Deqing County Xinshi Oil Factory v. Dynamic Care S.A. Panama

Updated：2004-03-16 Views：2102 
SHANGHAI MARITIME COURTt

PEOPLE??S REPUBLIC OF CHINA 

CIVIL JUDEMENT



No. Hu Hai Fa Shang Chu 407(2000)



Plaintiff :   Deqing County Xinshi Oil Factory

Domicile:   1 Tayuan Rd, Xinshi, Deqing County Zhejiang Province

Legal Representative: Lu Chaoqun, Chairman of the Board

Agent ad litem: Li Ming, lawyer of Shanghai Municipal Siwei 

                 Law Firm

Defendant:  Dynamic Care S.A. Panama 

Domicile:   52 Zossimadou & Tsamadoy St. 185 31 Piraeus, Greece

Legal Representative: Vasilatos Dionysios, director of the company

Agent ad litem: Huang Shungang, Chen Youmu, lawyers of

                 Shanghai Municipal Huali Law Firm



The cases of dispute between the plaintiff Deqing County Xinshi Oil Factory and the defendant Dynamic Care S.A. Panama on the difference of losses in maritime shipping of goods was accepted by this court on November 30, 2000. This court duly formed a collegial bench and held open hearings on April 10 and May 10, 2001. The agent ad litem Li Ming representing the plaintiff and the agent ad litem Chen Youmu representing the defendant were present at the court to intervene.  The hearing of the case has now been concluded.

The plaintiff stated: the plaintiff imported from Europe 49,856.69 tons of rape-seeds at the price of USD212.50 per ton, a total of USD 10,594,547.  The goods were shipped by the defendant??s ship Vita Hope to Shanghai, China. On August 31, 2000, the defendant issued 4 order bills of lading.  On October 7 of the same year, Vita Hope arrived at Minsheng Wharf of Shanghai Port and unloaded the goods.  On October. 12, the unloading completed.  In inspecting the goods, it was found short of 817.08 tons at a loss of an amount of USD173,629.50, and 4,700 tons of the seeds were moulded and deteriorated and mixed with foreign substance, at a depreciation rate of 12%-15%, causing a loss of USD119,850.  The above shortage and loss of goods totaled USD293,479.50.  The expenses incurred for inspection and application to the court for arresting the ship and legal cost totaled RMB42,000 yuan, equivalent to USD5,000.  The plaintiff requested the court to decide that the defendant compensate the plaintiff for the loss of goods of USD293,479.50, plus the bank interest on that amount for the period beginning from the date of claim to the date of coming into effect of the judgment, and that the defendant bear the legal cost and other expenses incurred in the amount of USD5,000.

The defendant alleged: The plaintiff could not prove that it had the right of action for the goods under this case.  The consignor under the 2 bills of lading was not the seller under the sales contract, and not the owner of the goods under the bills of lading. Thus he had no right to endorse the bills of lading for transfer.  SGS-CSTC Standards Technical Services Co., Ltd. (hereinafter referred to as ?°SGS?±) was entrusted by the plaintiff to issue a draft inspection report for a shortage of goods of 124 tons.  The report was acknowledged by the defendant as an evidence with legal effect.  The plaintiff??s claim against the defendant for a compensation for over 800 tons of loss of goods based on the operation report on bag-filling by the loading and unloading company at the unloading wharf should not be supported.  The record of bag-filling operation by Minsheng Harbor Co. was an indirect evidence.  Though its weighing apparatus may be accurate, the possibility of erroneous recording could not be ruled out because the record was made by the unloading party on its own??and it could not indicate the actual loading conditions. When SGS made the draft inspection, both the ship side and cargo side were present and they together made the calculations.  Even there might be errors, but it was legally fair.  The report by SGS stating that the shortage of goods being 124 tons was still within the reasonable error rate of 5% for bulk loading and unloading. Therefore, there was no shortage in unloading.  Moreover, the verification method for damage by SGS submitted by the plaintiff was not well-based and the result was not determined; it should not be taken as the basis for deciding the case.  As for whether the goods were moulded and deteriorated, the quality of  the goods should actually be examined and inspected and the results ??be obtained therefrom.  The results should be indicated by such relevant data as the acid content, mould content, etc.  The examination report by SGS only provided the data of FFA content, which could not prove that the value of the goods was affected.  The amount of loss and depreciation rate of goods determined by SGS report went against the principle of seeking from facts.  According to the requirements for inspection of goods, the damaged goods should be separated from the good ones and then to determine the amount and rate of loss. However, the inspection personnel did not operate in accordance with this requirement.  The plaintiff did not take any measure to prevent the increase of losses, but mixed the so-called damaged goods with the good ones in filling the bags.  This could not prove that there was damage to the goods.  The expenses incurred by the lawsuit, application for the arrest of the ship and lawyers?? fee claimed by the plaintiff were not the expenses inevitably incurred and should not be claimed by the defendant.

