a period of 4 years commencing from the day of delivery of the vessel; Shenzhen Huaxin to pay the hire to Xingpeng Panama by 17 installments, the initial sum being USD3,050,000 and each of the subsequent sum being USD273,750; besides the hire, the charterer Shenzhen Huaxin also had to pay the relevant taxes and duties, to pay interests for all hire overdue and other sums payable at the rate of default interest, the default interests rate to be 3% higher than the London Inter-bank Offered Rate; the obligation of Shenzhen Huaxin to pay the hire and the sums under this Agreement was absolute and unconditional, without being subject to any offset, counter-claim, defence, withdrawal, delay or reduction of rights, and also without the right of terminating this Agreement or being released from or exempted from or waiving any obligation or liability hereunder; should Shenzhen Huaxin fail to pay the hire or other payable sums within the time limit of payment and no remedial measures had been taken, Xingpeng Panama may notice Shenzhen Huaxin in writing of its terminating the agreement; thereafter, Shenzhen Huaxin should immediately pay the sum of depreciation equal to the amount specified by valid provisions and all other sum due but remaining outstanding, the prescriptive devaluation being 101% of the principal; starting from the day of delivery of the ship, Shenzhen Huaxin should be responsible for all costs and expenses related to the operation and management of the ship; should receive any writ of summons from the court, be sued against or calumniated, or be arrested, detained, seized, put under control of or confiscated by or via any court, legal proceedings, governmental organ or other administrative organization, Shenzhen Huaxin should notice Xingpeng Panama of the same timely and should, at its own expenses, endeavor to get the ship be exempted or released from detention within 30 days and immediately notify Xingpeng Panama of such lift; should Shenzhen Huaxin not be exempted or released from detention within 30 days, Xingpeng Panama may seek exemption and release of the ship by itself without being liable for its such act and all costs and expenses incurred by Xingpeng Panama for the said purposes should be borne by Shenzhen Huaxin; Shenzhen Huaxin assumed all risks of the ship’s losses, consumptions, being stolen or damaged as well as all risks of requisition of ownership and the ship’s being seized or confiscated; should substantial damages be done to the ship or actual, or constructive total loss or unanimously agreed total loss of the ship occur, or the ownership of the ship be requisitioned or the ship being seized or confiscated by any governmental organ or agents of governmental organ, Shenzhen Huaxin shall inform Xingpeng Panama of the same in time, and shall, on the next date of payment after the occurrence of the said incidents, pay to Xingpeng Panama an amount equaling the prescribed depreciation with the interests for breach of contract calculating from such date at the rate of default interest; in order to further ensure that the charterers pay the hire and perform their other obligations, the charterers should, as soon as possible, forward, in a way acceptable to the ship owners, to the ship owners the guaranty documents such as the contract and certificate of transfer of right and interests of hire with the beneficiary being Kapoc Line S.A. confirmed by the shipowner Xingpeng Panama and the charterer Shenzhen Xinhua, the certificate of transfer of right and interests and the hire payable with Kapoc Line S.A. as the beneficiary signed by and between Shenzhen Huaxin, the charterer to the bareboat charterparty and Shenzhen Xingpeng, the sub-lessor under demise charter, and the certificate of assignment of right and interests and the hire payable with the beneficiary being Kapoc Line S.A. confirmed by the sub-lessor under demise charter, Shenzhen Xingpeng; English law shall apply to the Agreement. The Agreement also contains clauses in respect of relevant definitions, delivery of ship, supervision and use of the ship, maintenance of the ship, conversion and alteration of the ship, ship survey, tear and wear of the ship, requisition of the ship, insurance, miscellaneous and contract-breaching matters, compensations, business reports, maritime salvage, bill of lading, compensation, non-compulsory termination of the contract, assignment of the right of the charterers, rider clauses, warrants by the charterers and preconditions and so forth. At the court hearing, the parties concerned confirmed that the hire and interests were to be paid once every three months, the last day of every three months being the day of payment and the first day of payment being the day of delivery of the ship. On the same day when the above