The People’s Insurance Company of China, Hebei Provincial Branch. v. Vysanthi Shipping Co. Ltd. of Cyprus

Updated：2004-03-16 Views：1879 
NINGBO MARITIME COURT

PEOPLE??S COURT OF CHINA

CIVIL JUDGMENT

  



Plaintiff: The People??s Insurance Company of China, Hebei Provincial Branch. 

Domicile: 499 Yuhua Road, West, Shijiazhuang, Hebei Province, People??s Republic of China.

Legal Representative: Su Jian-guo, General Manager.

Agent ad litem (Specially Authorised): Liu Yan, lawyer from Hai Xiang Law Office, Shanghai, People??s Republic of China.

Agent ad litem (Specially Authorised): Cai Cun-qiang, lawyer from Hai Xiang law Office, Shanghai, People??s Republic of China.

Defendant: Vysanthi Shipping Co. Ltd. of Cyprus .

Domicile: 1,C.Pantclides Avenue, PO BO2313,Nicosia,Cyprus.

Agent ad litem(Specially Authorised): Xu Jie, lawyer from Duan&Duan Law Office, Shanghai, People??s Republic of China.

The action centering around the dispute between the plaintiff, The People??s Insurance Company of China, Hebei Provincial Branch (hereinafter referred to as ?°PICC Hebei?±), and the defendant, Vysanthi Shipping CO.Ltd.of Cyprus (hereinafter referred to as ?°Vysanthi Co.?±) concerning the apportionment and recovery of salvage charges arising from a maritime accident was brought to this court by China Animal Feed Import & Export Corporation on 24 October 1996.This court agreed to hear the cases on 28th of the same month and set up a collegial panel in line with statutory requircments.When submitting their defence. Vysanthi Co. contested the jurisdiction of this court. This court issued a ruling on 23 January 1998 to reject the objection. Vysanthi Co. appealed against the said ruling to Zhejiang Provincial Higher People??s Court, which ruled on 21 May, 1998 to reject the appeal and affirm the original ruling. On 19 May, 1998, China Animal Feed Import & Export Corporation and PICC Hebei jointly applied to change the plaintiff from China Animal Feed Import & Export Corporation to PICC Hebei, on the grounds that the insurer, PICC Hebei, had paid insurance benefits to the insured, China Animal Feed Import & Export Corporation??thereby obtained rights of subrogation. On 1 February??2000??this court allowed PICC Hebei to act as the plaintiff in the litigation, and notified China animal feed Import & Export Corporation to whithdraw from the proccedings. This court heard the case in open court sessions on 18 January ,1999,28April, 2000,25 July, 2000, and 8 August,2001, respectively. Liu Yan and Cai Cun-qiang,  the agents ad litem for the plaintiff PICC Hebei, and Xu Jie, the agent ad litem for the defendant Vysanthi CO. , witnesses Turner and Domingo Cancello were called to the open court session on 25 July, 2002 to give evidence. The hearing of this case is now concluded.

