Civil Judgement of Guangzhou Maritime Court

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Civil Judgement of Guangzhou Maritime Court (2000)GHFSZ No.186

Case of Dispute over Damages under Contract for Carriage of Goods by Sea filed by Hainan Glory Honour Group Co. Ltd. against Far Eastern Shipping Company





GUANGZHOU MARITIME COURT OF PRC



CIVIL JUDGMENT



(2000) GHFSZ No.186



Plaintiff:	Hainan Glory Honour Group Co. Ltd.

Address: 	7th Floor, Dihao Building, Pearl River Square, 

No.2, Long Kun Bei Lu, Haikou, China

Legal Representative:	Cai Qiulong, General Manager

Agent ad Litem:	Du Gang, Lawyer of Guangxin Law Office

Agent ad Litem:	Li Hongzhi, Employee of Hainan Glory Honour Group Co. Ltd.



Defendant:	Far Eastern Shipping Company

Address: 	15, Aleutskaya Street, Vladivostok, 690019, Russia

Legal Representative:	Mr. Victor M. Miskov, Chairman of Board of Directors

Agent ad Litem:	Wang Jing, Lawyer of Wang Jing & Co. Law Firm

Agent ad Litem:	Fu Diyun, Employee of Hainan Southern Marine Consultants?? Service Co., Ltd.



With respect to the case of dispute over damages arising under the contract of carriage of goods by sea filed by the Plaintiff Hainan Glory Honour Group Co. Ltd. against the Defendant Far Eastern Shipping Company, the Supreme People??s Court handed down a ruling on 7 September 2000, ordering that Haikou Maritime Court should transfer this case to the jurisdiction of this court. After this court entertained this case on 15 November 2000, a collegiate bench was constituted in accordance with law. Both parties were summoned to exchange evidence before the court on 27 November and 5 December. A hearing was held openly on 21 December. Mr. Du Gang and Li Hongzhi, the agents ad litem acting on behalf of the Plaintiff, and Mr. Wang Jing, the counterpart acting for the Defendant, attended the proceedings. Now the hearing of the court has been concluded.



The Plaintiff Hainan Glory Honour Group Co. Ltd. complained in its Statement of Complaint that: Hainan Glory Honour Group Co. Ltd. was restructured into a group company, the Plaintiff, which has thereby fully taken over credit rights and debt liabilities of the former. In October 1997, M/V ?°Grigoriy Aleksandrov?± of the Defendant loaded 18,765.002 MT of Prime Steel Wire Rod, of which 9,506.962 MT was involved in controversy. In this case the original bill of lading covering the consignment was held by the Plaintiff. Upon completion of loading, the said vessel commenced her voyage towards the destination port, i.e., Zhanjiang Port, PRC. On 15 October 1997, the Defendant instructed the agent of M/V ?°Grigoriy Aleksandrov?± at Zhanjiang, Zhanjiang United International Shipping Agency Limited (hereinafter referred to as ?°Unisco Zhanjiang?±), to falsely declare to the departments concerned of Zhanjiang Port that the vessel was only laden with 10,000 MT of Prime Steel Wire Rod to be carried into China. As a result of the false declaration of the Defendant, all the cargo carried on board M/V ?°Grigoriy Aleksandrov?± was seized by No.3 Marine Police Team of the Frontier Defence Force of Guangdong Province (hereinafter referred to as ?°Marine Police Team?±) on 26 October. In spite of the Plaintiff??s possession of the original Bs/L, it was unable to take delivery of the cargo 5 months after arrival at Zhanjiang. On 20 March 1998, Marine Police Team raised no objection whatsoever to the cargo and agreed that the cargo of the Plaintiff be handed over to the Customs for disposal. Later, the Plaintiff went through the Customs clearance formalities, but the Defendant still refused to release the cargo without justifiable reasons and deliberately caused harm to the legitimate rights and interests of the Plaintiff. Inspection of the cargo in dispute made by CCIB revealed that there was a shortage of 965.002 MT, and the quality of part of the cargo was not up to the requirement set forth in the Bs/L to the extent that some of the cargo were severely rusted. To sum up the above, the Plaintiff asked the court to order that: (I) the Defendant indemnify the Plaintiff for its economic losses of RMB 15,219,791.43, among which: 1. Loss of shortage of 965.002 MT, worth USD 246,075.51 (converted to RMB 2,040,212.05 on basis of the exchange rate of 8.291); 2. Loss due to inconsistency in quality between the actual goods and those specified in the Bs/L, which amounted to RMB 337,197.60 as loss in respect of quality counted on basis of RMB 60.00 per ton; 3. Loss resulting from breakage and damages of 1,537.38 MT of cargo, which amounted to USD 392,031.90 (converted to RMB 3,250,336.48 on basis of the exchange rate of 8.291); 4. Loss of falling in market price of RMB 6,321,050.40 counted on basis of RMB 740 per ton; 5. Loss of interest amounting to USD 58,519.31 on the cargo cost under the L/C effected by the Plaintiff (accrued from the date of discharge - 7 November 1997 to the date of actual delivery - 15 April 1998 on basis of the corresponding annual deposit interest rate of the People??s Bank of China - 5.5%), (converted to RMB 485,183.60 on basis of the exchange rate of 8.291); 6. Loss of fine amounting to RMB 1,291,199.00 for delayed declaration imposed by Zhanjiang Customs in respect of the cargo in dispute; 7. Loss of overdue open-storage charges of RMB 718,662.30 collected by the terminal; 8. Loss of damage inspection fee of RMB 75,950 collected by CCIB Zhanjiang; 9. Loss of lawyer??s fee amounting to RMB 700,000. (II) Litigious Costs to be borne by the Defendant in the present suit.



Altogether the Plaintiff Hainan Glory Honour Group Co. Ltd. provided this court with 36 evidential documents. 



