TIANJIN MARITIME COURT

PEOPLE??S REPUBLIC OF CHINA

CIVIL JUDGMENT

                                             No. HSC 59 (2001)


Plaintiff: Shanxi Industrial Products Import & Export Co.

Domicile: No.133 Xinjian Road,Taiyuan,Shanxi

Legal Representative: Yan Wenjing, general manager

Agent ad Litem: Shi Chuan, lawyer of Tianjin Liren Law Office

Agent ad Litem: Li Xin ,lawyer of Tianjin Liren Law Office


Defandant: Huanlian Marine (China) Co.

Domicile: Suite 6, Section A, Wanlong Central Mansion, No.85

Liuwei Road, Hedong District, Tianjin

Legal Representative: Zhang Zhijian, Borad Chairman

Agent ad Litem: Wang Hong, lawyer of Tianjin Dawei Law Office


Defendant: Huanlian International Consulting Service (Tianjin) Co.,Ltd

Domicile: Suite 6, Section A, Wanlong Central Mansion, No.85 Liuwei Road, Hedong District, Tianjin

Legal Representative: Shen Jinfu, Borad Chairman

Agent ad Litem: Wang Hong, lawyer of Tianjin Dawei Law Office


Defendant: COSCO Container Lines

Domicile: No.1555 Changyang Road, Shanghai

Legal Representative: Wei Jiafu, Borad Chairman

Agent ad Litem: Liu Zuoming, lawyer of Beijing Haitong Law Office


Third Party: COSCO International Forwarding Co., Ltd., Tianjin

Domicile: 19-21 Flooor, Section A, COSCO Building, Hebei District, Tianjin

Legal Representative: Ye Weilong, Borad Chairman

Agent ad Litem: Shao Zhong, staff of the Company


With respect to the cases of dispute over contract of carriage of good by sea filed by the Plaintiff Shanxi Industrial Products Import & Export Co. against the Defendant Huanlian Marine (China) Co. (hereinafter referred to as the first Defendant), the Defendant Huanlian International Consulting Services (Tianjin) Co., Ltd. (hereinafter referred to as the second Defendant), the Defendant COSCO Container Lines (Hereinafter referred to as the third Defendant) and the third party COSCO International Forwarding Co., Ltd., Tianjin, a collegial panel was constituted in accordance with law to hear the case in open sessions after this Court entertained the case. The agents ad litem of the Plaintiff Shi Chuan, and Li Xin, the agent ad litem of the first and second Defendants Wang Hong, the agent ad litem of the third Defendant Liu Zuoming and the agent ad litem of the third party Shao Zhong attended the Court hearing. The case has now been concluded.


It was claimed by the Plaintiff that they entrusted the Defendants to ship the goods in June, 2000 in accordance with the sales contract concluded between the Plaintiff and the Canadian buyer R&G ,a party irrelevant to this case. As the agent of the first Defendant, the second Defendant signed and issued the Bill of Lading No.HF21Hl008, in which it was stated that the name of vessel was m/v ?°Feng He?±, description of the goods was stainless coupler, port of loading was Tianjin and port of destination was Vancouver.

    Originally, the quantity of goods entrusted by the Plaintiff for shipment was two metal cases, but actually it was three metal cases shipped on board the vessel. In this aspect, the Plaintiff had notified the second Defendant to alter the quantity of goods shipped on 28 June, 2000. In the letter of reply, the second Defandant responded that there was no time to make such alteration as the goods had reached the port, thus two metal cases out of the three at the warehouse were bounded together as one packing for shipment. Further, the second Defendant promised that the foregoing act would not affect the taking delivery of the goods in question at the destination port. After arrival of the goods at the destination port, the consignee took delivery of two metal cases only as there was one case short delivered. The consignee immediately contacted the carrier??s agent at Vancouver, requesting them to look for the missing goods, but in vain. Therefore, the consignee requested the Plaintiff to make up the missing goods. As the Plaintiff had requested the Defendant and their agents to look for the goods on several occasions but in vain, the Plaintiff had to make up the missing goods to the Canadian buyer R&G on 30 October, 2000 and to pay 20% damages for breach of contract according to the sales contract.