two agreements were signed, Shenzhen Huaxin and Shenzhen Xingpeng entered into a Sub-bareboat Charterparty, whereby it was agreed that Shenzhen Huaxin sub-chartered out “Xingye” by demise to Shenzhen Xingpeng and the latter paid hire to the former. The provisions in the Sub-bareboat Charterparty with regard to the lessor and the charterer’s rights and interests and the applicable law are identical with the corresponding contents of the Bareboat Charterparty by and between Xingpeng Panama and Shenzhen Huaxin. On 28 January 1997, Xingpeng Panama and Kapoc Line S.A. signed a Supplementary Agreement I to the Loan Agreement, agreeing that, at the request of Xingpeng Panama, Kapoc Line S.A. agreed to change the time charterer under the Time Charterparty from Far East Enterprises (Hong Kong) Co. Ltd. into Farenco Panama. The time charterparty shall remain effective for 4 years, the daily hire being not less than USD6,500. On the same day, Xingpeng Panama and Shenzhen Huaxin signed the Supplementary Agreement I to Bareboat Charterparty; Shenzhen Huaxin and Shenzhen Xingpeng entered into the Supplementary Agreement I to Sub-Bareboat Charterparty. The time charterer under the above two supplementary agreements was also be accordingly altered as Farenco Panama. Besides, before the signing of the above-mentioned loan agreement, bareboat charterparty, sub-bareboat charterparty and their respective supplements, Shenzhen Xingpeng and Farenco Panama concluded a Time Charterparty on 3 January of the same year, agreeing that Shenzhen Xingpeng chartered out “Xingye” to Farenco Panama for a period of 4 years and that Farenco Panama paid to Shenzhen Xingpeng the daily hire of USD6,500. After the said time charterparty was signed, Farenco HK issued a Guaranty for Charterparty to Shenzhen Xingpeng on 25 January of the same year, stating that as it was totally because Farenco HK so requested that Shenzhen Xingpeng signed the charterparty dated 3 January, Farenco HK hereby guaranteed that Farenco Panama would perform all its obligations under the charterparty and the relevant documents and would effect, in full, all payments due at the present time and in the future as scheduled as per the provisions of the charterparty and the relevant documents. On 29 January 1997, Xingpeng Panama, Shenzhen Huaxin and Kapoc Line S.A. signed an Agreement on Assignment of Right and interests in Bareboat Charterparty, which stipulated that Xingpeng Panama should assign all and any of its rights, qualifications and interests under the bareboat charterparty and its relevant supplementary agreement and appendix to Kapoc Line S.A., the mortgagee of “Xingye”, and should continue to perform its obligations under the charterparty; Shenzhen Huaxin paid to Kapoc Line S.A. the freight, hire, proceeds or other sums payable or to be payable on the basis of the Bareboat Charterparty and, without the approval of Kapoc Line S.A. in writing, Shenzhen Huaxin must not transfer or waive its rights and obligations under the charterparty; Xingpeng Panama undertook to take all necessary steps to ensure that Shenzhen Huaxin perform all obligations as per the provisions of the charterparty and that the said payment be effected to Kapoc Line S.A. at the time Kapoc Line S.A. may possibly instruct temporarily; once the outstanding debts were paid off to Kapoc Line S.A., Kapoc Line S.A. should, as per the demand of Xingpeng Panama and at the expense of the latter, transfer the pertaining assets and interests formally assigned to the former back to Xingpeng Panama; the relevant rights and compensation afforded to Kapoc Line S.A. under this agreement were a supplement to the rights and compensation conferred to Kapoc Line S.A. by the loan agreement, the guaranty documents and the applicable law, rather than a restriction; this agreement shall be governed by English law. On the same day, Shenzhen Huaxin, Shenzhen Xingpeng and Kapoc Line S.A. concluded the Agreement on Assignment of Right and interests in Sub-Bareboat Charterparty, providing that Shenzhen Huaxin transferred all its rights, qualifications and interests under the Sub-Bareboat Charterparty and the related supplementary agreements and appendix to Kapoc Line S.A., the mortgagee of “Xingye”; the clauses in respect of the rights and obligations of the transferor and the transferee, as well as the application of law were the same as the corresponding clauses under the said Agreement on Assignment of Right and interests in Bareboat Charterparty. On the same day, Shenzhen Xingpeng and Kapoc Line S.A. signed the Agreement on Assignment of Right and interests in Time Charterparty and Guarantee for Charterparty, stating that Shenzhen Xingpeng transferred all its rights, qualifications and interests under the Time Charterparty and the related