The evidence submitted to this court by the plaintiff and the cross-examination by the defendant were as follows:

Evidence One: The 4 bills of lading for the goods involved in this case proved the quantity and the ownership of the goods by the plaintiff?? but the defendant held that bill of lading No. 2 had no endorsement; that the name of the consignor under bills of lading No. 3 and No. 4 was not consistent with that of the seller in the trade contract and that the defendant was not the legal holder of the bills of lading.

Evidence Two: The invoice of goods proved the unit price and total price of the goods, the description of the quality of the goods by the seller, ??against which the defendant had no objection.

Evidence Three: The inspection report of the quantity and quality of the goods involved in this case by SGS.  Evidence Four to Evidence Nine were appendixes to that report.  Evidence Three to Evidence Nine were respectively the description of the condition of the ship, head-notes of the draft inspection, record by the inspectors about the clogging of goods, stowage plan of the ship, daily report of the loading port, pictures of the damaged goods: proving that through the draft inspection of the goods involved in this case there was a shortage of 124 tons.  Owing to the defect existing in the ship itself the conclusion might not accurately indicate the actual quantity of the goods unloaded.  The report proved that there were around 4,700 tons of goods clogged, moulded and deteriorated and mixed with foreign substance with a depreciation rate of 12%-15%.  The defendant held that the report was made out and consigned by the plaintiff unilaterally.  There were many supplements to the report; there were faxed documents and much of the wording was tendentious.  The defendant did not acknowledge the quantity of loss of the goods.  The draft inspection by the SGS inspectors might have erroneous head-notes, which were made out without the knowledge of the defendant. It was only when the plaintiff brought an action that the defendant knew that the plaintiff had objection to the quantity of goods.  The defendant only acknowledged the draft inspection report of the shortage of 124 tons as signed by it.

Evidence Ten: Jia Xiaodong, staff from SGS, faxed to Zhang Zhenxian, staff of the plaintiff, proving that the goods appeared loose and clogged that could be broken by pressing with hand.  The inspectors held that the defendant was partly responsible for the care for the goods.  The defendant expressed doubts as to whether Jia Xiaodong had the qualifications for an inspector, and did not acknowledge the effect of this evidence.

    Evidence Eleven: The fax from Shanghai Mingyang Freight Forwarding Co., Ltd. to Zhongrun Fat and Oil Industrial Co., Ltd. and the plaintiff of this case which proved that from Oct. 7 to 12, 2000 Deqing Xinshi Oil Factory and Zhongrun Fat and Oil Industrial Co., Ltd. applied for unloading.  The ship anchored at No 2 berth of Minsheng Wharf and used the gantry-crane grab bucket to unload the goods and operated the bag filling straight away.  According to the record reported by Xinhua Harbor Co. the actual quantity unloaded was 48,418 bags at 60kg/bag, totaling a net weight of 2,905.08 tons; 70,693 bags at 65kg/bag, totaling 4,595 tons. Minsheng Harbor Co. actually unloaded 639,069 bags at a net weight of 65kg/bag, totaling 41,593.485 tons.  The total weight of the above was 49,030.61 tons, short of 817.08 tons.  The defendant held that the status of Mingyang Co. was not clear, while the loading and unloading company at the wharf was appointed by the plaintiff.  It did not acknowledge the effect of this evidence.                   

Evidence Twelve: The daily report by Minsheng Harbor Co. Shanghai Port on unloading of import goods that proved the shortage of 817.08 tons in the unloaded goods, the loss of shortage was shared by the plaintiff and Zhongrun Fat and Oil Co., Ltd.  The defendant held that this evidence indicated that there were actually two consignees, which involved the right of action of the plaintiff.  Besides, the way of weighing by bag-filling was not agreed upon between the plaintiff and the carrier, so it should not bind on the carrier.

