HIGHER PEOPLE’S COURT OF GUANGDONG PROVINCE

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   HIGHER PEOPLE??S COURT OF GUANGDONG PROVINCE

   PEOPLE??S COURT OF CHINA

   CIVIL JUDGMENT





   No YFJERZZ.303 (2000)



   Appellant (Plaintiff in First Instance Trial):

	Pearl River Container Transportation Co.,Ltd.

   Domicile:	No.185 Chang Ti Avenue, Guangzhou, China 

   Legal Representative:	Li Ming, General Manager

   Agents ad litem:	Fang Ruifeng??Zhao Dengfeng, Lawyers of Guangzhou Jinma Law Office

	

   Appellant (Defendant in First Instance Trial): P & O Nedlloyd B. V.

	

   Domicile:	3011 XB Rotterdam, Boompjes 40, the Netherlands

   Legal Representative:	R.P.M. van Slobbe, Managing Director

   Agents ad litem:	Wang Jing, Chen Xiangyong, Lawyers of Wang Jing Maritime Law Office, Canton



   With respect to the cases of dispute between the Appellant - Pearl River Container Transportation Co.,Ltd. (hereinafter referred to as ?°Pearl River?±) and the Appellant ¨C P & O Nedlloyd B. V. (hereinafter referred to as ?°Nedlloyd B. V.?±) over the release of cargo without presentation of the original bill of lading, both Appellants refused to accept the No. GHFSZ 61(1998) Civil Judgment entered by Guangzhou maritime Court and filed appeals before this court. After having entertained the case by this court, a collegial bench was duly formed to hold hearings in open sessions. Now the trial of this case has been concluded.



   It was established after examination that: 



On 9, 12 and 15 February, 1996, Pearl River issued the Through Bs/L No.PRBT-96008, No.PRBT-96009 and No.PRBT-96012 from Sanbu, PRC to Shixin Garment Factory who processed the garments as entrusted by the holder of Through Bs/L - D.K. REMINGTON INTERNATIONAL. It was stated in Bs/L No.PRBT-96008 and PRBT-96009 that the shipper was Shixin Garment Factory, the consignee was to order, the carrying vessel was M/V ?°OOCL FAIR?±, the loading port was Sanbu, PRC and the port of discharge was Puerto Quetzal, Guatemala. The cargo under the foregoing two Bs/L were carried in containers No.GSTU5609103 and No.KNLU3071375, which contained 225 cartons of manufactured garments. The aforesaid bills of lading were endorsed by Shixin Garment Factory and the International Commercial Bank of China. The cargo loaded in the said two containers was shipped to Hong Kong under the arrangement of Pearl River and was then transshipped to the destination port. On February 5, NEDLLOYD (H.K.) LTD., as the agent of Nedlloyd B.V., accepted the offer made by Pearl River for booking of shipping space and issued the Booking Notes No.HKGVA207 and No.HKGVA208, in which it was expressly indicated that Pearl River was the shipper. On February 10, the cargo carried in the aforementioned two containers was loaded onto m/v ?°OOCL FAIR?± at Hong Kong. NEDLLOYD (H.K.) LTD., as the agent of Nedlloyd B.V., issued the on-carriage Bs/L No. HKGVA207 and No. HKGVA208 at Hong Kong, in which it was specified that the shipper was Pearl River, the consignee was the holder of the original Bs/L No.PRBT-96008 and No.PRBT-96009, the loading port was Hong Kong and the port of discharge was Puerto Quetzal, Guatemala. It was stated in B/L No.PRBT-96012 that the shipper was Shixin Garment Factory, the consignee was to order, the carrying vessel was m/v ?°NED DEJIMA?±, the loading port was Sanbu, PRC and the port of discharge was Puerto Quetzal, Guatemala. The cargo under the foregoing two Bs/L was carried in container No.TPXU6932857, which contained 225 cartons of manufactured garments. The aforesaid bills of lading were endorsed by Shixin Garment Factory. The cargo loaded in the said two containers was shipped to Hong Kong under the arrangement of Pearl River and was then transshipped to the destination port. On February 9, NEDLLOYD (H.K.) LTD., as the agent of Nedlloyd B. V., accepted the booking of shipping space offered by Pearl River and issued the Booking Note No.HKGYT620, in which it was expressly indicated that Pearl River was the shipper. On 16 February, the cargo carried in the aforementioned two containers was loaded onto M/V ?°NED DEJIMA?± at Hong Kong. NEDLLOYD (H.K.) LTD., as the agent of Nedlloyd B.V., issued the on-carriage B/L No. HKGYT620, in which it was specified that the shipper was Shixin Garment Factory, the consignee was to order, the loading port was Hong Kong and the port of discharge was Puerto Quetzal, Guatemala. Article 25(1) of the aforesaid three sets of Bs/L specified that ?°All actions under the contract of carriage evidenced by this Bill of Lading shall be brought before the Court at Rotterdam and no other court shall have jurisdiction with regard to any such action?±. 