supplementary agreements and appendix to Kapoc Line S.A., the mortgagee of “Xingye”; the clauses in respect of the rights and obligations of the transferor and the transferee as well as the application of law were the same as the corresponding clauses under the said Agreement on Assignment of Right and interests in Bareboat Charterparty. On the day when the Agreement on Assignment of Right and interests in Time Charterparty and Guarantee for Charterparty was signed, Shenzhen Xingpeng noticed Farenco Panama in writing to the effect that Shenzhen Xingpeng had assigned to Kapoc Line S.A. all its rights, qualifications, interests and benefits under the charterparty, all payments due to Shenzhen Xingpeng, as well as any other rights and interests likely to rise under the charterparty, at the same time authorizing and instructing Farenco Panama to pay to Kapoc Line S.A. all hire, proceeds or other sums already payable or would become payable to under the charterparty to Shenzhen Xingpeng. Farenco Panama replied in writing to confirm receipt of such notice. On 7 October 1998, Kapoc Line S.A. and ORIX Singapore concluded the Agreement on Assignment of Right and interests of “Xingye”, agreeing that from 7 October on Kapoc Line S.A. assigned the loan and other rights and interests enjoyed by it under the loan agreement and the related guaranty documents to ORIX Singapore; the assigned sums up to 7 October included the outstanding principal of the loan in amount of USD2,737,500 plus the interests accrued from the last day of payment of interests to 7 October in amount of USD41,746.88; the relevant guaranty documents included the Agreement on Assignment of Rights and Interests in Bare-boat Charterparty, the Agreement on Assignment of Rights and Interests in Sub-Bare-boat Charterparty, the Agreement on Assignment of Rights and Interests in the Time Charterparty and the Letter of Guarantee for Charterparty, and so forth; English law shall be applied to the Agreement. On the same day, the two parties also signed a Joint Declaration on First Priority Assignment of Mortgage of “Xingye”, stating that on 4 April 1997, formalities of registration of the mortgage of “Xingye” were passed in Panama; the shipowner Xingpeng Panama mortgaged the ship “Xingye” to Kapoc Line S.A. for the amount of USD4,380,000 plus interest; now Kapoc Line S.A. transferred, assigned, handed over and delivered all of its right and interests under such mortgage, together with all the rights, qualifications and benefits of Kapoc Line S.A. and all the creditor’s rights and debts due or to become due under such mortgage to ORIX Singapore. On the same day, Kapoc Line S.A. notified Shenzhen Huaxin and Shenzhen Xingpeng respectively that in accordance with the relevant guaranty documents, Kapoc Line S.A. had completely assigned all and any of its rights, qualifications, interests and benefits to ORIX Singapore. The assignment came into effect on 7 October, and that from this effective date on all sums payable to Kapoc Line S.A. should be paid to ORIX Singapore instead. After conclusion of the above agreements, the parties concerned have performed their respective obligations under the agreements. In January 1997, Kapoc Line S.A., as per the Loan Agreement, remitted USD4,380,000 to the bank account designated by Xingpeng Panama in refunding the loan. After paying off the said price for the ship to the Turkish Company, Xingpeng Panama took delivery of the ship “ALFAMAR” and renamed her “Xingye”. On 29 January 1997, Shenzhen Huaxin confirmed having taken delivery of “Xingye” from Xingpeng Panama and the commencement of calculation of hire on that day. On the same day, Shenzhen Xingpeng confirmed its having taken delivery of “Xingye” from Shenzhen Huaxin as well as the commencement of calculation of hire from that day on. During the time when “Xingye” was bareboat and time chartered out, her registry was still with Panama. After bareboat chartered in the vessel, neither Shenzhen Huaxin nor Shenzhen Xingpeng went through formalities for registration of the bareboat charter in Mainland China. During the court hearing, Shenzhen Xingpeng alleged that during the period when the vessel was time chartered to Farenco Panama, it had been trading to ports of Mainland China, without producing any evidence in this regard. Shenzhen Xingpeng also alleged that the purchase and trading operation of “Xingye” were managed by Xingpeng Panama and Shenzhen Xingpeng; Shenzhen Huaxin did not take part in the same. It was recorded on the 13 pieces of bank remittance receipts provided by ORIX Singapore that Xingpeng Panama, Shenzhen Xingpeng and Farenco HK, during the period commencing from 23 April 1998 to 21 April 1999, had paid to ORIX (Asia) Co. Ltd. (hereinafter referred to as “ORIX HK”) a sum of