On 26 December, 2000, R&C informed the Plaintiff that the carrier??s agent notified them that the missing metal case had been found and that the goods was not delivered at Vancouver because it was miscarried to Toronto. As the Plaintiff had made up the missing goods, R&G no longer needed such goods and requested the Plaintiff to dispose of the goods themselves. Under the repeated requests of the Plaintiff, R&G finally agreed to accept the goods at only 60% of the contract price. As a result, the Plaintiff suffered a loss  of RMB58,423.43 for the reduced price, the freight for the making-up goods, Customs duties and the damages for breach of contract.

The Plaintiff held that the three Defendants and the third party should be under the absolute liability for such delay in delivery of goods, which resulted in the economic losses of the Plaintiff. Therefore, the Plaintiff requested the court to order the three Defendants and the third party to indemnify them against the above mentioned economic losses.

During the hearing of the case, the first Defendant contended that:

1) After delivering the goods in accordance with the sales contract, the Plaintiff had fulfilled all its obligations thereunder and should be under no obligation to bear the risks and liabilities of the consignee. The Plaintiff??s making up the missing goods should fall within the scope of another legal relationship. Therefore, the Plaintiff was not entitled to sue the carrier.

2) The goods in question had never been under the management and control of the first Defendant. If the court were to support the matters of fact as alleged by the Plaintiff, it was those actually responsible for the management and control of such shipment that should be held liable for the delay in delivery.

3) The first Defendant had fulfilled their obligation to deliver the goods and had never received the Letter of Claim from the Plaintiff. Therefore, the claim of the Plaintiff had been time barred.

The second Defendant contended that, as the first Defendant??s agent, they should not undertake the liability for delay in delivery of the goods at issue.

The third Defendant contended that:

1) As the Bill of Lading in question had been transferred to the consignee, who had accepted such transfer and taken delivery of the goods against the same through endorsement, the Plaintiff was not entitled to file a lawsuit against the carrier.

2) Judging from the Bill of lading issued by the third Defendant, the Plaintiff, who was neither the shipper, nor the consignee and had no legal relationship of any sort with the third Defendant, was not entitled to sue the third Defendant.

3) Since the Plaintiff failed to adduce positive evidence to prove that it was three metal cases that the Plaintiff actually shipped, the lawsuit raised by the Plaintiff lacked the support of evidence and the basis of facts.

4) As the cargo received and delivered by the third Defendant was full container load cargo and the seal was intact upon delivery, the third Defendant had fulfilled the obligation of delivery.

5) Even if the Plaintiff could establish that it was three metal cases of goods actually shipped, it was due to insufficient mark and improper declaration of the goods on the part of the Plaintiff that one case of the goods was not timely taken delivery of at the destination port. There was not any fault or negligence on the part of the carrier. Therefore, the carrier should not be held liable for damages.

6) The constitution of delay in delivery of goods must satisfy two legal requirements, that is, definite time of delivery a agreed on one hand and definite place of delivery on the other. In this case, there was no such specification as to the period of delivery in the two Bills of Lading at issue. Therefore, no delay in delivery had ever occurred, as alleged by the Plaintiff.

7) Even if delay in delivery did exist and such delay was caused by the carrier, under such circumstances for which the carrier shall not be exempted from his responsibility, the liability of the carrier for the damages shall be limited to the amount of freight.

8) Since there was not any direct or positive causal relationship between the losses of the Plaintiff and the delay in delivery of the goods, the Plaintiff should not claim for damages against the carrier in accordance with law.

The third party contended that:

1) After the transfer of B/L through endorsement, the title to the goods was transferred to the consignee. The Plaintiff, being neither the B/L holder nor the consignee under the order of the B/L, was not entitled to file the lawsuit against the third party.