The Defendant Far Eastern Shipping Company defended that: (I) Hainan Hongjian Trade Co., Ltd. was incorporated on 27 October 1995 and made an application to Hainan Industrial & Commercial Administrative Bureau on 5 June 1997 for changing the name to Hainan Glory Honour Group Co. Ltd. (the Plaintiff in this case). On 11 June, Hainan Industrial & Commercial Administrative Bureau approved the said application submitted by Hainan Hongjian Trade Co., Ltd. and issued to the Plaintiff the Business License of Legal Incorporation on the same day. Since then, Hainan Hongjian Trade Co., Ltd. ceased to be qualified as a civil subject. (II) The 9,506.962 MT of Prime Steel Wire Rod in dispute was imported and transacted after 11 June 1997. However, it was Hainan Hongjian Trade Co., Ltd., although no longer being qualified as a civil subject, who still concluded the sales contract with the foreign party and resold the cargo in dispute to the domestic buyer. Hence, Hainan Hongjian Trade Co., Ltd. was unlikely to have obtained the bill of lading in a lawful way, nor could the Plaintiff succeed to its rights thereunder. (III) It was on 6 November 1997 that M/V ?°Grigoriy Aleksandrov?± completed discharging her cargo and that Marine Police Team issued a List of Detained Articles to the Defendant. The foregoing facts demonstrate that the Defendant, as the actual carrier, had delivered the cargo in sound conditions at Zhanjiang port. It was factually baseless for the Plaintiff to allege that the Defendant refused to release the cargo without justifiable reason. (IV) The reason why Marine Police Team did not agree to hand over the cargo to the Customs for disposal until 20 March 1998 was that the Plaintiff failed to provide to Marine Police Team with the documents pertaining to the importation of the cargo in due course or within appropriate time, thus the consequence arising therefrom should be borne by the Plaintiff. (V) The damage to or shortage of cargo arising after they were discharged off the vessel was not within the scope of responsibility of the carrier and the actual carrier, hence the Defendant should not be liable to make compensation therefor. (VI) It was factually baseless for the Plaintiff to allege that the Defendant had instructed Unisco Zhanjiang to falsely declare the quantity of cargo to be imported into China. (VII) The action brought by the Plaintiff before Haikou Maritime Court exceeded the one-year time limitation. In summary, the Defendant asked the court to dismiss the litigation requests filed by the Plaintiff.



The Defendant Far Eastern Shipping Company has in total provided 21 evidential documents to this court.



After examination, it has been ascertained by this court that:



(I) 	Facts in connection with the carriage, seizure and release of the cargo in dispute



On 12 October, M/V ?°Grigoriy Aleksandrov?± owned by the Defendant drew up the Stowage Plan, in which it was stated that M/V ?°Grigoriy Aleksandrov?± was laden with 3 consignments of cargo in 9,506.962 MT, 4,863.34 MT and 4,394.70 MT, respectively totaling 18,765.002 MT of Prime Steel Wire Rod, and that the loading port was Nakhodka, Russia, and the port of discharge was Zhanjiang, PRC. The specification of the second consignment (4,863.34 MT) was 8.0mm and the quantity was 5,816 bundles, whilst the specification of the third consignment (4,394.70 MT) was 6.5mm, and the quantity was 1,522 bundles. On 15 October, the agent of M/V ?°Grigoriy Aleksandrov?± at Zhanjiang - Unisco Zhanjiang submitted to Zhanjiang Harbor Master an Application for Entry of Sea-going Vessel into the Port, which stated that M/V ?°Grigoriy Aleksandrov?± was estimated to arrive at Zhanjiang port on 19 October, and the vessel was laden with 10,000 MT of Prime Steel Wire Rod to be imported into China. On 16 October, Zhanjiang Harbor Master approved the said application of Unisco Zhanjiang. On 19 October 1997, M/V ?°Grigoriy Aleksandrov?± arrived at the pilot anchorage of Zhanjiang port. On the same day, Marine Police Team seized the vessel at the pilot anchorage of Zhanjiang port. The vessel was laden with the three consignments of cargo specified in the Stowage Plan. The cargo in dispute was the first consignment, i.e., 9,506.962 MT of Prime Steel Wire Rod, of which 4,751.012 MT (9,096 bundles) was of a diameter of 6.5mm, and 4,755.950 MT (9,116 bundles) was of a diameter of 8.0mm. The date of shipment of that (first) consignment was 11 October 1997. The place of origin was Cheliabinsk Steel Plant, Russia. The requirement in respect of quality was GOST380-88, 3SP/PS standard. The unit package was 520 KG per bundle. The unit price was USD 255/MT CIF Zhanjiang. and the total value was USD 2,424,275.31.



On 26 October 1997, Marine Police Team gave a notice to Unisco Zhanjiang to the effect that, as per the instruction of the Department of Public Security of Guangdong Province, they decided to supervise the discharge of 18,765.002 MT of Prime Steel Wire Rod loaded on board M/V ?°Grigoriy Aleksandrov?±, and that the cargo would be temporarily under the custody of Marine Police Team. Thus Unisco Zhanjiang was requested to assist Marine Police Team in discharging and other related work.



On 31 October 1997, Marine Police Team requested Zhanjiang Port Authority to assist in discharging 18,765.002 MT of Prime Steel Wire Rod loaded on board M/V ?°Grigoriy Aleksandrov?±, and to keep the same. Both parties entered into an Agreement on Lumpsum Charges and a Letter of Authorization of Bailment. It was agreed in the Agreement on Lumpsum Charges that the standard for lumpsum port charges was RMB 42/MT, and that the lumpsum charges should not include the expenses for loading cargo onto wagons, the weighing charges or open storage charges, and the open storage charges should be counted at RMB 0.10 /MTday. In the Letter of Authorization of Bailment, Marine Police Team entrusted Zhanjiang Port Authority to keep in custody Prime Steel Wire Rod discharged from M/V ?°Grigoriy Aleksandrov?± for about half a year. On the same day, Marine Police Team asked Unisco Zhanjiang to advise the cargo owners to provide the documents pertaining to importation of the cargo and to come to Zhanjiang for investigation in two days.



On 6 November 1997, M/V ?°Grigoriy Aleksandrov?± completed discharging. On 7 November, the vessel departed from Zhanjiang port.



On 12 November 1997, Unisco Zhanjiang issued a Certificate, stating that Unisco Zhanjiang was disentitled to perform normal formalities for taking delivery of goods for the cargo owners before all the cargo discharged from M/V ?°Grigoriy Aleksandrov?± was released by Marine Police Team from detention.