Evidence Thirteen: The explanation on matters as recorded in regard to ?°Shanghai Port Loading and Unloading and Miscellaneous Operation Documents?± by Minsheng Harbor Co., Shanghai that proved that the operation documents recorded the different operations that had occurred between Minsheng Harbor Co. and the defendant, such as the time of the starting of operation and completion of operation of the different hatchways, the number of opening and closing operations of the hatches and the time of lease of harbor machinery by the defendant. The record of the tonnage of operation by every shift in the document was based on the record in the manifest provided by the defendant.  The record of the last shift of unloading was obtained from comparing the number of accumulated operations of the previous shifts with the figure recorded in the ship??s paper, which could not truly indicate the exact quantity of unloaded goods and should not be the evidence for delivery and acceptance of goods between the ship side and the cargo side.  Minsheng Harbor Co.??s automatic bag-filling weighing equipment had been certified and verified as qualified equipment by the National Technical Supervisory Department with an error value of 0.15%, lower than the permissible weighing error value.  The actual quantity of unloaded goods involved in this case was 48,418 bags with a net weight of 60kg/bag, 709,762 bags with a net weight of 65kg/bag, short of 817.08 tons than that recorded in the ship??s manifest.  Besides, the goods were mixed with a large amount of foreign substance.  The defendant held that this evidence was contradictory to the plaintiff??s Evidence No.Eleven.  Minsheng Harbor Co. had not weighed all the goods by filled bags.  It only filled the 65kg/bag of goods, while Xinhua Harbor Co. filled the 50kg/bag of goods.  The goods involved in this case was actually unloaded and weighed by two harbor companies.  The plaintiff could not prove the relationship between Minsheng Harbor Co. and Xinhua Harbor Co.  The evidence provided by Minsheng Harbor Co. could not reflect the facts, and had no truthfulness and fairness in it.

Evidence Fourteen: The inspection report produced by SGS Romania S.A. on inspecting the quantity and quality of the goods at the loading port proved that the goods were good in quality and the quantity conformed to the record in the bill of lading at the loading port.  The defendant had no objection to this.

Evidence Fifteen: The business license, the certificate verifying the company??s qualifications for foreign investment, the approval certificate of foreign invested enterprise??all proved that the inspection firm consigned by the plaintiff was qualified as such.  The defendant raised no objection to this. Nevertheless, though SGS was a qualified inspection firm, it had not performed the obligations of an inspector?? therefore its report was invalid.

Evidence Sixteen: The business license and the certificate of inspection and verification of bag-filling weighing equipment of Minsheng Harbor Co. that proved that its equipment had been verified as up to the standard and workable??The defendant held that it could not determine whether Shanghai Inspection Technical Institute was qualified to issue the certificate and whether the scales for packages were used for weighing the goods involved in this case.  This evidence could not be acknowledged.

Evidence Seventeen: The declaration form, the certificate from the original producer, the trade contract and letter of credit of the imported goods that proved that the unit price of the goods was USD212.50/ton.  The defendant raised no objection to this.

Evidence Eighteen: SGS??s supplementary explanation on the commodity inspection report that proved that the inspectors working in draft measuring discovered that the ship??s draft mark, the measuring hole of the ballast water tank and the plan for pipeline provided were obviously defective.  In view of such defects in the ship??the accuracy of the results of weighing might be greatly affected; the inspecors made reservations to the results.  The inspectors held that according to usual practice the weighing of bulk goods was usually conducted by ways of measuring ship??s draft and weighing onshore.  Weighing onshore included filling bags quantitatively or weighing by weigh-bridge.  When one of these weighing methods was proved to have serious errors owing to objective reasons (such as, the condition of the ship greatly affects the accuracy of weighing by draft), the alternative method, such as the weighing onshore may be adopted.  The inspectors stated that according to their knowledge the different operation districts in Shanghai Port, including Minsheng Harbor Co., conducted regular maintenance on their onshore weighing equipment and had them officially calibrated according to law by the authorities.  They had been accepted as a basis for handing over of quantities by importers and terminal customers.  The defendant held that the SGS inspectors had already indicated that the company??s commodity inspection reports had to be issued uniformly by the Beijing headquarters, while this evidence was issued in the name of SGS Shanghai Co.  The defendant did not acknowledge the effect of this evidence.             