2) The prerequisite for constituting delay in delivery was that the carrier and the shipper clearly provided the period of delivery. Where there was no such provision, delay in delivery shall not exist. Even if there had been delay in delivery in this case, the consignee or the Plaintiff should have provided taking-over record to prove that the goods in question was delivered to the consignee six months after the vessel arrived at the destination port. Otherwise, it could only indicate that, after signing for the receipt of the goods, the consignee failed to take delivery of the goods timely or to checked the goods carefully and resulted in shortage in taking delivery. Hence, it was the consignee who should be held liable and it was irrelevant to the carrier.

3) The evidence submitted by the third party was sufficient to prove that, during the whole business operation, the cargo condition as stated in all papers and documents showed that there were only two cases of stainless products. In the meantime, it was stated in the delivery order that the goods delivered were in apparent good order and condition. Therefore, there was no delay in delivery or shortage at all.

4) From the day when the consignee signed for the receipt of the goods, the B/Lheld by the consignee had fulfilled its function for taking delivery of the goods contained therein and no longer served as the document of title to the goods. The liability for breach of contract, the making-up of goods and the disposal of goods by reducing its price, were all disputes over matters of trade between the Plaintiff and the consignee and were of no relevance to the carrier.

5) The evidence of the Plaintiff could not prove the genuine  economic losses suffered thereby so far. As the third party did not see the bank account transfer vouchers for payment for damages for breach of contract, the freight for the making up goods by the Plaintiff and payment for the reduced price goods, the evidence provided by the Plaintiff was seriously insufficient.


In summary, the third party requested the court to dismiss the litigation requests of the Plaintiff.

During the hearing of the case, it was not disputed by the parties as to the following facts:

On June, 2000, the Plaintiff entrusted the second Defendant to carry originally two metal cases of goods, but actually three cases were loaded into the container. For this, the Plaintiff notified the second Defendant to alter the quantity of goods shipped on 28 June, 2000. As there was no time to revise the Customs Declaration, the second Defendant instructed the operator of the third party at container loading station to bind two cases together according to earlier practice and to make the three cases into two for the convenience of carriage .In the meantime ,the second Defendant notified the Plaintiff of what was done with the cases and advised them that the Plaintiff had made it clear to the agent and the Plaintiff should take it easy. Being unable to load full container goods, the second Defendant , as the agent , signed the bill of lading of the first Defendant to the Plaintiff. As the container-loading carrier ,the third party loaded twelve shipments of goods including the goods in question in one container and then delivered to the third Defendant for carriage to Vancouver ,the port of destination . the consignee took delivery of the goods on 27 July, 2000.

    The facts disputed by both parties were as follows:

1)The Plaintiff alleged that after the goods in question were carried to the port of destination Vancouver , the consignee only received two cases and there was a shortage of one case. The Plaintiff requested the Defendant and their agent to look for this case on several occasions. On 26 December, 2000,R&G informed the Plaintiff that the carrier??s agent just notified them that the missing case had been found and that the case was not delivered at Vancouver because it was miscarried to Toronto ,Canada and thus resulted in the delay in delivery. The third party alleged that , judging from the evidence they submitted, it was two cases of goods on all documents from receipt of the goods to delivery thereof and there was no short delivery at all, that up to this time ,the third party hadn??t seen the documents issued by the agent of the warehouse at the destination port, EUROASIA Company and the third party??s agent at the destination port SEAGO , evidencing that they lost the goods and then delivered to the consignee after finding the same . Nor did the third party see the agency agreement between O.T.S and SEAGO.


Upon examination ,it was found that the second Defendant actually received three metal cases with 2,981 kilograms in weight and 2.2cubic meters in volume. Although there only two cases specified in the Bill of Lading issued by the third party , they were 2,981 kilograms in weight and 2.2cubic meters in volume. After taking delivery of the goods and discovering the short delivery, the consignee immediately notified the Plaintiff of the same, the Plaintiff then checked with the second efendant .Both the second and the third Defendants had contacted and checked with SEAGO, the third Party??s agent in Canada. The foregoing matters of fact could be proved by the correspondence exchanged between the Plaintiff and the buyer and the correspondence exchanged between the second and the third Defendants and SEAGO.