On 26 March, 1998 Unico Zhangjiang issued a Notice stating that in accordance with the principal??s instruction, although the consignee was holding the original of the bill of lading but they might not take delivery of the cargo, if otherwise Unico Zhangjiang would have to shoulder direct or indirect consequences and all expenses as well. 



On 27 March 1998, Unisco Zhanjiang issued a notice to Zhanjiang Harbor Container Company and Zhanjiang Port Authority respectively to the effect that Marine Police Team decided to hand over the 9,060 tons of Russian steel wire rods of Hainan Hongjian Trade Co., Ltd. discharged from M/V ?°Grigoriy Aleksandrov?± to the Customs for disposal, and the outward custom-clearance formalities might be performed pending the finish of the matter under handling of the customs. The 9,060 tons of steel wire rods referred to in the said Notices are the cargo in dispute. 



On 30 March and 3 April 1998, Zhanjiang Hualian Customs Declaration Co., Ltd. submitted an PRC Customs Declaration Form for Imported Cargo to Zhanjiang Customs in respect of the cargo in question. It was recorded on the Form that the proprietor of the cargo was Harbin Oriental International Trade Co., Ltd., that the consignee was Hainan Hongjian Trade Co., Ltd. and that the cargo was 9,506.962 MT of Prime Steel Wire Rod. Zhanjiang Customs affixed a Chop of Examination upon the above Customs Declaration Form and approved release of the cargo on 7 April. 



As regards the other two consignments of cargo loaded on board M/V ?°Grigoriy Aleksandrov?±, i.e., 4,863.34 MT and 4,394.70 MT of Prime Steel Wire Rod, Marine Police Team advised Zhanjiang Harbor Container Company and Zhanjiang Port Authority on 26 February 1998 that the Department of Public Security of Guangdong Province had made a decision to hand over 9,000 MT of Prime Steel Wire Rod to Auction House of Guangdong Province for auction sales, and Zhanjiang Harbor Container Company and Zhanjiang Port Authority were requested to perform the formalities for delivery of 4,500 tons of the said steel products with a diameter of 6.5mm and 4,500 tons of those with a diameter of 8mm to Auction House of Guangdong Province. In the end, the said cargo was sold by auction at Auction House of Guangdong Province. 



Neither the Plaintiff nor the Defendant raised any objection to the foregoing facts, which are thus confirmed by the collegiate bench.



The Plaintiff submitted the Notice issued by Marine Police Team, which stated that as per the instruction given by the Department of Public Security of Guangdong Province, Marine Police Team decided to hand over the 9,060 tons of Russian steel wire rods of Hainan Hongjian Co. discharged from M/V ?°Grigoriy Aleksandrov?± to the Customs for disposal, and Unisco Zhanjiang was requested to give assistance in this respect. It was on 20 March 1998 that the aforesaid Notice was given. Based on such evidence, the Plaintiff maintained that Marine Police Team noticed Unisco Zhanjiang on 20 March 1998 that they had decided to release the cargo in dispute from detention and hand it over to the Customs for disposal. The Defendant raised an objection in this regard, holding the view that Unisco Zhanjiang received the Notice after 26 March 1998. But the Defendant failed to furnish the relevant documents to support its view. The collegiate bench is of the opinion that in absence of evidence to be presented by the Defendant in support of its view and in refution of the Plaintiff??s allegation, it shall be ascertained that it was on 20 March 1998 when Marine Police Team advised Unisco Zhanjiang of their decision to release the cargo from detention. 



In order to illustrate the circumstances of seizure of M/V ?°Grigoriy Aleksandrov?± at Zhanjiang port, the Defendant submitted the original copy of Explanation on Detention of M/V ?°Grigoriy Aleksandrov at Zhanjiang?± issued by Unisco Zhanjiang on 11 June 1998, and the Port Office of Zhanjiang Municipal People??s Government remarked on the Explanation on Detention of M/V ?°Grigoriy Aleksandrov?± at Zhanjiang on the same day saying that the above statement was in line with the facts. The Plaintiff raised an objection to this evidence, maintaining that such evidence was issued by Unisco Zhanjiang at the request of the Defendant, and Unisco Zhanjiang, as the agent of M/V ?°Grigoriy Aleksandrov?± at Zhanjiang port, had an interest in this case, thus the document issued by Unisco Zhanjiang should not be taken as the basis for ascertaining the facts. Besides, the Plaintiff held that the Port Office of Zhanjiang Municipal People??s Government was not the institution that seized M/V ?°Grigoriy Aleksandrov?±. Thus it was not empowered to certify that the statement made in the above evidence was in line with the facts. The collegiate bench is of the view that Unisco Zhanjiang, as the agent of M/V ?°Grigoriy Aleksandrov?± at Zhanjiang port, had an interest in this case, and that it was Marine Police Team rather than Port Office of Zhanjiang Municipal People??s Government that seized M/V ?°Grigoriy Aleksandrov?±, thus the Explanation on Detention of M/V ?°Grigoriy Aleksandrov?± at Zhanjiang shall not be adopted in lack of other evidence to corroborate it



The Plaintiff alleged that it was on 15 April 1998 that it actually took delivery of the cargo, but the Plaintiff did not furnish the corresponding evidence. The collegiate bench takes the view that there was no evidence supporting the Plaintiff??s allegation in regard to the time of taking delivery of goods, and such allegation shall be dismissed by this court.



(II) 	Legal Status of Far Eastern Shipping Company, Richline Shipping Limited, Sunwoo Shipping Co., Ltd. and Unisco Zhanjiang in the present suit.



The Defendant presented the copies of Fixture Note and Charter Party, holding the view that M/V ?°Grigoriy Aleksandrov?± was voyage-chartered to Linkvest (HK) Co., Ltd. on the subject voyage and that the agent and freight guarantor of Linkvest (HK) Co., Ltd. was Sunwoo Shipping Co., Ltd., and that the Defendant was not the carrier in respect of the carriage of goods in dispute. The Plaintiff objected to both of the said documents, and held that facsimile copies could not serve as the basis for finding the facts. The collegiate bench holds the view that as the two evidential documents are facsimile copies, they cannot serve as the basis for finding the facts in lack of other supporting evidence.