The plaintiff PICC Hebei stated that in June, 1996, The defendant??s ship M/V ?°Joanna V?± loaded 29,900 tons of dregs of bean, imported by China animal Feed Import & Export Corporation on C&F term, at the Nidera Berth of the Port ot San Lorenzo, Argentina. The vessel ran aground after leaving the berth. The defendant then asked a salvage company to carry out salvage operationas for the vessel. The salvage company requested a sum of 1.75 million US dollars as salvage remuneration, with a salvage security of 1.1 million US dollars of the aforesaid sum to be provided by the bill of lading holder, China Animal Feed Import & Export Corporation. Following the salvage operations, a London arbitration ruled that China Animal Feed Import & Export Corporation was to pay the salvage expenses plus interest, and for part of the salvage company??s legal fees and arbitration fees, the toal amount being 912,388.93 US dollars and 44,250.02 pounds sterling. The reason for the vessel??s running  aground  was that the cargo was inproperly stowed, and that the master of the vessel made an obvious mistake in determining the draft. The defendant, as the carrier, failed to perform its fundamental duties to ensure the vessel??s seaworthiness, causing the vessel to run aground at the very beginning of the voyage, and leading to the sharing of salvage and other costs by China Animal Feed Import & Export Corporation. The plaintiff, having obtained the right of subrogation, was entitled to bring an action for recovery against the carrier. For this case, the applicable law should be lex fori,viz. the law of the country of the court hearing the case. Therefore the plaintiff requested that this court order the defendant to pay damages to cover the plaintiff??s losses as follows:(1)Salvage expenses paid to the salvage company:880,464.21 US dollars  plus interest (of which 567,514.79 US dollalrs would accrue interest from 8 September, 1997 to the day of judgment at an annual rate of 5%,  312,949.42 US dollars would accrue interest from 8 January, 1998 to the day of judgment at an annual rate of 5%), and 10,572.32 pounds sterling plus interest(of which 4,827.62 pounds sterling would accrue interest from 8 September, 1997 to the day of judgment at an annual rate of 6.5%,  5,744.77 pounds sterling would accrue interest from 8 January, 1998 to the day of judgment at an annual  rate of 6.5%);(2)Sharing the salvage company??s legal fees:31,924.72 pounds sterling plus interest (accruing from 14 April, 1998 to the day of judgment at an annual rate of 6.5%);(3)Salvage security and insurance premiums: 5,637.50 US dollars plus interest (accruing from 24 February, 1997 to the day of judgment at an annual rate of 5%);(4)Overseas legal fees:33,677.70 pounds sterling plus interest (accruing from 15 April, 1998 to the day of judgment at an annual rate of 6.5%),461 US dollars plus interest (accruing from 7 December, 1998 to the day of judgment at an annual rate of 5%),and 298.15 US dollars plus interest (accruing from 5 February, 1999 to the day of judgment at an annual rate of 5%);(5)Domestic legal fees: RMB 105,887.20 Yuan plus an interest of 28,410.17 Yuan; (6)Property preservation fee: RMB 20,000 Yuan plus and interest of 5,734.50Yuan.

To back up its pleadings, the plaintiff submitted the following evidence to this court: (1)An insurance policy of number SZ34/02196003D; (2)Two bills of lading signed by Master Turner (3)Certificate of Subrogation issued by China Animal Feed Import & Export Corporation to PICC Hebei; (4)Arbitration award issued by Lloyds of London regarding the salvage expenses; (5)Payment receipts for salvage expenses plus interest and for fees for arbitrators and Lloyds of London paid by the plaintiff following two rounds of arbitration, altogether seven pieces; (6)Two payment receipts for the cargo owner??s share of the salvage company??s legal fees, paid by the plaintiff; (7)Three invoices and payment receipts for the salvage security and insurance premiums paid by the plaintiff; (8)Six invoices and payment reccipts for its overseas legal fees paid by the plaintiff; (9)Legal fees for domestic litigation: RMB 134,293.37 Yuan as agreed in the memorandum; (10)Payment receipt for property preservation fee; (11) logbook of m/v ?°Joanna V?± and the sea protest signed by Master Turner; (12)Factual record made by port agent of ?°Joanna V?± at the Port of San Lorenzo; (13)Survey report following a survey commissioned by the defendant and carried out by Clancy, Sons and Stacey from 2nd to 4th July, 1996; (14) A statement from the master of  the salvor ship dated 2 June, 1997; (15)Survey report issued by Master R.Lopec Mesa on behalf of the Shipowner??s P&L Association: (16) ??Guide to Entering Port?· and Lloyds of London Weekly; (17) Judgment on Case No.160 (1996) by Qing dao Maritime Court, and judgment on case No.289 (1997) by Shandong Provincial Higher People??s Court:Both were similar cases in which the courts ruled that the vessels?? running aground was caused by overloading and as such the owners of the vessels were held liable; (18) An outline of the general average adjustment. The plaintiff further clarified the aforementioned evidence as follows: the logbook, photo-copied from the vessel, recorded the vessel??s draft when leaving the port. The sea protest, the factual record by the agent at port of loading, and an outline of the general average adjustment were served by the adjuster appointed by the defendant to the agent appointed by China Animal Feed Import & Export Corporation to participate in the London arbitration for the apportionment of salvage expenses. The statement of the master of the salvor ship was an excerpt, the original of which had been sent to the court for verification. The record of the vessel`s draft made on July10th by the surveyor appointed by the Shipowner??s P&I Association, was copied from the arbitration file. Guide to Entering Port was an excerpt of the standard copy used worldwide. The Lloyds of London report was taken from its weekly journal published on 20 December, 1996.