USD1,388,757.27. At the court hearing, ORIX Singapore confirmed having received the hire of the 2nd to the 10th installments in the sum of USD2,463,750, but not that for the 11th to the 17th installments. According to the commercial invoices provided by ORIX Singapore, ORIX HK and ORIX Singapore, during 28 January 1997 to 27 April 1999, had respectively sent 9 notices to Shenzhen Xingpeng, requesting the latter to pay the interests agreed under the Loan Agreement for the first 9 installments, which amounted to USD554,246.33. At the court hearing, ORIX Singapore confirmed having received the said interests and alleged that it had refunded the part of each installment of hire or interests that exceeded the agreed sum to Shenzhen Xingpeng – altogether more than USD200,000 had been returned to Shenzhen Xingpeng; up to the day when this lawsuit was filed, there were still USD7,209.64 remaining on the bank account of ORIX Singapore; this sum should be payable to Shenzhen Xingpeng. The Time Charterparty and the Agreement on Assignment of Rights and Interests in Bareboat Charterparty involved in the present case were concluded by Ai Quanqin in the name of Shenzhen Huaxin. When signing the above two agreements, Ai Quanqin was the Director & General Manager of Shenzhen Huaxin. According to a Written Approval of All Directors and Share-holders of Shenzhen Huaxin signed by 3 directors as produced by ORIX Singapore, the company authorized Ai Quanqin to negotiate for and sign on the Bareboat Charterparty, the Sub-Bareboat Charterparty, the Agreement on Assignment of Rights and Interests in Bareboat Charterparty and so on. It was revealed from the annual report of 1997 of Shenzhen Huaxin that a vessel was additionally purchased in 1997; ORIX HK paid for it in amount of RMB28,805,249.60 through financing. At the court hearing, Shenzhen Huaxin confirmed that it was the controlling share-holder of Shenzhen Xingpeng and that Shenzhen Huaxin had no license to manage/operate ships and to engage in shipping business; Shenzhen Xingpeng confirmed that Xingpeng Panama was a company registered in Panama by them as per the demand of Kapoc Line S.A.; ORIX Singapore confrmed that Kapoc Line S.A. was a company registered in Panama by them; ORIX Singapore and ORIX Hk are the sole-owned subsidiaries to (Japan) ORIX Co., Ltd. respectively registered in Singapore and Hong Kong. On 28 October 1998, the Public Registrar of Panama certified that the owner of “Xingye” was Xingpeng Panama; the registry of the ship’s mortgage was entered on 4 April 1997, the mortgagee being ORIX Singapore and the mortgage amount being USD4,380,000. From January 1999 to December 2001, “Xingye” was arrested in Bangladesh and ORIX HK and ORIX Singapore appointed lawyers to try to get the ship released. In addition, Shenzhen Huaxin and Shenzhen Xingpeng did not pay the hire, ORIX HK and ORIX Singapore had to appoint lawyers in Hong Kong to sue them, for which they had paid lawyers’ fees to the law firms of Hong Kong, China, Daka, Bangladesh, Tokyo, Japan and Panama or paid to other relevant units the notarization fees, translation fees, insurance premium, survey fees, etc. As per the receipts and the debit notes furnished by ORIX Singapore to this court, the legal costs paid amounted to USD215,497.88, other miscellaneous costs amounting to USD134,299.58, of which USD43,641 was paid for this case, and USD6,031.21 was paid for translation, notarization and others. With respect to the above, Shenzhen Huaxin and Shenzhen Xingpeng are of the opinion that Shenzhen Huaxin and Shenzhen Xingpeng are not the parties paying or collecting the fees, and it could not be verified whether the above fees had actually been paid and the criteria for such charges, and they have nothing to do with this case, so they refused to confirm the same. On 9 August 2000, Shenzhen Xingpeng sent a letter to ORIX HK, stating that since it was impossible for “Xingye” to be released, Shenzhen Xingpeng, as the ship owner, suggested that a lump sum of USD250,000 be paid to the loan lender for settlement of the outstanding loan as well as the final and full settlement of the debts owing to ORIX Singapore by the shipowner, Shenzhen Huaxin and Shenzhen Xingpeng. After the subject dispute arose, Shenzhen Xingpeng and ORIX Singapore had held negotiations for many times. As Shenzhen Huaxin is the holding company of Shenzhen Xingpeng, some of the staff from Shenzhen Xingpeng who took part in the negotiations simultaneously held positions in Shenzhen Huaxin. ORIX Singapore was of the opinion that Shenzhen Huaxin had also participated in the negotiations, but failed to produce adequate evidence to prove it. On 18 May 2000, Hong Kong High Court rendered a judgment for the case filed by ORIX Singapore and Kapoc Line S.A. against Farenco