In order to demonstrate that the Defendant was the carrier in respect of carriage of the goods in question, the Plaintiff submitted the Bs/L No.1, No.2, No.3 & No.4, which showed that Richline Shipping Limited issued the Bs/L on behalf of the shipowner Far Eastern Shipping Company. The Defendant did not object to the above bills of lading, and held that it had never authorized Richline Shipping Limited to issue the aforesaid bills of lading. But the Defendant did not adduce any evidence to support its view. The collegiate bench holds that as the Defendant did not dissent to the authenticity of the said Bs/L when the cargo in question was released, thus the said Bs/L could be taken as the basis for finding the facts in this case. On basis of the contents of the Bs/L, the Defendant shall be ascertained as the carrier in respect of the carriage of the goods in controversy and Richline Shipping Limited as the agent of the carrier.



The Defendant maintained that Unisco Zhanjiang was appointed by Sunwoo Shipping Co., Ltd. as the agent of M/V ?°Grigoriy Aleksandrov?± at Zhanjiang. Thus Unisco Zhanjiang was the agent of Sunwoo Shipping Co., Ltd. rather than the agent of the Defendant. But the Defendant failed to provide the relevant proofs. The Plaintiff raised objection to the proposition of the Defendant, and held that Sunwoo Shipping Co., Ltd. was the agent of the Defendant, and Unisco Zhanjiang virtually accepted the Defendant??s appointment as the agent of M/V ?°Grigoriy Aleksandrov?±. In this respect, the Plaintiff submitted the copies of Bs/L covering the second consignment of goods (i.e., 4,863.34 MT of Prime Steel Wire Rod) carried by M/V ?°Grigoriy Aleksandrov?±, which showed that Sunwoo Shipping Co., Ltd. issued the Bs/L on behalf of Far Eastern Shipping Company. The collegiate bench holds that the said Bs/L may be taken as the basis for finding the facts, and, based on the Bs/L, it shall be ascertained that Sunwoo Shipping Co., Ltd. was the agent of the Defendant . In view of the fact that the Defendant was the carrier in respect of the carriage of goods in dispute as well as the shipowner stated in the Bs/L, Unisco Zhanjiang shall be deemed as having been appointed as the agent of M/V ?°Grigoriy Aleksandrov?± at Zhanjiang Port, and that Unisco Zhanjiang was the agent of the Defendant. There was no evidence supporting the Defendant??s allegation that Unisco Zhanjiang was the agent of Sunwoo Shipping Co., Ltd., which shall not be sustained by this court.



(III) 	The facts relating to the Plaintiff??s Title of Suit 



Hainan Hongjian Trade Co., Ltd. was incorporated on 27 October 1995, with its Registry No. being (QQA) 28404121-7, and its legal representative being Liu Bingjian. On 28 May 1997, the Plaintiff submitted to Hainan Industrial & Commercial Administrative Bureau an Application for Registration of Company, which stated that the business term would last from 28 May 1997 to 27 May 2017. The legal representative was Cai Qiulong and the shareholders (sponsors) included Hainan Hongjian Trade Co., Ltd.. On 5 June 1997, Hainan Hongjian Trade Co., Ltd. submitted to Hainan Industrial & Commercial Administrative Bureau an Application stating that Hainan Hongjian Trade Co., Ltd. was to set up a group company, in which Hainan Hongjian Trade Co., Ltd. would be the core enterprise, and that it applied for changing the name of Hainan Hongjian Trade Co., Ltd. into Hainan Glory Honour Group Co. Ltd.. On 11 June, Hainan Industrial & Commercial Administrative Bureau granted approval to the application filed by Hainan Hongjian Trade Co., Ltd., and issued to the Plaintiff the Business License for Legal Incorporation, based on which the date of incorporation of the Plaintiff was the same as that of the Defendant, i.e., 27 October 1995. In the meantime, the Plaintiff also adopted the Registry No. of Hainan Hongjian Trade Co., Ltd.[i.e., (QQA) 28404121-7]. Neither the Plaintiff nor the Defendant raised any objection to the foregoing facts, which shall be thus sustained by the collegiate bench.



The Plaintiff submitted the copy of Sales Contract No.SC/97-08-007, the original bank L/C No.LC51197124, the original telex copy of Bank Acceptance and the Statement of Modification of Subject Entity of the Plaintiff unilaterally issued by the Plaintiff, alleging that Hainan Industrial & Commercial Administrative Bureau did not request Hainan Hongjian Trade Co., Ltd. to hand back the business license and company seal when issuing the business license to the Plaintiff. In order to maintain the consistency of business, the Plaintiff carried on a little amount of business activities in the name of Hainan Hongjian Trade Co., Ltd. within a period after June 1997. Transaction, importation and taking delivery of 9,506.962 MT of Prime Steel Wire Rod are within such business activities. The Plaintiff entered into the Sales Contract No.SC/97-08-007 with Join Basis Limited in the name of Hainan Hongjian Trade Co., Ltd., and purchased 5,000 MT (+ 10%) of Prime Steel Wire Rod with diameter of 6.5mm and 8.0 mm respectively. After the contract was concluded, the Plaintiff, in the name of Hainan Hongjian Trade Co., Ltd., applied to Industrial & Commercial Bank of China Hainan Branch for opening the L/C No.LC51197124 in favor of Join Basis Limited. Upon arrival of the cargo at the destination port, the Plaintiff requested Unisco Zhanjiang to deliver the goods against the original bills of lading again and again, but Unisco Zhanjiang refused to do so on grounds that the cargo had been seized by the marine police, and the cargo owners could not take delivery of the cargo before the marine police lifted the order of detention. In regard to the above evidence submitted by the Plaintiff, the Defendant confirmed that the copy of the Sales Contract No.SC/97-08-007 was consistent with its original copy, affirmed the authenticity of L/C No.LC51197124 and the telex copy of Bank Acceptance, and confirmed that the Industrial & Commercial Bank of China Hainan Branch had accepted payment of the amount USD 2,424,275.31 under the L/C No.LC51197124. But it held that the Statement of Modification of Subject Entity of the Plaintiff was unilaterally issued by the Plaintiff, and could not serve as the basis for ascertaining the facts in this case. The collegiate bench is of the view that the Defendant has confirmed that the copy of the Sales Contract No.SC/97-08-007 was consistent with its original copy and affirmed the authenticity of L/C No.LC51197124 and the telex copy of Bank Acceptance. Thus the object of the Sales Contract No.SC/97-08-007 was just the 9,506.962 MT of steel wire rods in dispute, and the Industrial & Commercial Bank of China Hainan Branch accepted the L/C No.LC51197124 on 27 October 1997. With respect to the Plaintiff??s allegation that Hainan Industrial & Commercial Administrative Bureau did not recollect the business license and company seal of Hainan Hongjian Trade Co., Ltd., that is because Hainan Industrial & Commercial Administrative Bureau approved the incorporation of the Plaintiff, and when the Business License was issued to the Plaintiff, the plaintiff was allowed to continued to use the Registry No. and date of incorporation of Hainan Hongjian Trade Co., Ltd. as those of the Plaintiff, and approved the application of Hainan Hongjian Trade Co., Ltd. for changing its name, thus the allegation of the Plaintiff was factually baseless and shall not be sustained. In addition, the Plaintiff also alleged that, in order to maintain the consistency of business, the Plaintiff concluded the sales contract with Joint Base Limited, applied to the bank for opening the L/C, obtained the Bs/L and declared the goods to Marine Police Team and Zhanjiang Customs for importation in the name of Hainan Hongjian Trade Co., Ltd.. Given that the Plaintiff is the group company redeveloped on basis of Hainan Hongjian Trade Co., Ltd. with the latter being the core, and that the Defendant failed to adduce any evidence contrary to the Plaintiff??s proposition that it engaged in the business activities in the name of Hainan Hongjian Trade Co., Ltd., the plaintiff??s proposition is reasonable and shall be sustained by this court.