The defendant, Vysanthi Co., pleaded that Vysanthi Co. Was at no fault whatsoever for the grounding. Before and at the beginning of the voyage , the vessel had, in accordance with the applicable statutory requirements, exercised due diligence to ensure its seaworthiness. The problems occurred after the beginning of the voyage were due to navigation errors, for which the owner of the vessel should not be held liable, the insurer should. The plaintiff did not provide evidence to prove that the vessel??s actual draft was greater than 9.10 metres, i.c.  the plaintiff did not provide any evidence to prove that the vessel was not seaworthy at the beginning of the voyage, nor was it able to demonstrate grounding resulted from the unseaworthiness of the vessel. When the vessel was reversing, it was the stern section, rather than the middle section, that ran aground. Therefore, to say that the mid-section draft exceeded the maxiumum limit had no bearing on the vessel??s grounding. Should the plaintiff take the view that the dispute in this case was non-contractual in nature, then this lawsuit had no cause of action.The plaintill brought this action neither on the basis of dispute on contract nor based on tort. The action brought by the plaintiff had no legal basis whatsoever. It was therefore requested that  PICC Hebei??s pleadings be rejected .

To back up its pleadings, that defendant submitted the following evidence to this court: (1)Master??s sea protest, recounting the vessel??s situation and the navigational details of the vessel when it entered and left the port where the accidents occurred; (2)The chief mate??s statement, explaining the process through which the vessel??s cargo stowage plan was made, and the situations under which the vessel entered and left the port; (3)Witness statement made by Domingo Cancello, an Argentine national, explaining the state of the channel when the accidents occurred; (4) Affidavit of an Argentine lawyer Lesmi and the attached Exhibits A,B,C,D,E,F,G,H,and I, explaining the authority for navigation under Argentine law; navigational rules applicable to the channel where the accidents occurred , and rules regarding draft, under keel clearance, etc.; (5)The letter setting out the allowable draft for the vessel in question, issued by the coast guard on the day of the accident, which proved that the draft at the beginning of the voyage was allowed by the appropriate local authorities; (6)Vessel??s Customs clearance document, which proved that the vesscl had all the necessary paperwork when the voyage started, and in particular that the vessel??s draft met the requirements set by the authorities; (7)The vessel??s certificate of registry issued in Cyprus ; (8)International Load Line Certificate, which proved that the vessel was not overloaded when the voyage began ; (9)Certificate of survey, International Tonnage Certificate, cargo ship construction certificate, cargo ship safety equipment registration certificate, cargo ship safety equipment certificate, cargo ship safety radiotelegraphy certificate, cargo ship safety radio-telephone certificate, International Oil Pollution Prevention Certificate, supplementary oil pollution certificate issued by United States Maritime Administration; water pollution economic liability certificate, and full manning certificate; (10)Letter from the United States Maritime Administration to the operator of M/V ?°Joanna V?±, authorising the vessel to ship grain; (11)Ship engine room classification certificate, certificate of class (engine room), ship hull classification certificate , certificaite of class (hull); (12)Crew list: (13)A follow-up statement dated 12 May, 2000 from the master of the salvor shipt;  (14)Ship Register, indicating M/V ?°Joanna V?±??had a full load dead-weight tonnage of 50,550 tons, with a maximum draft of 12.52 meters; (15)The response filed by China Animal Feed Import & Export Corporation for the London arbitration , indicating that the plaintiff had participated in the said arbitration; (16)Witness statement made by Master Turner in open court session, confirming that it was the first time that M/V ?°Joanna V?±??called at the Port of San Lorenzo, and the grounding was due to insufficient water depth. The Master had read a lot of publications on navigation , but none of them had any record about the top water level of  this channel. The ??Guide to Entering Port?·was not an official publicatoin, and was not indicative of the real situation in 1996, The depth sounder onboard the vessel would not work when the under keel clearance was some 10 centimeters. The draft data that the vessel sound have used to plan the loading was prepared by the coast guard and obtained through the port agent. However, this document was issued after the accident; the Master did not receive it in the course of loading. The Master did not attempt to assess water depth situation from other sources, rather, he proceeded with the loading with reference to the draft situation on a day-to-day basis. The coast guard advised the vessel of the changes in water depth on a daily basis. The starting of the voyage of the vessel was approved by the local coast guard,  who inspected the draft situatoin and duly signed for it. (17) The witness statement made by an Argentine national Domingo Cancello in open court session, confirming that the Nidera Berth was a private property located at the upper end of the Parana River, and that the coast guard was the local authority in charge of navigational matters. When leaving the port, the vessel must have a departure permit issued by the coast guard. The coast guard would come onboard to verify the paperwork as well as the draft situation. Should a vessel??s draft exceed its maxiumum limit, they would not allow it to leave the port. To depart from this berth, the under keel clearance should be at least 0.3 meter (1 foot).??Guide to Entering Port?·was not official. The data contained therein could serve as general information only; they were outdated and were not indicative of the situation of the port. It was the data contained in official publicatoins that all sea-going vessels use. The second table in Exhibit F of Evidence No. 4 filed by Vysanthi Co. Was formally published by the authorities.It was signed by the head of the maritime administration. The signature on Evidence No.3 and its exhibits was the true signature and proper handwriting of the head of maritime administration himself; (18) The award presented by Donald Davies, the arbitrator proving that the vessel had exercised due diligence to ensure that the vessel was seaworthy prior to and at the beginning of the voyage and was not at fault for running aground; (19)The water depth survey report for the LOC channel, commissioned by the plaintiff??s lawyer, which confirmed that the vessel was not at fault.