HK, ordering Farenco HK to pay USD3,544,818 to ORIX Singapore and Kapoc Line S.A. and the interests calculated from 10 November 1999 up to the day of actual payment, as well as to bear the court costs of the said case. On 29 September 2000, Hong Kong High Court issued a court order for the case filed by ORIX Singapore and Kapoc Line S.A. against Farenco HK. ORIX Singapore confirmed that Hong Kong Court had, at its request, laid the case aside. On 14 January 2002, Sanwa Bank Japan Hong Kong Branch issued a certificate to the effect that based on the electronic record of the daily transaction interests rate, the annual interests rate of London Inter-bank Offered Rate for fixed deposit from 27 October 1998 to 29 October 2001 (per three-month being a unit of calculation) was 5.26768%. The Collegial Bench unanimously hold that: the main basis of the Plaintiff ORIX Singapore’s lodging the complaint was the agreement on assignment of rights and interests between it and Kapoc Line S.A., the agreement on assignment of rights and interests among Kapoc Line S.A., Xingpeng Panama and Shenzhen Huaxin, as well as the agreement on assignment of rights and interests among Kapoc Line S.A., Shenzhen Huaxin and Shenzhen Xingpeng. The rights and interests to be assigned under three agreements on assignment of rights and interests were the hire and other costs in respect of “Xingye” due to the mortgagee or the lessors of the ship. Therefore, the subject case is about a dispute over agreements on assignment of rights and interests in bareboat charterparty involving foreign elements. Although the Loan Agreement between Xingpeng Panama and Kapoc Line S.A. have some connection with the facts of this case, yet the Loan Agreement itself is neither the focus of the subject dispute nor the direct basis of the Plaintiff’s complaint. Hence, the assertion of Shenzhen Huaxin and Shenzhen Xingpeng that this case is about the contractual relationship of financing and chartering is not tenable. The Plaintiff ORIX Singapore advocated that disputes under this case should be regulated by the law agreed upon in the contracts among the parties. The parties to the agreements on assignment of rights and interests in bareboat charterparty under this case had agreed under the agreements that English law should be the applicable law. This should be deemed the true intention of the parties to the agreements. Paragraph 1 of Article 145 of the General Principles of the Civil Law of the PRC provides that the parties to a foreign-related contract may choose a law which is suitable for settlement of contractual disputes. The choice of the parties to the agreements involved in this case in respect of the applicable law is not in violation of the public interests of China and should be deemed lawful and effective. The parties concerned should adduce evidence to prove that this case should apply English law. The Defendants Shenzhen Huaxin and Shenzhen Xingpeng waived their burden of proof because they advocated that Chinese law should be applicable. The Plaintiff ORIX Singapore submitted to this court a Legal Opinions on English Law issued by an English solicitor. A lawyer from Hong Kong as appointed by the Ministry of Justice of the PRC notarized the signature of the English solicitor who issued the said Opinions. According to the Opinions, the English solicitor entrusted by ORIX Singapore, upon perusal of the Loan Agreement, Supplementary Agreement I to the Loan Agreement, Bareboat Charterparty, Supplementary Agreement I to the Bareboat Charterparty, Sub-Bareboat Charterparty, Supplementary Agreement I to the Sub-Bareboat Charterparty, Agreement on Assignment of Rights and Interests in Bareboat Charterparty, Agreement on Assignment of Rights and Interests in Sub-Bareboat Charterparty, Time Charterparty, Letter of Guarantee for Charterparty, Agreement on Assignment of Rights and Interests in Time Charterparty & Letter of Guarantee for Charterparty, and Agreement on Assignment of Rights and Interests in “Xingye”, takes the view that, under the presupposition that the signing, presenting, performance or enforcement of all of the contracts by and among the companies established in the territory under the judicial jurisdiction of foreign countries were all in compliance with the laws of the relevant countries, the above contracts and agreements are effective under the English law, that ORIX Singapore is entitled to claim the outstanding hire plus the interests accrued thereon, the legal costs and other relevant costs incurred by ORIX Singapore in the process of exercising its rights under the above contracts or agreements, and that the claims listed in the Statement of Complaint of ORIX Singapore may be supported by English law. English judicial precedents are also introduced in the