SHANGHAI MARITIME COURT

PEOPLE??S REPUBLIC OF CHINA

CIVIL JUDGMENT


No. Hu Hai Fa Shang Chong 3 (2001)



  Plaintiff: Helvetia Schweizerische Versicherungsgesellschaft 

  Domicile: Berliner Strasse 56-58 60311 Frankfurt, Germany

  Legal Representative of the plaintiff: Dr. Peter Reusch

  Agents ad litem: Wang Huaijiang, Xu Jianghua, attorneys-at-law of Haixiang   Law Firm of Shanghai 

 

  Defendant: United Developing Co., Ltd. Shanghai New Technological Development Zone

  Domicile: No. 509 Caobao Rd, Shanghai

  Legal Representative: Wang Zhihong, Chairman of the Board

  Agents ad litem: Zhang Chunrong, attorney-at-law of Ronghua Law Firm of Shanghai


This court issued the judgment No. Hu Hai Fa Shang 312(1997) over the cases regarding the subrogation dispute arising from the maritime cargo insurance contract between the plaintiff and the defendant on June 23, 2002. On April 25,2001, the Higher People??s Court of Shanghai issued a civil order No. Hu Gao Jing Zhong 508 (2000) which revoked the original judgment and remanded it to this court for retrial. After placing the case on file for retrial on May 29, this court established a collegial bench and held a public hearing for this case on June 21. The agent ad litem of the plaintiff Xu Jianghua and the agent ad litem of the defendant Zhang Chunrong appeared in the court and attended the hearing.


The plaintiff alleged that in April 1995, one knitting machine stowed in a container exported by the insured Mayer&Cie Co., Ltd. of Germany, was imported from Germany to Shanghai under B/L No. BRE/SHA/5074, the carrier was the head office of China Ocean Shipping Cooperation (Group), the consignor was Jie Gao Electronic Co., Ltd. (Hong Kong), and the consignee was Jie Gao Electronic Co., Ltd. (Shanghai)(hereinafter called Shanghai Jie Gao Company). On April 7, the consignee picked up the cargo from the port and sent it to the warehouse of the defendant. The next day when the defendant opened the container and began the loading and unloading, the cargo was thrown onto the ground from about 1 meter high and the knitting machine was damaged. Evaluated by the People??s Insurance Company of China, Shanghai Branch, the knitting machine suffered a total loss. As this accident happened in the warehouse of the defendant and the machine hadn??t arrived at the warehouse of the consignee, the liability of the insurer wasn??t terminated yet. On October 12, after having indemnified the insured, the plaintiff obtained the right of subrogation. The Plaintiff held that the accident was caused by the wrong operation of the defendant, which constituted a tortious act. Hence the plaintiff requested the court to adjudicate that the defendant pay the price of the cargo and the freight for a new shipment amounting to German Mark 207,615 in total (roughly equivalent to USD 138,410) and its interest, and bear the legal cost.


The defendant argued that the defendant had no relation with this case either in fact or in law. This accident was beyond the scope of the liability of insurance , and the plaintiff should not have paid for the claims. As it was stipulated in the insurance policy that the destination was Shanghai, Shanghai Jie Gao Company was the consignee, and the plaintiff admitted that the goods had arrived at Shanghai Port and been delivered to the consignee, which meant the end of the plaintiff??s liability of insurance. It was not proper for the plaintiff to make any claim for the settlement. In the warehouse-to-warehouse clause in the insurance policy for sea carriage, the warehouse for the arrived goods shall be the warehouse at the destination port. After the goods had been discharged and put into the warehouse at the destination port, the plaintiff??s liability of insurance terminated. When the accidents happened, the insurance contract had already terminated. Hence the German Mayer&Cie Co., Ltd. had no right to claim for compensation and the plaintiff had no right of subrogation. Another thing that shall be considered was that there was no contract relationship or other kind of legal relationship between the defendant and Shanghai Jie Gao Company. The defendant just offered some mechanical and labor assistance for the latter when the latter wanted to pick up the goods and transport it to the appointed place. What??s more, after the happening of the accident, the defendant and Shanghai Jie Gao had negotiated for the settlement of the loss suffered by the latter. 