During the cross-examination in court, the defendant expressed the following views after examining the plaintiff??s evidence: No objection to the insurance policy, the bills of lading, the Certificate of Subrogation, and the payment receipt for litigation fees. On the face of it, no objection to the payment receipts for the salvage expenses plus interest, and the fees for the arbitrator and Lloyds of London. However, the fees for arbitration should be based on the original arbitration award.With regard to the award that was filed, the defendant indicated that they were unable to determine the authenticity of the signature.The defendant had no objection to payment receipts Per Se for part of the salvage company??s legal fees, the salvage security and premiums, and the overseas legal fees incurred by China Animal Feed Import & Export Corporation for the London arbitratoin, but took the view that the reason for such payments was not strong enough. The defendant had no comment with regard to the memorandum. Items of Evidence No. 11 through 18 were photocopies; they were not good enough in a court of law and should not be accepted as valid . On the face of it, no objection to Evidence No.13. The plaintiff expressed the following views after examining the defendant??s evidence: Master  Turner and the chief mate were employed by and working for the vessel, and as such their statements should not serve as evidence. Whether Domingo Cancello, the Argentine witness, was an expert in  matters concerning the channels remained to be verified. He claimed that he worked for a commercial company and his court appearance was of a commercial nature, therefore his statement should not be accepted. The authenticity of Evidence No.4 could not be determined. Evidence No.5 was not issued by the coast guard as claimed by the defendant, but a certificate from its port agent. Evidence No.6 was incomprehensible. Evidences items7-12  were all certificates, and as such should be checked against the originals. The master of the salvor ship was not a Singaporean national, yet his statement was notarised and authenticated in Singapore, In additoin, the original of the statement made by the master of the salvor ship dated 2 June, 1997, had already been sent to our side, and the two statements contradicted with each other, therefore it was impossible to determine the truthfulness of Evidence No.13. The loading capacity of M/V ?°Joanna V?± as recorded in the ship register was irrelevant to this case. The response statement was not for the arbitration on the salvage operations. The arbitratoin on salvage operations had already concluded and as such this document was not relevant to this case. The content of Evidence NO.18,  was true, but in view of the problem of the conflict of jurisdiction, it should not be used as evidence in this case, not to mention the large number of errors involved. The defendant??s quotation of Evidence NO. 19 was out of context. 