   The container No.TPXU6932857 under B/L No.PRBT-96012 was discharged at Puerto Quetzal, Guatemala at 2400 hours on 23 March, 1996, while the containers No.GSTU5609103 and No.KNLU3071375 under Bs/L No.PRBT-96008 and No. PRBT-96009 were discharged at Puerto Quetzal, Guatemala at 0105 hours on 24 March, 1996. 



   On 19 December, NEDLLOYD (H.K.) LTD. sent a fax to Pearl River, stating that the foregoing cargo had been delivered to the consignee by the Customs of Guatemala according to the agent of NEDLLOYD (H.K.) LTD. at Guatemala. It was also said in the fax that ?°The cargo was placed under the custody of the local Customs upon completion of discharge at Guatemala port. The carrier had nothing to do with the delivery of cargo, and it was the Customs of Guatemala who was the sole organization entitled to dispose of the cargo. Therefore, it was the local Customs rather than the carrier that should be legally responsible. The legal liability assumed by the carrier was terminated once the cargo had been delivered to the local Customs. Pearl River should file the claim directly against the Customs of Guatemala for the loss of cargo?±. 



   Nedlloyd B.V. had not provided to the Court of First Instance the cargo manifest or the relevant statutory provisions of Guatemala pertaining to the care for the goods carried by sea. At the court hearing in the first instance, Nedlloyd B.V. showed the three sets of original on-carriage bills of lading which it collected from Pearl River and which had been endorsed by Peal River . Meanwhile, Pearl River also submitted another set of on-carriage bills of lading without overleaf clauses issued by Nedlloyd B. V. 



   On 3 February, 1997, D.K.REMINGTON INTERNATIONAL commenced the proceedings before the Court of First Instance with the original Bs/L No.PRBT-96008, No.PRBT-96009 and No.PRBT-96012 it possessed on the grounds of the loss resulting from the delivery of cargo without presentation of original bills of lading by Pearl River Container Transportation Co., Ltd. Hong Kong Branch, viz. Pearl River in this case. On 17 February, 1997, the Court of First Instance served the Notice to Reaction, Copy Plaint and the Writ of Summons upon Pearl River . On 6 October, 1998, the Court of First Instance delivered the Civil Judgment No. GHFSZ 13 (1997), ruling that: I. Pearl River shall make compensation for the loss of cargo amounting to US$70,200 and its corresponding interest (accruing from 1 March, 1996 to the day on which the judgment comes into force at the loan interest rate of the circulating fund issued by the People??s Bank of China) to D.K.REMINGTON INTERNATIONAL; II. The litigation request filed by D.K.REMINGTON INTERNATIONAL against Pearl River in this case shall be rejected. Pearl River shall pay the legal fee of US$ 2,560. On the same day, the Court of First Instance handed down the Civil Judgment No. GHFSZ 14(1997), ruling that I. Pearl River shall make compensation for the loss of cargo amounting to US$140,400 and its corresponding interest (accruing from 1 March, 1996 to the day on which the judgment comes into force at the loan interest rate of the circulating fund issued by the People??s Bank of China) to D.K.REMINGTON INTERNA-TIONAL; II. The litigation request filed by D.K.REMINGTON INTERNATIONAL against Pearl River shall be rejected. Pearl River shall pay the legal fee of US$ 4,200. Pearl River refused the aforesaid two judgments delivered by the Court of First Instance and instituted an appeal to the Higher People??s Court of Guangdong Province, which handed down the Civil Judgments No. YFJERSZ 436 (1998) and No.YFJERSZ 437  (1998) as the final judgments, ordering that the appeal be dismissed.



   On 3 March, 1997, Pearl River brought an action against P & O Nedlloyd B.V. Hong Kong Branch before the Court of First Instance on the grounds of release of cargo without presentation of original bill of lading. On 19 September, 1997, Pearl River made an application to the court for joining Nedlloyd B.V. in the proceedings as the co-defendant. The application was approved by the court, which gave a notice to Nedlloyd B.V. for the attendance at the proceedings. Nedlloyd B.V. raised the dissension of jurisdiction within the period of defence. On December 19, 1997, the Court of First Instance rendered a ruling rejecting the dissension of jurisdiction raised by Nedlloyd B.V. This court issued a ruling on 30 March, 1998, revoking the ruling made by the Court of First Instance on the dissension of jurisdiction and rejecting the claim filed by Peal River.