As the evidence for supporting his claims, the plaintiff submitted the following documents:

(i) Maritime insurance policy issued by the plaintiff;

(ii)	Proof of the German Mayer&Cie Co., Ltd.??s receipt of the compensation amounting to German Mark 190,000 and its subrogation to the right to claim (namely the letter of subrogation);

(iii)	Order for the shipment;

(iv)	Probation report issued by the People??s Insurance Company of China ,Shanghai Branch for this accident;

(v)	B/L issued by the head office of China Ocean Shipping Cooperation (Group);

(vi)	Customs entry of the goods;

(vii) Certificate for free import of the goods;

(viii) Letter from Shanghai Jie Gao to this court about its receipt of the accident handling fees paid by the defendant and the relevant evidence attached;

(ix)	Statement of cargo damage given by the defendant to the plaintiff;

(x) Vouches;

(xi) Air transport document for new consignment;

(xii) Open policy and its annex;

(xiii) Specific stipulations on cargo insurance (ADS clause in 1973, the 1984 version) and the specific conditions for open policy in the German Maritime Insurance General Rules.


The defendant didn??t raise any objection to the evidence. As the buyer, CICO Service Center Shanghai was neither a party to the insurance contract in this case, nor a party to the contract for carriage of goods by sea in this case, and the plaintiff failed to proof the relationship between the Center and this case. The order sheet of the Center could not be used to determine the case. With the open policy submitted by the plaintiff, there were some German documents enclosed. But the defendant could not define whether it was about the law of Germany or just the insurance clause of an insurance company in Germany, and the plaintiff didn??t explain. As the documents were just copies and lack of notarization and legalization and the plaintiff only submitted the translation of some clauses which lacked of authenticity, completeness and didn??t meet the requirements of the form of an evidence required by law, it shall not be regarded as evidence. Among other evidence submitted by the plaintiff, the key evidence, such as the insurance policy, the probation report on the damaged cargo, the letter of subrogation were original documents and the specific stipulations (Clause ADS in 1973, 1984 version) on cargo insurance and the specific conditions for open policy in German Maritime Insurance General Rules had been notarized and legalized. Also the aforesaid evidence was inter-related and the defendant had no objection. Therefore the authenticity of such evidence was confirmed.


The defendant submitted the following evidence to support his argument:

(i) Customs entry of the cargo

(ii) Duty free certificate of the cargo

(iii) Letter about negotiation between the defendant and Shanghai Jie Gao Co., Ltd. on the settlement of the loss, and some relevant vouchers.


The plaintiff didn??t raise any objection to the foregoing evidence and its effectiveness was confirmed.


Considering the above said evidence together with what had been obtained from the court trial, the following facts were hereby confirmed: On August 26,1991, the office of the insurance broker WAGNER Insurance Company (hereinafter refereed to as WAGNER) had, on behalf of the plaintiff, executed a contract with the insured, Die Mayer-Firmengrupe, Mayer&Cie. Gmbh&co., for cargo transportation insurance under open policy, of which the insurance term was from January 1, 1992 to January 1, 1993. If there was no objection, on the day of expiration, the insurance contract would renew for another year automatically. It was stipulated in the open policy that the right of transferring the name would take effect on January 1, 1995. WAGNER, on behalf of the plaintiff, issued a standard maritime insurance policy No. 95/2001 to the bearer, on which it was provided that this insurance was included in the aforesaid open policy, the insurable interest was granted to the bearer, the amount of insurance was German Mark 214,300 and the insured cargo was the 20 feet container with 2 pallet shelves. The content of the cargo to be recorded according to the vouchers and the gross weight of the cargo was 3500Kg. The cargo was transported from Albstadt, Germany through Hamburg to Shanghai, China. The period of insurance liability was from warehouse to warehouse with the premium paid. The organization for settling claims was the People??s Insurance Co. of China, Shanghai Branch. The insurance conditions were: ADS of German Maritime Insurance General Rule; the specific conditions for loading (ADS Cargo of 1973, the 1994 version) and the terms and conditions of the insurance contract under the open policy. The form of the insurance policy was ADS all risks policy added with clauses of DTV war, strikes, and risks of machine and means of transport. It was stipulated in the over leaf clauses of the B/L of sea transportation that the period of insurance was warehouse-to-warehouse and pursuant to Article 5 of 1973-1984 version of ADS Cargo, the insurance liability would terminate when the cargo was delivered to the place appointed by the consignee in the destination (the final delivery place). 