Based on the aforementioned cross-examination, this court made rulings about the admissibility of the evidence as follows; (1) With regard to the plaintiff??s evidence : as the defendant had no objection to the documentation of the insurance policy ,the bills of lading, the Certificate of Subrogatoin, the memorandum and the salvage security ,these were accepted as evidence. With regard to the payment receipts for the salvage expenses plus interest, the fees for the arbitrator and Lloyds of London, and the salvage company??s legal fees following the London arbitration, the defendant suggested that the original award be submitted, and held that the authenticity of the arbitrator??s signature on the award filed by the plaintiff could not be determined, and on such grounds doubted whether these payments were to cover the expenses for the arbitration determined by the arbitration award. The defendant, being a participant in the arbitration and a party in the apportionment of the salvage charges, should have a copy of the arbitration award, as the plaintiff did. In light that the defendant did not submit its own copy of the award to contest that filed by the plaintiff, this court held the view that the arbitration award filed by the plaintiff and the corresponding payment receipts could serve as evidence for the plaintiff??s losses. The logbook was consistent with that taken from m/v ?°Joanna V?± in an earlier case heard by this court, namelyNingbo Maritime Commercial First Trial No.182, (1996); the sea protest and the factual record made by the port agent of m/v ?°Joanna V?± were confirmed to be true by Master Turner, the master of the vessel in question, in open court session. The defendant did not deny that it commissioned a professional firm to conduct survey, but disputed the format of the survey report issued by the surveyor. After the plaintiff submitted the original report, the defendant was not able to come up with contradicting evidence to refute it. The same was true with the statement from the master of the salvor ship. Therefore, these four items were accepted as evidence. Although the plaintiff did not submit the original draft record from the defendant??s P&I association, the defendant did not dispute that the plaintiff copied it from the arbitration file. Therefore the draft record was also ruled as admissible. Master Turner confirmed that he read the Guide to Entering Port prior to the accident. Although it was alleged that the publication was outdated and there was an updated version, neither Master Turner nor the defendant could come up with the current version or explain why m/v ?°Joanna V?± was still keeping and consulting this copy. Therefore, it could be established that this publication did exist and it could be used as a basis for determining the maximum draft. (2) with regard to the defendant??s evidence: Master Turner and the chief mate being both employed to work onboard the vessel in question, having experienced the entire course of the event, their description of the accident as it occurred and unfolded was the first-hand account. Except for their conclusion about the cause of and liability for the grounding, the statements of the said shipmaster and chief mate  submitted by the defendant, and the factual account of the accident in Master Turner??s witness statement made in open court session, could be accepted as a basis for establishing the fact of the accident. Based on the notarised document filed by the defendant after the open court session, Witness Domingo Cancello was a qualified maritime surveyor registered with the coast guard. His statement made in the open court session was admissible as evidence. Nevertheless, when compared with other evidence about the draft, this evidence failed to demonstrate that the vessel??s draft at the beginning of the voyage was adequate. Evidence No.4: As the identity of the witness was unclear, its authenticity could not be determined; Evidence No.5 was not issued by the coast guard as the defendant claimed, but was a certificate from the vessel??s port agent. Therefore Evidence No.4 and Evidence No.5 were ruled as inadmissible. As the authenticity of Evidence items Nos.6-12 could not be determined, these items were not accepted. Evidence No.13 contradicted with the corresponding evidence submitted by the plaintiff. The plaintiff??s evidence was based on the actual measurements taken by the master of the salvor ship, and as such should be used as the basis for consideration. Evidence No.14 and Evidence No.15 were irrelevant to the facts contested in this case and were ruled as inadmissible. The purpose for the defendant to submit Evidence No.18 and Evidence No.19 were to quote the conclusions contained therein  that the vessel should not be held liable, and not to substantiate the facts related to the case. The quoted conclusions were not binding on this court in determining the liability for the accidents, and therefore should not be used as evidence.