said Opinions. However, these Opinions are but analyses and comments to the effect that the contracts involved herein are effective and the Plaintiff ORIX Singapore’s claims may be supported by English law without giving the specific provisions of the related English law, and have not been notarized and legalized in Britain. Hence the collegial bench could not ascertain the Opinions as the evidential document of English law, nor could the correctness of the precedents introduced be ascertained. Therefore, in accordance with article 193 of the Opinions of the Supreme People’s Court on Some Issues Concerning the Enforcement of the General Principles of the Civil Law of the People’s Republic of China, the law of China shall be applied to this case. This case is about a dispute over the contract of assignment of rights and interests in a bareboat charterparty. Whether the effectiveness of the Loan Agreement is ascertained or not shall not affect the handling of the subject dispute. Moreover, the effectiveness of the Loan Agreement does not fall within the scope of trials of this case. Therefore, the collegial bench shall not ascertain the issue of effectiveness of the Loan Agreement. Ai Quanqin signed the Bareboat Charterparty, Sub-Bareboat Charterparty and the corresponding agreements on assignment of rights and interests on behalf of Shenzhen Huaxin. Before the said agreements were signed, Ai Quanqin had obtained the authorization from some of the directors of Shenzhen Huaxin, and at the time of signing the agreements, Ai Quanqin was the Director & General Manager of Shenzhen Huaxin. After the agreements were signed, Shenzhen Huaxin revealed in its annual report that it had purchased a cargo vessel from ORIX HK through financing. All these facts are sufficient to prove that Ai Quanqin had obtained authorization from Shenzhen Huaxin when he signed the agreements and that Shenzhen Huaxin had acknowledged the signing of the above agreements by Ai Quanqin on its behalf. Hence, the assertion of Shenzhen Huaxin that the company did not authorize Ai Quanqin to sign the agreements is not in conformity with the facts and should not be supported. The Bareboat Charterparty in respect of “Xingye” between Shenzhen Huaxin and Xingpeng Panama was not registered in Mainland China, the legal consequence of which, according to Article 6 of the Regulations of the PRC on Registration of Ships, is that the unregistered Bareboat Charterparty can not be directed against a third party, rather than that the Bareboat Charterparty is not made void. The assertions of Shenzhen Huaxin that the Bareboat Charterparty between it and Xingpeng Panama should be null and void because Shenzhen Huaxin has no license to engage in shipping business and the said charterparty did not go through registration formalities for bareboat chartering are baseless and should not be supported. The Bareboat Charterparty by and between Shenzhen Huaxin and Xingpeng Panama is not in breach of the prohibitive provisions of the laws and administrative regulations of China. Therefore, it is lawful and effective and is legally binding upon both parties. Likewise, the Sub-Bareboat Charterparty between Shenzhen Huaxin and Shenzhen Xingpeng is also lawful and effective and binding upon the two parties to it. As per the said Bareboat Charterparty and Sub-Bareboat Charterparty, Xingpeng Panama had the obligation to deliver the ship to Shenzhen Huaxin and enjoyed the right to collect from the latter the hire and other related costs, and Shenzhen Huaxin was obliged to deliver the ship to Shenzhen Xingpeng and entitled to collect from the latter the hire and other sums due. Now that the vessel named in the agreements has been actually delivered and accepted, Shenzhen Huaxin has the obligation to pay the hire and other costs to Xingpeng Panama, while Shenzhen Xingpeng has the obligation to pay the hire and other costs to Shenzhen Huaxin. The Agreement on Assignment of Rights and Interests in Bareboat Charterparty among Xingpeng Panama, Shenzhen Huaxin and Kapoc Line S.A. reflects the true intentions of the three parties to it and is not in violation of law or administrative regulations. The rights of Xingpeng Panama under the Bareboat Charterparty are transferable and valid creditor’s rights. Therefore, the Agreement on Assignment of Rights and Interests in Bareboat Charterparty is effective. According to the Agreement, Xingpeng Panama assigned all its rights to Kapoc Line S.A., and Kapoc Line S.A. is entitled to ask Shenzhen Huaxin to pay the hire and other costs, while Shenzhen Huaxin is obliged to pay the hire and other costs to Kapoc Line S.A.. Likewise, the Agreement on Assignment of Rights and Interests in Sub-Bareboat Charterparty among Shenzhen Huaxin, Shenzhen Xingpeng and Kapoc Line