The Plaintiff submitted the Certification of Recognition of Hainan Enterprise issued by Commercial & Trading Department of Hainan Province on 22 July 1997, which stated that Hainan Glory Honour Group Co. Ltd. might enjoy the relative rights of the enterprises set forth under Category (I) Article I of Notice of Further Unloosing the Enterprises of this Province in respect of their Freedom of Engaging in Import & Export Trade and the Relative Questions issued by Hainan Provincial People??s Government, within the year in which it was registered and may engage in import & export trade in Hainan within the business scope approved by the industrial & commercial administrative bureau, and that the certificate shall remain valid until 30 June 1998. The Defendant objected to the authenticity and source of such certificate, but it failed to adduce any evidence to the contrary. The collegiate bench is of the opinion that such certificate may be taken as the basis for ascertaining the facts in this case in absence of evidence to be produced by the Defendant to the contrary. Thus the Plaintiff shall be deemed to have the rights of engaging in import & export trade in Hainan.



(IV) The facts relating to the losses in this case



On 10 May 1998, CCIB Guangdong issued a Weight Inspection Certification in relation to the goods in question, certifying that all the said cargo was stacked at the open storage of Zhanjiang Harbor Container Company upon discharge at the port, and that CCIB sent its staff to check the quantity of the cargo on site between 15 April and 8 May 1998, and that the quantity so checked was 8,815 bundles / 8,541.96 tons. The inspection fee was RMB 2,852.



On 12 May 1998, CCIB Guangdong issued a Damage Inspection Certification in relation to the goods in question, certifying that CCIB sent its staff to inspect the damages to the said cargo on site between 21 and 28 March 1998, and found that the cargo was being corroded. Its surface was severely rusted and bundles seemed to be loosening. The depreciation rate of the aforesaid cargo was assessed at 18%, and the cargo sustained a loss of weight for 1,537.55 MT. The damages to the cargo could be attributed to prolonged storage of the cargo at an open storage, and to the exposure to rain and sun as well as humid weather. The inspection fee was RMB 75,950.



On 30 November 2000, Material Information Office of Guangdong Province issued a Certification, indicating that in October, 1997, the unit price of Russian steel wire rod with a diameter of 6.5mm was RMB 2,470-2,520 per ton, and that with a diameter of 8.0mm was RMB 2,450-2,500 per ton. In May 1998 the unit price of Russian steel wire rod with a diameter of 6.5mm was RMB 2,220-2,700 per ton, and that with a diameter of 8.0mm was RMB 2,200-2,250 per ton. 



Neither the Plaintiff nor the Defendant raised any objection to the foregoing facts, which shall be affirmed by this court.



In support of its allegation that no cargo damage or cargo shortage was sustained by M/V ?°Grigoriy Aleksandrov?± at time of discharge on 6 November 1997, the Defendant adduced the following 2 evidential documents: 1. Copies of the List of Damaged Cargo and the List of Shortlanded Cargo issued by Penavico Zhanjiang, which revealed that the steel wire rods discharged from M/V ?°Grigoriy Aleksandrov?± were 18,212 bundles, 1,522 bundles and 5,816 bundles respectively. There was no remark of cargo damage or cargo shortage on the aforementioned copies of the List of Damaged Cargo and the List of Shortlanded Cargo. The copy of the List of Shortlanded Cargo corresponds with the original List of Shortlanded Cargo in the files of (2000) GHFSZ No.145 Case heard by this court. The Plaintiff objected to the above documents, maintaining that the copies could not be accepted as the basis for ascertaining of facts, and that as the Defendant did not submit the concrete proof on basis of which the issuance of the List of Damaged Cargo and the List of Shortlanded Cargo by Penavico Zhanjiang was made, therefore their authenticity could not be determined. The collegiate bench holds the view that the copy of List of Shortlanded Cargo was verified to be the genuine copy of the original, thus it can be taken as the basis for finding the facts in this case in absence of evidence to be provided by the Plaintiff to the contrary. Hence, it shall be established that there was no cargo shortage in respect of the three consignments of cargo discharged from M/V ?°Grigoriy Aleksandrov?± at Zhanjiang, which are in the quantity of 18,212 bundles, 1,522 bundles and 5,816 bundles respectively, totaling 25,550 bundles. As regards the copy of List of Damaged Cargo presented by the Defendant, it shall be dismissed insomuch as there is no other evidence to corroborate it.  2. Copy of the List of Detained Articles issued by the Department of Public Security of Guangdong Province on 6 November 1997, showed that the Department of Public Security of Guangdong Province seized 25,550 pieces / 18,697.1 tons of steel wire rods on 6 November 1997. The Plaintiff raised objection to the form and content of this evidence, holding that the facsimile copy cannot be accepted as the basis for ascertaining facts. The collegiate bench is of the view that the copy of the List of Detained Articles issued by the Department of Public Security of Guangdong Province cannot be taken as the basis for finding the facts in this case in absence of evidence to corroborate it.