It was stipulated in the specific conditions under the open policy and German Maritime Insurance General Rules (ADS Cargo of 1973, 1984 version) that according to law and in accordance with ADS, the open policy was not an independent policy, while the specific policy was an independent policy. In case the cargo was not transported in the way as agreed, the insurer shall be free from his obligation. In case the cargo had been delivered at the place appointed by the consignee in the destination (the final delivery place) and/or after the discharge of the cargo at the destination port and the cargo was to be forwarded to any other destination not named in the insurance contract and the risk increased because of the change of the destination, and/or after 60 days of the completion of discharge of the insured goods from the carrying vessel at the destination port, the insurance will terminate. If the insured claimed for compensation for the amount of insurance, the insurer will get the right of subrogation, including all the rights and remedies of the insured goods, after paying the insurance premium. Whereas the basis of the insurance contract was the specific provisions respecting cargo in German Maritime Insurance General Rules (ADS Cargo of 1973). During the court hearing the plaintiff failed to prove whether German Maritime Insurance General Rules (ADS Cargo of 1973) was the law of Germany, or just a standard insurance clause of an insurance company.


On February 18,1995, in Breman, Germany the carrier issued a maritime transport B/L No. BRE/SHA/504 of the head office of China Ocean Shipping Cooperation (Group), in which it was stipulated that the consignor was Gernan Jie Gao Mechanical Engineering Co. Ltd.(Hong Kong), the consignee was Shanghai Jie Gao Company and the cargo was transported from Hamburg to Shanghai, CY-CY. The cargo with a gross weight of 3500 Kg was packed in a 20 feet container and arrived at Shanghai on March 21. On April 4, the defendant went through the procedures for Customs entry in Caohejing Administration of Customs, Shanghai. The defendant declared that the goods was a cylinder knitting machine with foreign investment, produced in Germany and its CIF price to Shanghai was German Mark 98,000, with the exemption from import duty. On April 7, the container was opened in Caohejing High-technology Zone, Shanghai. It was stipulated in the probation report issued by the People??s Insurance Company of China, Shanghai Branch by request of Shanghai Jie Gao Company, that the knitting machine was placed on a wooden pallet shelf by the consignor, packed in aluminum foil paper, then put into the container. In addition, the assessor was informed by the consignee that on April 8, when the workers lifted the pallet shelf to send the goods to the warehouse, the pallet shelf suddenly turned over and fell on the ground from about 1 meter high. The knitting machine was deformed and, considering the high precision, it was determined that there was no value to repair it. The probation report believed that the reason for the damage was the accident happened during the lifting up of the pallet shelf. On March 19, 1997, some one representing the defendant issued an explanation on the accident that as Shanghai Jie Gao Company had no equipment to open the container, it asked the defendant to offer the service to send the goods to the factory building. On April 7,1995, the goods were put in the open air. On April 8, the operator of the defendant didn??t find any unusual situation when he took out the knitting machine with forklift. When the knitting machine was lifted up and put on a truck to be sent to the factory building of Shanghai Jie Gao Company in accordance with the plan, as Shanghai Jie Gao Company failed to inform the defendant that the fittings in the wrapping bag haven??t been fixed and the machine was overweight by 170kg , the machine inclined and fell on the ground, leading to its total loss. After negotiation, the defendant paid RMB13833.15 for compensation to Shanghai Jie Gao Company, for which the plaintiff was not responsible according to the insurance contract, (including the costs and expenses for the appraisal, packing and exporting the wreckage of the knitting machine, the cost for importation, fees for Custom clearance and storage fees for importing a new knitting machine).   