Based on aforementioned items of evidence and witness statements, the facts of this case were established as follows: m/v ?°Joanna V?± was a bulk cargo ship, with a total dead-weight tonnage of 50,550 tons (summer) and a maximum allowable draft of 12.55 metres for the summer. The vessel??s port of registry was the Port of Limassol in Cyprus. The owner of the vessel was the defendant in this case. The vessel kept the latest navigation manual for the Parana River and a ??Guide to Entering Port?·. In June??1996, China Animal Feed Import & Export Corporation was to import a batch of dregs of bean, to be carried by m/v ?°Joanna V?±. At 1040 on June 25th, the vessel began to load the dregs of bean in bulk  at the Nidera Berth, Port of San Lorenzo, upon the Parana River in Argentina. The Loading was completed at 1520 on the 28th. On the same day, two bills of lading were issued, duly signed by Master Turner. The bills of lading spelt out that: the cargo was Argentine dregs of bean in bulk, the amount was 29,900 tons, and the consignee was to order. These two bills of lading were transferred to, and subsequently legitimately held by, China Animal Feed Import & Export Corporation. At 1835 on June 28th, the vessel began her voyage. At 1850, when the vessel was approximately 200 metres away from the dock, the vessel??s starboard ran aground. The GPS position was ??32??41.9??S,  ??60??43.3??W. The vessel was 0.7 nautical mile from the southernmost buoy of the main berth, the direction being 325??At 2115,the vessel, having been secured to the dock by cable, started the engines in an attempt to free itself from the grounding, but to no avail. On July 2nd, the defendant signed a salvage contract with the owner of towboat ?°Albatros III?±. At 1542 on that day, the towboat ?°Albatros III?± towed m/v ?°Joanna V?± to free itself from the grounding and began to reverse in the downstream direction. However, at 1722, the vessel??s port side ran aground at about 300 metres away from, and in alignment with, the tip of the dock. This time the position was approximately 200 metres from the earlier grounding place. At this time the vessel??s draft was 9.05 metres (29 Teet and 8 inches). The master signed a salvage contract with a salvage company named Satecna Costa Afuera S.A./Wijsmuller on behalf of the owners of vessel and cargo, under which the said salvage company was to carry out salvage operation.The logbook showed that on july 9th,the vessel was tilting 2 degrees to starboard,and at 1600 was tilting 0.80 degree to port side. ON July 10th, the vessel moored at the Nidera Dock. To reduce the loa,d 5,500 tons of cargo were unloaded onto a barge. The unloading was completed at 1615 on July 11th, at which time the vessel??s draft was 7.82 metres (25 feet and 8 inches) At 1734 on July 11th, with the help of the towboat, the vessel began to reverse in the downstream direction along the Nidera Channel, during which it touched the river bed several times and slightly ran aground twice. After the vessel reached the designated downstream anchorage, it began to reload the cargo from the barge. At 1215 on July 12th, the reloading was completed. These operations gave rise to a huge sum of salvage expenses. When signing the salvage contract, the salvage company asked for a salvage remuneration of 1.75 million US dollars, and required the salved party to provide salvage security. China Animal Feed Import & Export Corporation therefore provided a salvage security for 1.10 million US dollars to the salvage company. Afterwards, disputes in salvage expenses arose between the salvor and the salved party. The salvage company applied for arbitration in London. After two rounds of arbitration by Lloyds of London, it was ruled that the salved party should pay a total of 1.15 million US dollars as salvage remunation plus an interest of 122,580.55 US dollars, and 15,461.25 pounds sterling as arbitration fees. Of these sums the cargo owner was to pay 880,464.21 US dollars as its share of salvage expenses and interest, 10,572.39 pounds sterling as its share of arbitration fees, 31,924.72 pounds sterling as its share of the salvage company??s legal fees,5,637.50 US dollars as the salvage security and premiums, and 33,677.70 pounds sterling as its legal fees in London. China Animal Feed Import & Export Corporation insured this batch of dregs of bean for all risks with the plaintiff. On 9 July, 1996, the plaintiff issued an insurance policy numbered SZ34/02196003D. The policy indicated that the insured cargo was a batch of 29,900 tons of Argentine dregs of bean, to be shipped from the Port of San Lorenzo to Ningbo or Shekou, the insured amount was 9,620,325 US dollars. Based on an application made by China Animal Feed Import & Export Corporation, on 25 September, 1996, this court granted a lien on m/v ?°Joanna V?± and held the vessel at the Port of Ningbo. After the owner of the vessel provided the security, on 29th of the same month this court lifted the lien, with the plaintiff paying RMB 20,000 Yuan as property preservation fee. In line with the arbitration award, the plaintiff made payments between 8 September, 1997 and 24 April, 1998,in respect of the cargo owner??s shares of the salvage expenses, the arbitration fees and other relevant expenses, and paid legal fees to its Chinese lawyers as agreed. On 18 April, 1998, China Animal Feed Import & Export Corporation issued a Certificate of Right of Subrogation to the plaintiff. The plaintiff thereby subrogated the rights of the consignee, and asked the defendant to pay the cargo owner??s share of the salvage expenses and to be liable for other relevant losses.