In order to support its allegation that the cargo actually taken from at the terminal of Zhanjiang Port was inconsistent with the specifications in the Sales contract, the Plaintiff submitted the Quality Inspection Certificate issued by CCIB Guangdong in respect of the cargo in dispute on 31 March 1998, stating that CCIB Guangdong sent its staff to make an on-site inspection of the said cargo, the outcome of which revealed that the cargo was manufactured by three different plants and packed in three different ways. Among the cargo, 5,598 bundles / 2,922 tons were manufactured by CHELIABINSK with a weight of 520 KG per bundle. 1,294 bundles / 3,726 tons were manufactured by an unknown plant with each bundle being lashed by crude round wire and composed of 8-12 small bundles weighing 3 tons per bundle and 300 kg per small bundle, and 1,923 bundles / 1,607 tons were manufactured by ZAPSIB with a weight of 800 KG per bundle. Upon counting, it was found that in total 5,333 tons of the said cargo was not up to the requirement for the weight of bundles and place of origin set forth in the Sales Contract No.SC-97-08-007. The inspection fee was RMB 46,656. The Defendant did not raise objection to the authenticity of such inspection certificate, but objected to the contents thereof without adducing any supporting document. The collegiate bench is of the opinion that in absence of evidence to be furnished by the Defendant to contrary effect, the aforesaid inspection certificate may be taken as the basis for ascertaining of facts and suffices to prove that among those taken delivery of by the Plaintiff, 5,333 tons of the said cargo was not up to the requirement for the weight of bundles and place of origin set forth in the Sales Contract No.SC-97-08-007.

	

In regard to its proposition that it sustained a loss of quality at RMB 60/MT as a result of inconsistency between the cargo it actually took delivery of and the standard set for in the Sales Contract No.SC-97-08-007 in the weight of bundles and place of origin, the Plaintiff failed to provide the calculation basis for the aforesaid loss of RMB 60/MT. The collegiate bench holds the view that the aforementioned calculation adopted by the Plaintiff was factually groundless and shall thus be dismissed.



The Plaintiff submitted the originals of Sales Contracts for Industrial & Mineral Products No.HJ970911SS & No.HJ980520SS concluded between it and Zhanjiang Xiashan Financial & Trading Enterprise Corp. and Zhanjaing Xiashan Pingtong Trade Co., Ltd. on 15 September 1997 and 20 April 1998 respectively. It was agreed in the Contract No.HJ970911SS that the unit price of steel wire rods with diameters of 6.5mm and 8.0mm was RMB 2,770/MT, and it was agreed in the Contract No. HJ980520SS that the unit price of steel wire rods with diameters of 6.5mm and 8.0mm was RMB 2,030/MT. On basis of these, the Plaintiff alleged that it suffered a loss due to the fall of market prices and that the loss should be calculated at RMB 740/MT. The Defendant held that Hainan Glory Honour Group Co. Ltd. had been terminated by the time the said contracts were signed, thus the said contracts should be null and void. The collegiate bench opines that as the said two contracts are originals, they may be taken as the basis for ascertaining the facts in this case in absence of the evidence to be produced by the Defendant to the contrary. Thus it shall be ascertained that there was a difference of RMB 740 between the unit price of steel wire rod with a diameter of 6.5mm and that of 8.0mm as agreed upon in the Sales Contracts for Industrial & Mineral Products No.HJ970911SS & No.HJ980520SS.



In support of its proposition that it had sustained the loss of fine for delayed Customs declaration, the Plaintiff submitted three Special Invoices of Customs Administrative & Institutional Charges, which showed that Harbin Oriental International Trade Co., Ltd. paid to Zhanjiang Customs the fine for delayed Customs declaration in the amount of RMB 1,291,199 on 30 April 1998. The Defendant made confirmation of the authenticity of the said three documents, but held that such evidence could not prove that the Plaintiff had actually suffered the loss of fine for delayed Customs declaration. The collegiate bench is of the view that the said three documents can only attest that Harbin Oriental International Trade Co., Ltd. paid to Zhanjiang Customs the fine for delayed Customs declaration in the amount of RMB 1,291,199 on 30 April 1998.



The Plaintiff submitted a copy of Bill Specially for Payment of Fine for Delayed Payment of Customs Dues issued by Zhanjiang Customs on 24 July 1998, and held that the Plaintiff paid to Zhanjiang Customs RMB 140,957.92 as the fine for delayed payment. The Defendant averred that the said Bill was merely a facsimile copy whose authenticity could never be confirmed. The collegiate bench opines that as the foregoing evidence is merely a copy, thus it cannot be taken as the basis for finding the facts in this case in absence of evidence to corroborate it.



The Plaintiff presented the original Receipts issued by CCIB Zhanjiang on 24 March 1998 and by Marine Police Team on 30 April 1998. The Receipts revealed that Hainan Hongjian Trade Co., Ltd. paid to CCIB Zhanjiang an inspection fee of RMB 84,431 on 24 March 1998 and paid to Marine Police Team the handling charges, open storage charges and inspection fee totally amounting to RMB 718,662.30 on 30 April 1998. The Defendant dissented from the said documents without adducing any proof to contrary. The collegiate bench is of the opinion that such evidence may be taken as the basis for ascertaining the facts in this case in absence of the evidence to be produced by the Defendant to the contrary. Thus the facts stated therein shall be sustained.



The Plaintiff alleged that it had paid a lawyer fee of RMB 700,000, but did not produce any evidence to support its allegation. The Defendant objected to such claim of the Plaintiff. The collegiate bench takes the view that the foregoing allegation of the Plaintiff was not supported by evidence and shall be thus dismissed.