As to whose agent was O.T.S., Canadian telecom system Co., Ltd. in the letter addressed to R&G from O.T.S. submitted by the Plaintiff ,O.T.S. alleged that they had just received the notice from the agent company of the warehouse EUROASIA that the missing goods of the buyer had been found. In the meantime ,O.T.S. declared that they were no longer the agent of SEAGO and hoped that R&G would contact SEAGO directly. Both the address and fax in Vancouver in the letterhead of SEAGO as submitted by the second Defendant and the address and fax of the third party??s agent at the destination port as stated in the Bill of Lading were the same as the address and fax of O.T.S.


On the basis of the foregoing facts and evidence , this court held that although the third party denied receiving three cases of goods , the volume and the weight measured at the time of loading the container were those of three cases. Further ,when checking with their agent at the destination port ,the third party also alleged that the shipments in question were two packings(holding three metal cases).However , the consignee only received two cases of goods .Therefore, it was not a matter of fact in this case that the third party only received two cases of goods according to the specification in the Bill of Lading . Evidenced by the address and fax of the third party??s agent SEAGO at the destination port Vancouver as stated in the Bill of Lading and acknowledged by the third party ,O.T.S was the agent of SEAGO ,which was the third party??s agent.


2)The making-up goods by the Plaintiff.


The Plaintiff submitted to this court the Bill of Lading of m/v?°Lin Xing?±V.0037E to prove that they did make up 17 cases of goods to the Canadian buyer on 1 October, 2000. In light of the foregoing Bill of Lading and the invoices No.0372547 and 0372548 issued by Yake International Transportation( China )Co., Ltd. , the court supported the face that the Plaintiff made up the goods.


3)Damages for breach of contract paid by the Plaintiff to the Canadian buyer.


The Plaintiff did not provide to this court any direct evidence with respect to their payment of damages for breach of contract to the buyer. According to the sales contract , the conditions for breach on the part of the seller were that the shipment was more than fifteen days late as stipulated in the contract , or that the cargo shortage was higher than10%. In this case , the Plaintiff was not in breach of the provisions of the contract and should not pay damages. Therefore, this court does not sustain what was alleged by the Plaintiff in this respect.


In light of the above mentioned matters of fact , it was held by this count that:


1)Now that the Defendants had received three cases of goods and specified two cases in the Bill of Lading only , the Defendants should make it clear to the third party and their agent at the destination port so as to avoid short delivery . Obviously ,the first Defendant failed to assume the foregoing obligation and should be held partly liable for the delay in receiving the goods by the consignee.


2)As the first Defendant??s agent , the second Defendant should act within the scope of responsibility authorized by the first Defendant. In accordance with the relevant provisions on agency business under Chinese law, it was the first Defendant who should take the legal consequences arising from the acts of the second Defendant and the second Defendant should not be held liable.


3)Although the third Defendant was the actual carrier of the goods in question ,the period of responsibility thereof was from container yard(CY/CY) in consideration that what they carried was full container load cargo .As the seal of the  container was sound and intact at the container yard when delivered  and that it was not the obligation and act of the Defendant to deliver the goods to the ultimate consignee , the third Defendant should not be held liable for the litigation requests of the Plaintiff.


4)As the party responsible for the delivery of the goods to the consignee as stated in the Bill of Lading , the third party ,who actually received three cases of goods but specified only two cases in the Bill of Lading , failed to timely notify their agent at the destination port of such . When checked by the consignee upon discovering the short delivery of goods ,the third party??s agent failed to find the short delivered goods either .As a result ,the goods were delivered six months later .It was obvious that the third party and their agent failed to exercise due diligence to fulfill their obligations of delivery of goods .There fore the third party should also be held partly liable for delivery of goods beyond the reasonable period.  