On October 12, 1995, the German Mayer & Cie. Gmbh & Co. received the compensation amounting to German Mark 190,000 from the insurance broker of the plaintiff WAGNER Company, meanwhile transferred the right to claim against the third party to the insurer, namely the plaintiff. 


The plaintiff brought an action to the First Intermediate People??s Court of Shanghai in March, 1997. On August 11, 1997, the case was transferred to this court for hearing. In the notes of the original hearing, the plaintiff stated that the German insured was the seller of the goods in this case, that the goods was sold to German Jie Gao Company, and that it was stipulated in the contract of sale that Shanghai Jie Gao Company was appointed as the consignee and the price term was CIF.


This court held that the parties to the contract were entitled to choose the applicable law to the contract according to the principle of self-determination of free will. The plaintiff failed to prove that the parties to the insurance contract in this case made any choice of law to be applied to this case, nor did the plaintiff offer any relevant German law which had the closest connection with the insurance contract. In the court hearing, as the defendant indicated that the law of the PRC shall be the applicable law and the plaintiff agreed, and this was also in conformity with legal principles, hence this court adopted the relevant law of the PRC as the applicable law for defining the relationship of the parties under the insurance contract. In accordance with the provisions of the law of the PRC, the maritime insurance contract was a contract according to which the insurer shall make compensation for the loss of the insured object and bear the consequences resulting from the loss suffered by the insured due to the risks insured against and shall be answerable for the liabilities arising therefrom, while the insured shall pay the insurance premium. In case the loss of the insured object within the scope of coverage under the insurance contract was caused by a third party, the right of claim of the insured against the third party will be transferred to the insurer from the time the insurer paid the compensation. Obviously, pursuant to the provisions of law, the acquisition of the right of subrogation shall be based on the effective insurance contract under which the insurer had made proper and reasonable settlement of the claims by the person entitled to the insurance benefit. As for the improper and unreasonable settlement of claims, the insurer will not automatically have the right of subrogation even with the letter of subrogation. In this case, the plaintiff just only submitted an order for purchase of the goods, which had no substantive relationship with the insurance contract or the contract for carriage of goods by sea. The plaintiff didn??t submit evidential proof as to whether the two trade partners had any agreement on the ownership of the goods or the subrogated party in insurance had the ownership or insurance benefit when the accident happened. Therefore, even the subrogated party held the insurance policy, it couldn??t prove that he had the insurance benefit according to the principle of insurance benefit. In accordance with the plaintiff??s statement in the court, the goods in this case had been sold to the German Jie Gao Company, and Shanghai Jie Gao Company was appointed the consignee. After the arrival of the goods, Shanghai Jie Gao picked up the goods. Obviously, the delivery of the goods indicated the transference of the ownership. At this time, the German insured had no benefit of the goods. As the B/L was in fact a document of title and the consignee stated therein was Shanghai Jie Gao Company which had been proved by the fact that the latter had picked up the goods, thus this court could infer that it was the latter who had the ownership of the goods and shall enjoy the insurance benefit, not the subrogated party in insurance. Whereas the plaintiff had settled the claims of the insured and accepted the letter of subrogation, and considering what was said above, the obtaining of the right of subrogation had no support of law and fact, thus the plaintiff couldn??t have the qualifications of a party to an action. As the plaintiff failed to prove the subrogated party enjoyed any right to the goods when the accident happened, this court didn??t support his claim for his right of subrogation based on the transference of the creditor??s rights from the subrogated party of insurance.