Evidence Nineteen: The contract between the International Insurance Business Department under People??s Insurance Co. of China,, Zhejiang Provincial Branch and Shanghai Municipal Siwei Law Office;  A uniform Shanghai lawyers?? service invoice issued by Shanghai Siwei Law Office to Zhejiang Provincial Branch of the consignor China People??s Insurance Co., and the voucher for remittance account issued by the consignor to the consignee Shanghai Municipal Siwei Lawyers?? Firm through the bank. All these proved that the consignor Deqing Xinshi Oil Factory entrusting Liming, lawyer from Shanghai Municipal Siwei Lawyers?? Firm, to act as attorney for the case of damage to the goods, thus incurring attorney??s fee.  The defendant held that the plaintiff had no right of action for the lawyer??s fee and the law did not provide that a lawsuit must be conducted through an attorney.  The plaintiff??s petition regarding the attorney??s fee should not be supported.

Evidence Twenty: The letter of guarantee from the British Insurance and Compensation Association, which proved that the plaintiff??s petition for custody involved in the dispute in this case and the loss of the cost for arresting the ship incurred therefrom.  The defendant held that the loss was not inevitable and should not be compensated for.

The defendant submitted the following evidence to the court and the plaintiff commented on those evidence as follows:

Evidence One: The draft inspection report issued by SGS Romania S.A. at the loading port. It proved that the carrier received 49,856.38 tons of goods for loading at the port.  The plaintiff had no objection to this.

Evidence Two: The bill of loading and unloading operations and miscellaneous operations issued by the port of Shanghai and the handing- over list for load reduction between the ship side and the cargo side. This proved that the carrier at the unloading port and the cargo handling company employed by the plaintiff confirmed the unloaded goods being 49,857 tons, and also proved that up to October 10, 2000 the goods in cargo holds Nos. 2, 4 and 6 had all been unloaded, while those in Nos. 1, 3, 5 and 7 were in the process of being unloaded.  The plaintiff had no objection to the form of evidence.  However, it objected to the statistical figures of the total quantity of goods.  It held that the figure was not the true indication of the actual quantity.  Besides, the record stating that there was a large amount of foreign substance mixed in the goods proved that the quality of the goods was defective.

Evidence Three: The fax by Shanghai Zhongheng Consultant Co., Ltd. to China People??s Insurance Co., Shanghai Branch. It proved that the inspectors from Zhongheng Co., while inspecting the goods carried in the ship on Oct. 10, 2000, discovered that the goods in No.3 and No.6 holds were slightly clogged, that the rape-seeds clogged and faded in color amounted around 1,500 tons,  that the goods in No.1 and No.7 holds were in good condition and that the goods in No.2, No.4 and No.6 holds were already unloaded. The inspectors from Zhongheng Co. held that the ship was in good condition and the clogging of the goods resulted from the humidity of the goods being too high before loading, and that it was due to the quality of the goods themselves.  The plaintiff held that Zhongheng Co. was not legally qualified as inspector??that its fax submitted to Shanghai People??s Insurance Co. had nothing to do with the client of this case. The effect of the evidence should not be acknowledged.

Evidence Four: The analysis report by T.J. Sears, captain from Cushing Associates. It proved that there was mistake in the SGS??s inspection report at the unloading port.  The plaintiff held that the status and position of the reporter had not been determined and the report was based on the judgment on the materials provided by the defendant.  The effect of the report should not be acknowledged.

Evidence Five: The inspection report by SGS Romania S.A. and BBN International Goods Inspection Co., Ltd. at the loading port. It proved that there was no unsatisfactory condition of the goods, that the cargo holds were dry, clean and suitable for stowing and transporting goods.  The plaintiff held that this evidence could not prove that the goods were delivered in good condition at the unloading port.  The defendant should be held responsible for the supervision of the goods.  

Evidence Six: The preliminary inspection report by Captain R.R. Mathews and Associates to the defendant. It proved that in making special investigation on the claim for damage to the goods by the plaintiff, the inspectors held that the goods were only slightly damaged. The plaintiff held that the status and qualifications of the report maker were not determined.  The reporter and the defendant had common interests.  Its evidence was not objective and fair.

Evidence Seven: The report on the fumigation of the ship at the loading port. It proved that the goods after being loaded was fumigated.  According to the requirements the cargo holds must be closed for 10 days after fumigation.  The plaintiff held that this evidence had nothing to do with this case.

Evidence Eight: The letter addressed by the captain from the ship Vita Hope to the supervisor of the ship. It proved that the goods in No.3 and No.5 holds were slightly clogged, that the unloading operation was normal, that the plaintiff did not refuse to accept the goods, that the weather was good while loading and during the voyage, and that the  results of inspection showing that the goods did not contain sea water.  The plaintiff held that the captain did not reflect the facts. The contents of the evidence should not be acknowledged.