It was also established that, between October ,1995 and January ,1996, a total of five vessels ran aground in the channel at the beginning of the voyage from the Nidera Berth, the drafts of these vessels were between 7.75 meters (25 feet and 5 inches) and 8.38 metres (27 feet and 6 inches), while the ??Guide to Entering Port?· expressly indicated that the maximum allowable draft for the channel was 8.23 metres (27 feet).

This court held that there was a contractual relationship with respect to carriage of goods by sea between the consignee, China Animal feed Import & Export Corporation, and the defendant .The bills of lading in question did not have any Paramount Clause, nor should matters regarding arbitration clause as agreed upon by the parties and clause regarding applicable law apply to this case. Based on the ??Most Closely Connected??principle, the consignee could legitimately bring an action to a Chinese court with a view to recovering the salvage charges from the carrier, and the Maritime Code of the People??s Republic of China should apply .The plaintiff being the insurer of the consignee, China Animal Feed Import & Export Corporation, and having paid for the consignee??s expenses arising from the salvage operation in accordance with the insurance contract and thereby obtained the subrogation was entitled to try to recover costs from the  liable carrier.

The focal points in dispute between the two parties are whether m/v ?°Joanna V?± was overloaded, leading to un-seaworthiness at setting sail, which caused grounding, and whether the vessel had exercised due diligence to ensure that the vessel would be seaworthy. First, with respect to seaworthiness, whether the vessel was overloaded should not be based entirely upon the vessel??s registered dead-weight tonnage. Rather, the basis for judgment should include whether the vessel was safely afloat and could smoothly sail in the waters in question. m/v ?°Joanna V?± ran aground immediately after setting sail. After Unloading 5,500 tons of cargo during the salvage, its minimum draft was still 7.42 metres (24 feet and 4 inches ) , After resumed sailing ,the vessel touched the river bed again. It was obvious that, given the vessel??s draft situation at the beginning of the voyage, grounding was certain or virtually inevitable. This was consistent with the facts. Therefore it could be established that the vessel was not seaworthy at the beginning of the voyage. Second, the water area in which the accidents occurred was a rather special one, characterized by its treacherous channels. A careful master ought to consider all available data and do his utmost to work out the actual water depths in the channel. Several vessels had run aground in the area, and the drafts of those vessels were between 7.75 metres and 8.38 metres. In addition there were some other masters advising that the maximum draft for the channel, based on the ??Guide to Entering Port?·and other sources, was 8.23 metres. The master of m/v ?°Joanna V?±, being clearly aware of or ought to be aware of these facts, relied exclusively on data supplied by the local agent in determining the allowable draft, without ever questioning or verifying the data. Further, the master had no knowledge whatsoever that there was a special maritime directive (NO.2/82) issued by Argentina specifically for this channel, which specified that the maximum allowable draft for a vessel was 7.32 metres (24 feet). What the master had done as mentioned above clearly testified to the fact that he was far from having exercised due diligence as he ought to have. The negligence was glaring .The depth sounding data taken after the accident confirmed that the data contained in the ??Guide to Entering Port?·were correct after all. Judging from the depth measurement taken after the accident, had the vessel strictly abided by the maritime directives and manuals and taken into account the draft data of the vessels grounded earlier and the data contained in the ??Guide to Entering Port?·, and rigorously set a limitation to its cargo load, it would not have run aground. Although the defendant stressed time and again that ?°the local coast guard, as the local authority in charge of navigational matters, was in a position to provide the most authoritative data on the treacherous situation in the channel, and claimed that the vessel determined its draft on the basis of the maximum allowable draft issued by the local coast guard, it had so far failed to provide evidence to support these assertions. The defendant, as the carrier, failed in its duty to exercise due diligence to ensure that the vessel was seaworthy before and at the beginning of the voyage, and should therefore be held liable for cargo owner??s losses which arose from un-seaworthiness. The un-seaworthiness of m/v ?°Joanna V?± at the beginning of the voyage led to the salvage operations, causing the cargo owner to bear a huge sum of salvage expenses. The cargo owner was entitled to recover the money from the defendant. Documents filed by the plaintiff indicated that it had indeed paid the salvage expenses, the salvor??s legal fees, the salvage security and premiums, overseas legal fees, domestic legal fees and property preservation fee. The defendant should be liable for these expenses. The plaintiff??s pleadings were legitimate and should be supported. In accordance with Article 47 and Article 197 of the Maritime Code of the People??s Republic of China?? Article 237 and Section 1 of Article 64 of the Civil Procedure Law of the People??s Republic of China, the judgment is rendered by this court as follows??