(V) Other Facts



On 12 March 1999, Haikou Maritime Court accepted the Application for Property Preservation Prior to the Proceedings filed by Hainan Hongjian Trade Co., Ltd., in which the court was asked to freeze up RMB 11,000,000 and its interest obtained by Fesco under the (1998) QJZZ No.99 Civil Judgment handed down by the Higher People??s Court of Hainan Province and deposited in the account of Haikou Maritime Court. On 15 March, Haikou Maritime Court ruled that the application made by Hainan Hongjian Trade Co., Ltd. be approved and that the said sum be reserved. On 18 March, Hainan Hongjian Trade Co., Ltd. brought a lawsuit against Fesco with Haikou Maritime Court. On the following day, Hainan Glory Honour Group Co. Ltd. issued an Application for Modifying the Names of the Plaintiff and the Applicant for Property Reservation Prior to the Proceedings, requesting that Hainan Glory Honour Group Co. Ltd. be substituted by the Applicant for property reservation and the Plaintiff on grounds that Hainan Hongjian Trade Co., Ltd. had changed its name to Hainan Glory Honour Group Co. Ltd.. Hainan Glory Honour Group Co. Ltd. submitted the Statement of Complaint to Haikou Maritime Court, which approved its application and entertained this case.



On 28 December 2000, the collegiate bench confirmed upon consulting with presiding Judge Feng Minggang of Haikou Maritime Court that it was on 19 march 1999 that the Plaintiff submitted to Haikou Maritime Court the Statement of Complaint and the Application for Modifying the Names of the Plaintiff and the Applicant for Property Reservation Prior to the Proceedings. 



At the court hearing, the Defendant submitted that the Plaintiff submitted the Statement of Complaint to Haikou Maritime Court after 14 April 1999 rather than 19 March 1999 on grounds that Hainan Hongjian Trade Co., Ltd. was the Applicant stated in the Ruling on property reservation when Haikou Maritime Court served it on the Defendant on 14 April 1999. When Ms. Fu Diyun, the agent ad litem acting for the Defendant proceeded to Haikou Maritime Court on the same day to read over the court files, she found neither the Statement of Complaint nor the Application filed by the Plaintiff. The Defendant raised dissension from the title of suit of Hainan Glory Honour Group Co. Ltd. on 21 April. As such allegation of the Defendant was in conflict with the facts, it shall be dismissed by this court.



Both the Plaintiff and the Defendant agreed that this case be governed by Chinese law. 



It is unanimously held by the collegiate bench that this case is a dispute over damages arising under the contract of carriage of goods by sea. Both the Plaintiff and the Defendant chose Chinese law as the governing law. In light of the stipulations of Article 145 of General Principles of Civil Law of PRC, the party to an action involving foreign elements may choose the law applicable to the dispute arising out of a contract. Thus the law of PRC shall govern the substantive dispute in this case.



The Plaintiff was a group company redeveloped on basis of Hainan Hongjian Trade Co., Ltd.. On 11 June 1997, the Industrial & Commercial Administrative Bureau of Hainan Province approved the application for changing name filed by Hainan Hongjian Trade Co., Ltd., and issued to the Plaintiff the Business License of Legal Incorporation, in which the Registry No. and date of incorporation of Hainan Hongjian Trade Co., Ltd. continued to be used. Up to then, Hainan Hongjian Trade Co., Ltd. ceased to exist, and was no longer qualified as a civil subject. In order to import the 9,506.962 tons of steel wire rods in question, the Plaintiff concluded the sales contract, applied for opening the letter of credit and obtained the letters of credit in the name of Hainan Hongjian Trade Co., Ltd., so as to maintain the business consistency. Given that Hainan Hongjian Trade Co., Ltd. had been terminated by the time the Plaintiff engaged in the business activities involved in this case in the name of Hainan Hongjian Trade Co., Ltd., the rights and obligations of Hainan Hongjian Trade Co., Ltd. in this case shall be succeeded by the Plaintiff. As the Plaintiff has a direct interest in the present suit, it had the title to sue in this case. The Defendant argued that the Plaintiff was in illegal possession of the bills of lading, thus it could not exercise the rights thereunder. In view of the fact that the Defendant did not object to the bills of lading at time of release of the cargo in dispute, and that Marine Police Team and Zhanjiang Customs considered the cargo in dispute was lawfully imported before they released the cargo from detention, therefore the aforesaid argument of the Defendant had neither factual nor legal basis to support. Thus it shall be dismissed by this court. 



The agent of the Defendant, Unisco Zhanjiang, declared to Zhanjiang Harbor Master in the Application for Entry of Foreign-going Ship that M/V ?°Grigoriy Aleksandrov?± was laden with 10,000 MT of imported steel wire rods. After Marine Police Team checked up the import documents of the cargo in dispute submitted by the Plaintiff, it agreed to hand over the cargo of the Plaintiff to the Customs for disposal, and the Customs released the cargo of the Plaintiff in the end. Therefore, it shall be ascertained that Unisco Zhanjiang had made an import declaration of the 9,506.962 tons of steel wire rods to Zhanjiang Harbor Master, Marine Police Team and Zhanjiang Customs respectively. Given that Unisco Zhanjiang had made an import declaration of the cargo of the Plaintiff, failure of Unisco Zhanjiang to declare the other two consignments carried by M/V ?°Grigoriy Aleksandrov?± did not hinder the Plaintiff from duly taking delivery of its cargo in accordance with law. Given that failure of the Defendant to declare other imported cargo had no causal connection with failure of the Plaintiff to duly take delivery of its cargo, the Plaintiff cannot demand that the Defendant make compensation for the economic losses resulting from its failure to duly take delivery of the cargo, inclusive of the loss due to fall in the market price claimed by the Plaintiff, loss of interest accrued from payment of cargo costs effected by the Plaintiff, loss in respect of fine paid by Harbin Oriental International Trade Co., Ltd. for delayed Customs declaration to Zhanjiang Customs, and the loss in respect of overdue open storage charges incurred.