Evidence Nine: The report on comments by experts from Control Union. It proved that the commodity inspection report of SGS was not scientific-based and standardized. The plaintiff held that the analysis of the experts did have evidential effect.

Evidence Ten: The voyage charter party between the consignor and the defendant. It proved that the unloading work at the unloading port was conducted by a cargo handling company arranged by the consignee.  The plaintiff had no objection to this.

Evidence Eleven: The fax sent by SGS staff to the captain of Vita Hope on Oct. 11, 2000. It proved that the plaintiff claimed that the damage to the goods was discovered on Oct. 10, 2000.  There was no discovery of damage to the goods before this date.  The plaintiff did not acknowledge this evidence.

Evidence Twelve: The factual record of time of unloading at the unloading port. It proved that the agent appointed by the plaintiff signed his name on the record to confirm that the goods were in good condition on leaving the ship.  The plaintiff held that this evidence only recorded the time of unloading and could not prove the quality of the goods was good on delivery.

Evidence Thirteen: The statement jointly signed by the agent of the plaintiff at the loading port and the first mate of the defendant, certifying that the dispute between the two parties at the loading port had nothing to do with the moulded deterioration of the goods.  The plaintiff held that this evidence was a statement made for the benefit of the defendant in evading responsibility. There was no evidential effect in it.        

Evidence Fourteen: The analysis and assessment on the SGS  inspection report on the damage to the goods by A.G. Scott, expert and former member of London Charter Ship Association, member of Cereal and Vegetable Seeds Trading Association and arbitrator of London Maritime Arbitration Committee. It proved that the inspection report had not analyzed the basic data of the water content in the goods, that the determination of the relationship between FFA content and depreciation rate did not come up to the standards, and that the basis for determining the damage was not adequate. The plaintiff held that the qualifications of the expert providing this report had not been determined, that he had no right to express his opinion on cases that happened in China. Besides, the plaintiff could not determine whether the defendant had provided all the necessary materials as bases for the expert to comment on.  The plaintiff did not acknowledge the objectivity of the above comments by the expert.