The defendant, Vysanthi Shipping Co. Ltd. of Cyprus , shall pay the plaintiff, the People??s Insurance Company of China, Hebei Provincial Branch ,the following expenses:

share of the salvage expenses:880,464.21 US dollars plus interest (of which 567,514.79 US dollars accruing interest from 8 September??1997 to 28 September?? 2001 at an annual rate of 5%,and 312,949.42 US dollars accruing interest from 8 January??1998 to 28 September??2001 at an annual rate of 5%)??10,572.32 pounds sterling plus interest (of which 4,827.62 pounds sterling accruing interest from 8 September??1997 to 28 September??2001 at an annual rate of 6.5%, and 5744,77 pounds sterling accruing interest from 8 January??1998 to 28 September??2001 at an annual rate of 6.5%);share of salvage company`s legal  fee s for London arbitration :31,924.72 pounds sterling plus interest (accruing interest from 14 April,1998 to 28 September,2001 at an annual rate of 6.5%);



salvage security and premiums :5,637.50 US dollars plus interest (accruing interest from 24 February,1997 to 28 September ,2001 at an annual rate of 5%);Overseas legal fees for the London arbitration:33,677.70 pounds sterling plus interest (accruing interest from 15 April, 1998 to 28 September, 2001 at an annual rate of 6.5%);domestic legal fees for this case :RMB 105,887.20 Yuan plus an interest of 28,410.17 Yuan ;property preservation fee of RMB20,000 Yuan plus an interest of 5,734.50 Yuan .

The aforementioned sums shall be paid in full within ten days of the coming into force of the judgment.

The court fees for hearing this case, which amount to RMB135,000 Yuan, shall be borne by the defendant, Vysanthi Shipping Co. Ltd.  of  Cyprus.

If not satisfied with the judgment, the plaintiff may within 15 days upon service of this judgment, and the defendant may within 30 days upon service of this judgment, submit an appeal petition and a copy of same to this court. The appeal case will be heard by Zhejiang Provincial Higher People??s Court (within seven days of filing the appeal, a fee in the amount of RMB 135,000 Yuan for the appeal should be paid in advance .The remittance should be made to: The Agricultural Bank of China, West Lake, Branch, Hangzhou A/C No.:398011029886000402).



Presiding Judge: Wang Beibao

Judge: HU Jianxin

Associate Judge: Xu Yangyong

(sealed by): Ningbo Maritime Court

28 September, 2001

Certified true copy

Clerk: Yin Xiaoming