Presiding Judge Zhan Simin and Judge Huang Weiqing take the view that, based on the Weight Inspection Certificate issued by CCIB Guangdong, the Plaintiff alleged that there was a cargo shortage of 965.002 MT under the Bs/L in controversy. It was stated in the Weight Inspection Certificate that the Plaintiff had taken delivery of 8,815 bundles of cargo, with 9,397 bundles less than the quantity stated in the Bs/L. While the quantity of cargo discharged from M/V ?°Grigoriy Aleksandrov?± was in line with that stated in the Bs/L. Thus the cargo shortage of 9,397 bundles / 965.002 tons did not occur during the period of responsibility of the carrier. Besides, the Plaintiff also alleged that 1,537.38 tons of cargo had sustained damages on basis of the Damage Inspection Certificate issued by CCIB Guangdong. The certificate revealed that the damages to the cargo could be attributed to prolonged storage of the cargo at an open place, and exposure to rain and sun as well as humid weather. Hence, the damage to the cargo in the quantity of 1,537.38 tons did not occur during the period of responsibility of the carrier either. Pursuant to Article 46 of Maritime Code of PRC, which provides that ?°The responsibility of the carrier with respect to non-containerized goods covers the period during which the carrier is in charge of the goods, starting from the time of loading of the goods onto the ship until the time the goods are discharged therefrom?±, the Defendant shall not be liable for the aforementioned cargo shortage or cargo damage claimed by the Plaintiff, which had not been incurred during the period of responsibility of the carrier in respect of non-containerized cargo. 



The Plaintiff alleged that among the cargo in question, manufacturer of 5,619.96 tons of steel wire rods did not meet the records in respect of manufacturers and entries as set forth in the Bs/L and that consequently the Plaintiff suffered a loss of quality at RMB 60/ton. When Marine Police Team appointed Auction House of Guangdong Province to sell by auction the other two consignments of cargo carried by M/V ?°Grigoriy Aleksandrov?±, i.e., 4,863.34 tons and 4,394.70 tons, Marine Police Team merely advised Zhanjiang Port Authority and Zhanjiang Harbor Container Company to hand over 4,500 tons of steel wire rods with a diameter of 6.5mm and 4,500 tons of steel wire rods with a diameter of 8.0mm to Auction House of Guangdong Province for auction sales, but did not set special requirements with regard to the manufacturers and packaging. Therefore, it was no wonder that when the customs consented the plaintiff to take delivery of cargo the Plaintiff discovered the package and manufacturers of the cargo were inconsistent with the requirement stated in the Bs/L. Besides, the Plaintiff did not provide the calculating basis in regard to the quality loss of RMB 60/ton. The claim of the plaintiff in this connection shall thus be rejected by this court.



Since none of the loss of cargo shortage, loss of cargo damage and loss of quality claimed by the Plaintiff are sustained by the court, the Plaintiff??s claim for inspection fees and lawyer??s fee shall be dismissed by this court. 



On 26 March 1998, the agent of the Defendant Unisco Zhanjiang refused to perform formalities for delivery of cargo to the Plaintiff under the circumstance that Marine Police Team had agreed to hand over the cargo to the Customs for disposal. Thus the Defendant constituted a breach of contract by that time and jeopardized the legitimate rights and interests of the Plaintiff. Since the Plaintiff did not adduce evidence to prove the specific scope of and calculation basis for the losses sustained by the Plaintiff counting from 26 March 1998 until the Defendant agreed to release the cargo, up to 30 March with plaintiff making declaration to Zhanjiang Customs, this court has no way to up hold such losses.



The Defendant submitted that the action brought by the Plaintiff before Haikou Maritime Court exceeded the one-year time limitation. It was on 20 March 1998 that Marine Police Team, after checking the import documents of the cargo in dispute presented by the Plaintiff, advised Unisco Zhanjiang to release the cargo in dispute from detention and it was not until then that the Plaintiff was able to ask the Defendant to deliver cargo. Thus the time limitation for this suit should start from 20 March 1998. It was on 19 March 1999 that the Plaintiff submitted to Haikou Maritime Court the Statement of Complaint and the Application for Modifying the Names of the Plaintiff and the Applicant for Property Reservation Prior to the Proceedings. Therefore, the one-year time limitation set forth in Maritime Code of PRC was not expired, thus the Defendant??s defence against the claim filed by the Plaintiff by saying that plaintiff??s suit being time-barred shall be dismissed.



Acting Judge Huang Qingnan took the view that: 



As the carrier in respect of the carriage of goods in dispute, the Defendant was obligated to deliver the cargo to the holder of the bill of lading, i.e., the Plaintiff. In normal circumstances, the carrier should be responsible for maintaining the cargo in sound conditions before delivery thereof and recollection of the bill of lading albeit the cargo has been discharged from the vessel and is stored at the port. Otherwise it should be liable to make compensation. Uts reasoning is that the Port is usually entrusted by the agent of the carrier at the destination port to discharge the cargo and to exercise the obligation of keeping the cargo, and the Port cannot deliver cargo without the consent of the agent of the carrier. The cargo are still under the custody and control of the carrier at that time. But in the present suit, the Defendant has declared the cargo of the Plaintiff for importation, thus failure of the Plaintiff to take delivery of cargo has nothing to do with the Defendant. Besides, the port was entrusted by Marine Police Team to keep the cargo, which was then under the custody of Marine Police Team, thus the Plaintiff was disentitled to ask the Defendant to bear all risks relating to the cargo during the period of custody of Marine Police Team when the Defendant had declared the cargo of the Plaintiff for importation. Therefore, the claim for cargo shortage and cargo damage filed by the Plaintiff shall be rejected. Other opinions of Huang Qingnan are in line with those of the other two members of the collegiate bench.



To sum up the above, a judgment is hereby entered in accordance with the provisions of Article 145 of General Principles of Civil Law of PRC and Article 46 of Maritime Code of PRC, as follows:



The claim filed by the Plaintiff Hainan Glory Honour Group Co. Ltd. against the Defendant Far Eastern Shipping Company shall be dismissed. 



The acceptance fee of RMB 86,109 shall be borne by the Plaintiff.



Any party which is not satisfied with this judgment may submit to this court within 15 days for the Plaintiff and within 30 days for the Defendant the Statement of Appeal with copies according to the number of the opposing parties. The appeal shall be instituted with the Higher People??s Court of Guangdong Province







Presiding Judge: Zhan Simin

Judge: Huang Weiqing

Acting Judge: Hunag Qingnan

(Official Chop of Guangzhou Maritime Court)

Date: April 3, 2001



Court clerk: Xie Lei