Proceeding from the evidence submitted by the plaintiff and the defendant, this court confirmed the facts as follows: On May 29, 2000, Glencore Co. in Switzerland concluded with the plaintiff Deqing Xinshi Oil Factory a sales contract for 50,000 tons of rape-seeds at a unit price of USD212.50/ton.  On July 28, 2000, Glencore Co. signed a voyage Charter Party with the defendant. on Aug. 28 and 31, 2000 respectively, the captain of Vita Hope belonging to the defendant issued 4 clean order bills of lading, among which the consignor of No 1 and 2 bills of lading was Glencore Co., the consignor of No 3 bill of lading was Salco Grain AG, and the consignor of No 4 bill of lading was Deqing Xinshi Oil Factory.  The loading port was Constantza and the unloading port was Shanghai, China.  The carrier was Vita Hope and the name of the goods was rape-seeds from Europe, weighing respectively 11,184.5 tons, 30,000 tons, 7,058.99 tons and 1,613.2 tons, totaling 49,856.69 tons.  The above 4 bills of lading were endorsed by the consignor and transferred to the plaintiff.  On October 3, 2000, the ship arrived at Shanghai and anchored at Luhuashan Anchorage in the evening. The pilot and the inspectors from SGS arranged by the plaintiff boarded the ship. On Oct. 4, draft inspection began. On October 5, the Vita Hope reduced the load to the sea-going vessel Shuangfeng. Judging from draft inspection, the reduced load was 7,500 tons.  On October 6 evening, Vita Hope anchored at Minsheng Wharf, Berth No. 2 of Shanghai and began to unload the goods.  The reduced load and unloaded goods were filled into bags with fixed quantities in the harbor area and then shipped to Zhejiang and Henan.  According to the record in the cargo operation bill of Shanghai Port loading/unloading and sundry operations and the counting bill of handing over between the Vita Hope and the sea-going vessel Xinshuangfeng in reducing the load of imported goods, on October 10, No. 2, 4 and 6 cargo holds completed unloading and No. 1, 3, 5 and 7 were being unloaded; the total unloaded goods weighed 41,336 tons.  On the same day, inspectors from SGS together with the captain and the inspectors from the Insurance and Compensation Association entrusted by the defendant inspected the goods in No. 1, 3, 5 and 7 holds.  On October 11, the staff from SGS faxed to the captain, stating that on Oct. 10, during the unloading process, SGS inspector discovered that there were clogged rape-seeds in No.3 and No.5 holds.  Inspectors from SGS and the Insurance and Compensation Association jointly examined the goods.  The results were as follows: the clogged rape-seeds could be kneaded loose with fingers; the clogged layers were 5-6 meters from the hatchway of No. 3 and No.5 holds. There were 2 meters thick of clogged layers in both of the two holds, that is, about 2,905 sq.m. of rape-seeds clogged.  The inspectors from the Insurance and Compensation Association and SGS took samples and conducted further tests.  On Oct. 11, unloading completed.  The loading/unloading and sundry operations bill of Shanghai Port and the counting bill of handing over in reducing load of imported goods between Vita Hope and sea-going vessel Xinshuangfeng stated a total quantity of 49,767 tons of goods unloaded.  The defendant and the cargo handling company entrusted by the plaintiff both signed in confirmation.  On October 12, the bag-filling weighting accumulated figure at the port was 49,039.61 tons.  On October 13, the staff from SGS made a final draft inspection in Shanghai GD Changqing Sea Transportation Engineering Co,, Ltd.  The record of SGS draft inspection showed that the time of the completion of draft inspection was 22:00 hours on October 11, and the result was that the total weight of the unloaded goods was 49,732.197 tons.  The representative from the defendant signed and affixed his seal on that record for confirmation.  The commodity inspectors made the head-notes ?°Owing to defects of the ship, the results of the draft inspection could be erroneous?± on the results of the draft inspection.  The head-notes had not been acknowledged by the defendant.  During the inspection, the plaintiff and the inspectors from SGS did not analyze the damaged goods and did not separately stacked the goods.  The plaintiff sold part of the goods to Zhejiang Zhongrun Fat and Oil Co., Ltd.  On October 20, SGS issued the report of commodity inspection.  The result was: It was estimated that up to October 10, 2000 there were altogether 3,500 tons of clogged goods.  Since Oct. 10, 1,200 tons more of clogged goods were found.  The total amount of moulded and deteriorated clogged goods was 4,700 tons.  The depreciation rate of the 4,700 tons of goods was 12%-15% (C&F+import tax+VAT+insurance).

It was found that SGS was an approved Sino-foreign joint venture  enterprise, having a qualification certificate of a foreign invested, inspected and verified company.  Its scope of business was to examine, verify, supervise, inspect goods, appraise and offer other technical services entrusted by customers.  Tongbiao Standards Technical Service Co., Ltd. Shanghai Branch was subordinate to SGS, being its branch company, without the qualifications of an independent legal entity??its scope of business was to offer supervisory, verification, assessment and consultant services to ensure the guarantee system of the quality of goods for enterprises, to supervise quality and set up laboratories for verification, inspection and quality test, inspection of equipment and examination of technical development and issuance of certification documents according to the needs of business.  Zhongheng Consultant Co., Ltd. was a domestic joint venture limited liability company and an independent legal entity.  Its scope of business was to offer services of technical consultation on the piloting of ships, power of ships, supervision of transportation of goods by water, Professional Consultancy Services on maritime accidents, consultation on market information and real estates information.

It was also found out that on October 11, 2000, the plaintiff involved in the case of dispute petitioned for the custody of property, requesting that the ship Vita Hope belonging to the defendant be arrested, thus resulting in the charge for arrest of RMB5,000 yuan.  On November 10, International Insurance Business Department of Zhejiang Provincial Branch of China People??s Insurance Co. signed an attorney contract with Shanghai Municipal Siwei Lawyers Firm, stipulating that Siwei Lawyers Firm appoint Li Ming, a lawyer, to act as the agent ad litem for Deqing County Xinshi Oil Factory for the case of damage to goods.  The invoice for lawyers?? fee made out by Shanghai Municipal Siwei Lawyers Firm amounted to RMB168,731 yuan.  China People??s Insurance Co., Zhejiang Branch remitted the amount through the bank to Shanghai Municipal Siwei Lawyers Firm.

The above facts were proved by the plaintiff??s evidence One to Nine, Eleven to Thirteen, Fifteen to Twenty and the defendant??s evidence Two, Ten, Eleven and the notes of court hearing by this court.