5)It was after the Customs clearance of the goods had been made, that the Plaintiff altered the number of cases. As a result , the second Defendant had to specify two cases in the Bill of Lading even though actually receiving three cases, so as to make the contents of the documents conform to those of the Customs declaration , which was the hidden trouble for possible short delivery . Therefore ,the Plaintiff  should have notified the consignee timely as to the foregoing circumstances. However the Plaintiff did not make such notice in time , resulting in the short taking delivery by the consignee , for which the Plaintiff should be held partly liable.


6)Seen from the items of the Plaintiff ??s claim, the conditions for payment for damages for breach of contract were that the shipment period was more than fifteen days late as specified in the contract ,or that the cargo shortage was higher than 10%. In this case ,the shipment was within the period as stipulated in the contract and there was no cargo shortage shipped by the Plaintiff . According to the trade term in the contract , i.e., CIF , the obligation of the seller as regards delivery should have been completed once the goods were delivered to the carrier . As to the cargo shortage thereafter, the buyer should undertake such risk . the Plaintiff should not be under the obligation to pay damages in accordance with the sales contract . Hence, the loss for damages raised by the Plaintiff was not reasonable and positive and was not sustained by this court . With respect to the loss from reduced price ,as the goods in question were neither seasonal nor damaged, such item of loss was not positive loss resulting from the delay in delivery ,but form the trade activities between the buyer and the seller and was irrelevant to the carrier. Therefore , the court does not support such item of claim.

7)Being the shipper of the goods under the Bill of Lading at issue, the Plaintiff had transferred the Bill of Lading through endorsement. With the transfer of the said Bill of Lading, the right of claim against the carrier under the contract of carriage was transferred from the shipper to the consignee as well. In this case, as far as the shipper in the Bill of Lading was concerned, the Plaintiff was not entitled to file the claim against the carrier.

8)The Plaintiff submitted to this court a letter of subrogation made by the Canadian buyer R&G to the effect that the Plaintiff was subrogated to the right of claim, through which the Plaintiff obtained the right of claim against the carrier under the contract of carriage. However, the right to be subrogated could only be that of the transferor according to the contract of carriage. As far as this case was concerned, it was only the right of claim arising from the losses suffered due to the breach of contract on the part of the carrier that R&G could transfer to the Plaintiff, i.e., the basis for the right of claim was losses suffered by R&G. The court noted that the losses claimed by the Plaintiff(the damages for breach of sales contract, freight for making up goods, loss from reduced price of goods were all the losses of the Plaintiff rather than R&G. Therefore, with respect to the litigation requests for the foregoing losses of the Plaintiff against the Defendant on the basis of the letter of subrogation, this court does not sustain.

To sum up the above, in accordance with Article 84,112 of the General Principles of Civil Law of the PRC, Article 79,402 of the Contract Law of the PRC and Article 64 (1) of the the Civil Procedure Law of the PRC, this court hereby renders the judgment as follows:

The litigation requests of the Plaintiff the Industrial Products Import & Export Co.of Shanxi Province shall be diamissed.

The acceptance fee of this case in the sum of RMB2,263 shall be born by the Plaintiff.

Any party who is not satisfied with this judgment may file a Statement of Appeal in quintuplicate within 30 days for the first Defendant and within 15 days for other parties concerned upon the day of service of this judgment for appealing to the Higher People??s Court of Tianjin, and shall pay the appeal fee RMB2,263 to the Higher People??s Court of Tianjin within 7 days of filing the Statement of Appeal (Bank Account: Agricultural Bank of China, New Technology Product Zone Sub-branch Office 394-9887000390). Any delay beyond the foregoing prescribed time limit shall be deemed as a waiver of the appeal.


Presiding judge :Chen Xianzhang

Judge        :He Yiru

Deputy  judge :Jia Ming


18 September, 2001

      Certified true copy

Clerk:        Lee Zhen