S.A. is also legitimate and effective. As per the said Agreement and the Sub-Bareboat Charterparty, Kapoc Line S.A. is entitled to ask Shenzhen Xingpeng to pay the hire and other costs, and the latter is obliged to pay the hire and other costs to the former. The Agreement on Assignment of Rights and Interests in Sub-Bareboat Charterparty stipulates that Shenzhen Huaxin undertakes to take all necessary steps to ensure that Shenzhen Xingpeng perform all obligations as per the provisions of the charterparty, and that the said payment be effected, timely, to Kapoc Line S.A. at the time Kapoc Line S.A. may possibly instruct temporarily; the relevant rights and compensation afforded to Kapoc Line S.A. under this agreement were a supplement to the rights and compensation conferred to Kapoc Line S.A. by the loan agreement, the guaranty documents and the applicable law, rather than a restriction. In the light of the above, what Shenzhen Huaxin assigned was merely its rights under the sub-bareboat charterparty, not rights and obligations altogether, and what Kapoc Line S.A. assumed was the rights of Shenzhen Huaxin; the obligations of Shenzhen Huaxin under the charterparty have not be exempted. That is to say, if Shenzhen Xingpeng fails to pay the hire and other costs to Kapoc Line S.A., the right of Kapoc Line S.A. to collect the hire and other costs would not be restricted due to the Agreement on Assignment of Rights and Interests in Sub-Bareboat Charterparty; Kapoc Line S.A. is entitled to ask Shenzhen Huaxin to pay the hire in reliance on the Bareboat Charterparty, the Agreement on Assignment of Rights and Interests in Bareboat Charterparty and so forth; meanwhile, Shenzhen Huaxin has undertaken that the hire be paid to Kapoc Line S.A. on time, which shows that Shenzhen Huaxin is willing to be the co-debtor for the outstanding sums payable by Shenzhen Xingpeng. Similarly, the Time Charterparty and the Agreement on Assignment of Rights and Interests in Letter of Guarantee for Charterparty between Shenzhen Xingpeng and Kapoc Line S.A. did not exempt Shenzhen Xingpeng from its obligation of payment of hire, and Shenzhen Xingpeng was still willing to assume liabilities, as a co-debtor for the obligation of payment of hire of Farenco Panama under the time charterparty. ORIX Singapore and Kapoc Line S.A. signed the Agreement on Assignment of Rights and Interests in “Xingye”, whereby Kapoc Line S.A. assigned its rights and obligations under the contracts involved in the present case to ORIX Singapore and notified Shenzhen Huaxin and Shenzhen Xingpeng of the same. This Agreement reflects the true intentions of the two parties and is legitimate and valid. In the light of the Agreement on Assignment of Rights and Interests in Bareboat Charterparty and the Agreement on Assignment of Rights and Interests in Sub-Bareboat Charterparty, Kapoc Line S.A. transferred its right of collecting the hire and other costs from Shenzhen Huaxin and Shenzhen Xingpeng to ORIX Singapore. Therefore, ORIX Singapore is entitled to demand payment of the hire and other costs by Shenzhen Huaxin and Shenzhen Xingpeng, and Shenzhen Huaxin and Shenzhen Xingpeng should pay the hire and other costs directly to ORIX Singapore and bear the liabilities for overdue payment. It is agreed upon under the Bareboat Charterparty and the Sub-Bareboat Charterparty that Shenzhen Huaxin and Shenzhen Xingpeng should pay the hire by 17 installments. If the hire is not effected within the time limit, they should pay the agreed depreciation and all other sums overdue. Now Shenzhen Xingpeng and Shenzhen Huaxin have only effected the hire and interests of the first 10 installments, with the remaining 7 installments still unpaid. The sums overdue amount to USD1,916,250 (USD273,750/installment x 7), and the agreed depreciation is USD19,162.50. As per the above agreements, Shenzhen Huaxin and Shenzhen Xingpeng have the obligation of payment. The Plaintiff ORIX Singapore, after deducting the USD7,209.64 of Shenzhen Xingpeng remaining in the bank account of the former, requests Shenzhen Huaxin and Shenzhen Xingpeng to pay USD1,928,202.86. Such request is well-grounded and should be supported. It is also specified in the Bareboat Charterparty and the Sub-Bareboat Charterparty that besides paying the hire, Shenzhen Huaxin and Shenzhen Xingpeng agree to immediately pay the interests for the overdue hire on the basis of the default interests upon receipt of a debit note for the sums payable under the said charterparties. Hence, the request of the Plaintiff ORIX Singapore for payment of default interests by Shenzhen Huaxin and Shenzhen Xingpeng is in conformity with the stipulation of the contracts and thus should be backed. The above agreements prescribe that the default interests be 3% higher than