This court held that the transfer of the ownership of goods in the trade contract and the transfer of bills of lading under the transport contract were different in legal relationships.  The 4 bills of lading issued by the defendant in this case were order bills of lading, which could be transferred after being endorsed to order or endorsed in blank.  The 4 bills of lading  in this case were all endorsed by the consignor as stated in the bills of lading to be transferred to the plaintiff.  The plaintiff was legal in holding the bills of lading and had the right to assent its stand of rights to the goods involved in the bills of lading.  According to the bills of lading the relationship in the contract for sea carriage of goods between the plaintiff and the defendant had been legally established.  The provisions of the bills of lading were binding on both parties.  The parties to bills of lading shall each perform its own obligations wholly, appropriately and timely and were entitled to exercise their rights.  The arguments of the defendant that the plaintiff had no right for action for the goods in bills of lading No.3 and No.4 had no legal basis and was not adopted by this court.

As provided by law, the carrier??s period of responsibility for non-containerized goods should begin from the time of loading of the goods onto the ship to the time of discharging the goods from the ship.  The goods are under its custody and care for the whole period.  When the carrier delivers the goods to the consignee, the consignee should notify the carrier in writing of the shortage of or and damage to the goods if any.  If the shortage or damage was not apparent, the consignee should notify the carrier in writing of all the relevant information about the goods within 7 days beginning from the next day of the delivery of goods, otherwise, the taking over should be considered as a prima facie evidence of the delivery of all the goods in good order and condition by the carrier.  If the carrier and the receiver of the goods conduct joint inspection of the goods on delivery, such written notification about the loss of or damage to the goods is not necessary. The delivery of the goods involved in this case started from the 5th and finished on 11October., 2000.  In the course of the delivery of the goods, the plaintiff did not submit to the defendant a written notification about the shortage of and damage to the goods.  The inspectors from SGS engaged by the plaintiff made the head-notes on the draft inspection conclusion that on October 13 ?°owing to the defects of the ship, the results of inspection may be erroneous?±, but the head-notes was not signed and confirmed by the defendant, while the plaintiff did not prove that the written head-notes was served to the defendant within 7 days beginning from the next day when the goods were delivered.  Therefore, on the completion of unloading, the signing and confirmation of the conclusion of a shortage of 124 tons of goods through draft inspection should be considered as a prima facie evidence of the delivery of the exact quantity of goods by the defendant to the plaintiff.  Shanghai Minsheng Harbor Co. was not a commodity inspection and verification entity; the bag-filling weighing method, though calibrated and examined by the authorities concerned and a verification certificate had been issued, was not agreed beforehand by the carrier and the consignee or confirmed by the defendant afterwards.  The defendant had no means to supervise and control such situation as whether the record of weighing was accurate or complete.  After the bags were filled, the goods were carried away.  The defendant had no means to re-check.  The plaintiff could not prove that the shortage of goods happened during the period of custody by the carrier.  As soon as the goods were delivered, the risks and responsibilities were at the same time shifted from the defendant to the plaintiff.  According to international shipping practice, the permissible rate of error for a large quantity of bulk cargo in international sea transportation was 5%.  The total quantity of goods involved in this case was 49,856.69 tons.  Apart from the shortage of 124 tons of goods jointly confirmed by the carrier and the receiver and then denied by the plaintiff, the plaintiff had not proved that other shortages occurred during the period of the defendant??s responsibility.  Therefore, even the defendant delivered 124 tons less , it was still within the reasonable permissible rate of error of 5%.  In regard to a written notification for the shortage of goods and the counting of the quantity of the goods, the plaintiff did not perform his obligation of producing evidence, and it did not prove that the shortage of goods occurred during the period of the custody by the carrier.  The plaintiff??s request for a suit for the shortage of goods was not supported by this court.