It was stipulated in the insurance policy that German Maritime General Rule (ADS Cargo of 1973) was applicable. Although the plaintiff didn??t prove whether it was the law of Germany, it didn??t affect its application to this case. The provisions of the ?°warehouse-to-warehouse?± Clause on the term of insurance liability was applicable to this case. As there were different opinions in the understanding of the clause ?°place appointed by the consignee (the final delivery place)?± between the defendant and the plaintiff, and the plaintiff didn??t quote any legal interpretation in the law of Germany or international convention for ?°the final delivery place?±; besides, there was no such definition or interpretation in the law of PRC either, the famous clause of ICC, which had been widely used internationally, will be used to explain the warehouse-to-warehouse clause. The provisions of the insurance clause that ?°the insurance will terminate when the goods are forwarded to the place of destination appointed by the consignee, that is the final delivery place?±, will be understood as the insurance will terminate after the goods arrived at the destination port and sent to the first warehouse or other storage place of the consignee in the destination. ?°The first warehouse or other storage place?± include the place belonging to, or leased by, or borrowed by the consignee or it??s just a place for deposit. Considering the actual situation of this case, the goods had arrived at Cao Hejing High-Technological Zone of Shanghai, in which the Shanghai Jie Gao Company located, it shall be regarded that the goods had arrived at the final delivery place and the duration of the insurance liability terminated. Furthermore, the container was opened at the place of the defendant, leading to the material change of the mode of transport (from containerized transport to non-containerized transport) and increasing the risk of transport. According to the provisions of the insurance clause, the insurance liability terminated and the insurer was free from any responsibility for the damage to the goods. As the plaintiff??s claim that the damage of the goods happened within the term of the responsibility of insurance had no factual basis, this court does not support it.


Since there was no contract between the plaintiff and the defendant, and the cargo damage happened in the territory of China, the law of the PRC shall be applied to this controversy over the tortious act according to the principle that ?°The law of the place where a tort is committed shall be applied to tortious damage. In accordance with the provisions of the law of the PRC, the work of lifting the goods in this case didn??t come under the statutory regulations basing on the no-fault liability shall be applied. Hence the victim in the tortious act shall prove the facts of damage, the illegality of the action and the causation between the action and the damage. Both the probation report and the statement of facts had description of the situation of the cargo damage, and the probation report also made a presumption of the reason of the cargo damage. But neither of the evidence made an analysis of the liability for the cargo damage. Nor did the plaintiff submit any evidence in support of the fault of the operator of the defendant during his work, while the evidence provided by the plaintiff just proved that it was the package of the goods and the improper distribution of the goods that caused the cargo damage. The plaintiff failed to prove neither the existence of the defendant??s fault nor the causation between the cargo damage and the defendant??s fault. Therefore the plaintiff??s claim that the defendant shall bear the liability of tortious damage had no factual basis and can??t be supported. 


In conclusion, the plaintiff??s claim will not be supported considering the following facts: (i) The plaintiff didn??t prove that the person subrogated had insurance benefit at the time the accident happened (ii) Since the accident didn??t happen within the time period of ?°warehouse-to-warehouse?±, the plaintiff as an insurer didn??t have any responsibility for indemnity under the insurance. So the plaintiff didn??t have the capacity of being the subject of an action as a subrogated party in the insurance. (iii) The plaintiff didn??t prove that the action of the defendant constituted a tort either.


According to Clause 1 of Article 64 of the ?°Civil Procedure Law of the People??s Republic of China?±, Clause 1 of Article 84, Article 142, Article 145 and Article 146 of the ?°General Principles of Civil Law of the People??s Republic of China?± as well as Article 71 and Article 216 and Clause 1 of Article 252 of the ?° Maritime Code of the People??s Republic of China?±, The judgment is rendered by this court as follows:

The claim of the plaintiff, namely the Helvetia Schweizerische Versicherungsgesellschaft, will not be supported.

The court acceptance fee of this case is RMB 15,160, which will be borne by the plaintiff.


In case the plaintiff or the defendant, as the case may be, refuses to comply with this judgment, the plaintiff can appeal to the Higher People??s Court of Shanghai within 30 days of receipt of this judgment, while the dependent may within 15 days of the receipt of this judgment submit the statement of appeal to this court together with copies thereof according to the number of the litigants of the opponent party. Within 7 days from the next day of submitting the statement of appeal, the appellant shall pay the costs of appeal to this court in advance, which is the same amount as the court acceptance fee for the first instance determined by this judgment. If failed to pay in time, it shall be deemed that the appeal petition has been withdrawn.





                                                               

Presiding Judge: Ni Chunnan


Acting   Judge: Sheng Jun


                                Acting    Judge:  Zhang Liang

Certified true copy

                             August 7, 2001


                                Clerk          ??Wang Lei