London Bank’s USD deposit rate (P) of the same amount. The Plaintiff ORIX Singapore’s claim that the default interests be calculated on the basis of P + 3% is baseless and thus should be dismissed. The default interests should be calculated on the basis of P + 3% x P. During the court hearing, the Plaintiff ORIX Singapore admitted that only 7 installments of hire, namely from 11th to the 17th, were not received. The dates of payment for the said 7 installments are 29 April 1999, 29 July 1999, 29 October 1999, 29 January 2000, 29 April 2000, 29 July 2000 and 29 October 2000, and the amount of each installment is USD273,750. Another request of the Plaintiff ORIX Singapore that the default interests be calculated from 27 April 1999 to 29 January 2002 is groundless and should not be supported. The default interests should be calculated on the basis of the hire of each installment from 30 April 1999, 30 July 1999, 30 October 1999, 30 January 2000, 30 April 2000, 30 July 2000 and 30 October 2000 up to 29 January 2002. The respective rights and interests of ORIX Singapore, Shenzhen Huaxin and Shenzhen Xingpeng are defined as per the Agreement on Assignment of Rights and Interests in Bareboat Charterparty, the Agreement on Assignment of Rights and Interests in Sub-Bareboat Charterparty and the Agreement on Assignment of Rights and Interests in “Xingye”. The rights that ORIX Singapore enjoys against Shenzhen Huaxin and Shenzhen Xingpeng are those that Xingpeng Panama and Shenzhen Huaxin enjoy as the bareboat lessor under the Bareboat Charterparty and the Sub-Bareboat Charterparty. Shenzhen Huaxin and Shenzhen Xingpeng are only responsible for payment of legal costs or miscellaneous expenses paid or incurred by Xingpeng Panama or Shenzhen Huaxin as per the Bareboat Charterparty and the Sub-Bareboat Charterparty. Shenzhen Huaxin and Shenzhen Xingpeng should compensate for the part of the legal costs and other miscellaneous costs directly incurred for this case. Other costs are internal expenses of ORIX Singapore or Kapoc Line S.A. and should not be borne by Shenzhen Huaxin and Shenzhen Xingpeng. The request of ORIX Singapore for Shenzhen Huaxin and Shenzhen Xingpeng to bear the said legal costs and miscellaneous expenses is baseless and should be dismissed. Mainland China and Hong Kong have relatively separate judicial systems. ORIX Singapore lodged the subject complaint with Hong Kong court, which was accepted by Hong Kong High Court. This does not affect ORIX Singapore’s right to file a complaint again with this court. Therefore, this court does not support the groundless allegation of Shenzhen Huaxin and Shenzhen Xingpeng that these claims of ORIX Singapore are repeated claims. In summary of the above, the judgment is made as follows in pursuance of Article 91, Article 111 and Article 112 of the General Principles of the Civil Law of the PRC: The Defendants Shenzhen Huaxin and Shenzhen Xingpeng to indemnify the Plaintiff ORIX Singapore for the hire and the depreciation in amount of USD1,928,202.86; The Defendants Shenzhen Huaxin and Shenzhen Xingpeng to pay the default interests to the Plaintiff ORIX Singapore accrued on each installment of hire of USD273,750 respectively calculating from 30 April 1999, 30 July 1999, 30 October 1999, 30 January 2000, 30 April 2000, 30 July 2000 and 30 October 2000 up to 29 January 2002 at 3% higher than the London Bank’s USD deposit rate of the same amount; The Defendants Shenzhen Huaxin and Shenzhen Xingpeng to indemnify the Plaintiff ORIX Singapore for the legal costs and incidental expenses in amount of USD49,672.21; and Other litigant requests of the Plaintiff ORIX Singapore to be dismissed. USD6,312 out of the acceptance fees of this case in the sum of USD22,510 is to be born by the Plaintiff ORIX Singapore and the remaining USD16,198 to be borne by the Defendants Shenzhen Huaxin and Shenzhen Xingpeng. Shenzhen Huaxin is to bear the translation fees for this case at RMB1,000. The acceptance fees paid in advance by ORIX Singapore shall not be returned by the court, and Shenzhen Huaxin and Shenzhen Xingpeng shall pay their share of the acceptance fees to ORIX Singapore direct. The above payments should be effected within 10 days as of the day when this Judgment takes effect. Should there be any objections to this Judgment, a statement of appeal with copy/copies in the number of the opposing party/parties may be submitted to this Court within 30 days by the Plaintiff ORIX Singapore and within 15 days by the Defendants Shenzhen Huaxi and Shenzhen Xingpeng upon the service of this Judgment, for appealing before the appeal court Guangdong Higher People’s Court. Chief Judge: Zhan Simin Judge: Xu Yuanping Judge: Cheng Shengxiang Date: 2 July 2002 Assistant to Judges: Pan Guanchong 　 　Clerk: Zhu Mingfang