As for the damage to the goods, the inspectors engaged by the plaintiff??together with the defendant??inspected No 1, 3, 5 and 7 cargo holds on October 10, 2000 during the period of unloading.  The inspectors from SGS notified the defendant in writing on October 10, 2000, of the damage to the goods in No.3 and No.5 holds.  This should be considered as the prima facie evidence that the defendant did not deliver to the plaintiff the goods in good order and condition as described in the bills of lading.  Since the plaintiff could not prove that it had notified the defendant in writing of the damage to the goods in No. 2, 4 and 6 holds during the delivery or within 7 days beginning from the next day of the delivery, this should be regarded as the prima facie evidence that the defendant had delivered the goods in good order and condition in No. 2, 4 and 6 cargo holds to the plaintiff .  The verification report on the damage to the goods issued by the inspectors engaged by the plaintiff stated that up to October 10 there was a total of 3,500 tons of damaged goods and 1,200 tons of damaged goods after October 10.  Under the circumstances that the defendant had no effective evidence to deny such a conclusion, this report should be regarded as the conclusive evidence that the defendant had not delivered to the plaintiff 4,700 tons of goods in good order and condition.  Sorting and separation of goods was a necessary means for the protecting on and remedy of goods prescribed by the Commodity Inspection Law. SGS held that the damage to the goods was not so serious to make it necessary to separate and sort the goods, and such separation and sorting would increase unnecessary loss.  SGS was a legally established entity and an inspection organization qualified for verification and was entitled to and capable of assessing the quantity of damaged goods and the depreciation rate in inspecting the extent of damage to the goods, taking into consideration the factor of market prices.  The defendant was not able to provide effective evidence to prove that the conclusion of SGS inspection report on the quantity of damaged goods and the depreciation rate was erroneous and its basis for the defence regarding the quantity of damaged goods and inappropriate determination of the depreciation rate by the plaintiff??s inspectors had no factual support.  The defendant held that the damage to the goods was caused by the inherent defects of the goods itself, but it did not provide this court with effective evidence. Therefore, its stand also lacked the support of facts.  The sale of part of the goods received by the plaintiff to Zhejiang Zhongrun Fat and Oil Co., Ltd. was affected by such factors as the selling price, market risk and marketing channel.  It had no direct and inevitable causality with the actual damage suffered by the plaintiff owing to the defendant??s responsibility in transportation.  Therefore, the basis of the argument of the defendant that the goods sold by the plaintiff did not suffer actual damage was not supported by this court.  The plaintiff and the defendant had no objection to the unit price of USD212.50 of the goods in this case.  The request for a suit made by the plaintiff only on the basis of C&F value of the damaged goods and the minimum  of depreciation rate of 12% should be supported. 

The claim by the plaintiff in applying for the custody of property before the lawsuit, giving rise to the expenses of RMB5,000 yuan for arresting the ship was a reasonable expenditure incurred for holding its right in lawsuit and was entitled to claim compensation from the defendant.  This request should be supported.  The attorney??s fee of the plaintiff was paid by the outsider China People??s Insurance Co., Zhejiang Branch.  The plaintiff did not provide to this court with effective evidence on any agreement regarding the payment of lawyer??s fee between the two parties.  The petition had no legal basis and was, therefore, not supported.  In accordance with articles 46, 51, 55, 79 and 81 of the ?°Maritime Code of the People??s Republic of China?± and Article 8, Item 1 Article 60 and Article 107 of the ?°Contract Law of the People??s Republic of China?±, it is decided as follows:

1.	The defendant shall pay the plaintiff for the damage of 4,700 tons of goods in an amount of USD119,850, plus interest, within 10 days beginning from the day on which this judgment comes into effect.  (The interest shall be calculated from Nov. 8, 2000 to the day on which this judgment comes into effect, basing on the corresponding foreign exchange rate of current deposit.);

2.	The defendant shall pay the plaintiff the property custody fee of RMB5,000 yuan within 10 days beginning from the day on which this judgment comes into effect; and,

3.	The plaintiff??s other requests are not supported.

    The fee for court hearing of RMB22,421.90 yuan shall be shared by the plaintiff at RMB11,391.70 yuan and the defendant, RMB9,030.20 yuan.  The above amount was prepaid by the plaintiff and the defendant shall pay its amount due to the plaintiff in 7 days beginning from the day on which this judgment comes into effect.         

    In case of any objection to this judgment, the plaintiff may submit to this court an appeal request within 15 days upon the service of  this judgment, and the defendant, within 30 days upon the service of this  judgment. They shall submit the number of duplicates corresponding to the number of clients of the other party.  The appeal shall be made to Higher Municipal People??s Court of Shanghai.  The party making the appeal shall prepay to this court the fee for appeal equal to that paid to the court of first instance within 7 days beginning from the day on which the appeal request was submitted.  In case the payment was not made within the time prescribed, it shall be regarded as the withdrawal of the appeal.



                               Presiding judge: Ma Peifang

                                Alternate judge: Sun Yingwei

                             Alternate judge: Shen Jun



Shanghai Maritime Court (seal)



                   June 12, 2001

  Certified true copy

                    Clerk: Qian Xu