   On 5 June, 1998, Pearl River submitted an application to the Court of First Instance for the arrest of m/v ?°NEDLLOYD LOUTMAN?± owned by Nedlloyd B.V. On 6 July, 1998, the Court of First Instance ruled that the application filed by Pearl River for property preservation prior to the proceedings be approved, and arrested M/V ?°NEDLLOYD LOUTMAN?± of Nedlloyd B. V. at Shekou, Shenzhen on the same day. Pearl River paid to the Court of First Instance the ship arrest application fee of RMB 5,000 and provided the Court of First Instance with a security of RMB 800,000. On 8 July, Nedlloyd B.V. submitted to the Court of First Instance the Letter of Undertaking issued by PICC Guangdong in the amount of US$ 400,000. On the same day, the Court of First Instance lifted the order of arrest of M/V ?°NEDLLOYD LOUTMAN?± and Nedlloyd 

B. V. paid the property preservation execution fee of US$3,000.



   It was held by the Court of First Instance:



   This case was about the claim of recovery of loss filed by Pearl River against the carrier in respect of the second-leg voyage, namely, Nedlloyd B.V. under the circumstance where D.K.REMINGTON INTERNATIONAL, the holder of the through bills of lading, had brought a lawsuit against the carrier in respect of the entire voyage, namely, Pearl River, before the Court of First Instance on the grounds of dispute over release of cargo without the original bills of lading. It was the contract of carriage of goods evidenced by the through bill of lading that determined the rights and obligations between the holder thereof and the carrier in respect of the entire voyage. The carrier in respect of the second-leg voyage, being in charge of sectorial transport of the shipment, was the actual carrier. Hence, the responsibilities assumed by the actual carrier shall be based on the statutory stipulations rather than the contract of affreightment covering the entire voyage. The through bill of lading was not an evidence of the contract of carriage of goods between the carrier in respect of the entire voyage and the carrier in respect of the second-leg voyage. Under the on-carriage bills of lading in question, where Nedlloyd B.V. accepted the offer made by Pearl River for booking the shipping space, Pearl River was the shipper and Nedlloyd B.V. was the carrier in respect of shipment on the second-leg voyage, and the on-carriage bills of lading were the documents evidencing the contract of carriage of goods between Pearl River and Nedlloyd B.V. Therefore, it was the booking notes and the contract of carriage of goods evidenced by the on-carriage bills of lading that determined the relationship between Pearl River and Nedlloyd B.V. in respect of their rights and obligations. Although Nedlloyd B.V. expressly provided in the Bs/L that the law of the country of domicile of Nedlloyd B.V. should be applicable in settling the dispute, Pearl River never accepted such provision. Pearl River and Nedlloyd B.V. did not reach a consensus on the law governing the settlement of dispute in this case, under which Hong Kong was the place where the contract of carriage was concluded as well as the place of shipment, while the Netherlands was the place where Nedlloyd B. V. had its domicile, and Guatemala was the place of destination. All the foregoing places had actual connections with the subject dispute. Since neither party to this action had furnished any law of the aforementioned places nor any legal advice presented by the relevant legal experts therefrom, the law of the PRC shall be applicable to this case in the light of Article 193 of the Opinions of Supreme People??s Court on Several Issues Concerning the Implementation and Enforcement of the General Principles of the Civil Law of the PRC, Nedlloyd B. V. was under the obligation of delivering the cargo to the consignee stated in the on-carriage bills of lading at the destination port. It was stated in the On-Carriage Bs/L No.HKGVA207 and No.HKGVA208 that the consignee was the holder of the original Bs/L No.PRBT-96008 and No.PRBT-96009. Albeit Nedlloyd B.V. had collected the original on-carriage bills of lading, it was still bound to deliver the cargo against presentation of the Through Bs/L as agreed upon. As the aforesaid Through Bs/L were in the possession of D.K.REMINGTON INTERNATIONAL, Nedlloyd B. V. should be liable for breach of contract inasmuch as it failed to fulfill the afore mentioned obligation. Nedlloyd B. V. did not provide the documents in support of its allegation that the said cargo had been placed under the custody of the Customs of Guatemala, thus Nedlloyd B. V. could not be exonerated from the liability for compensation for the loss sustained by Pearl River due to the release of cargo without the original bills of lading. In accordance with the final judgment No. YFJERZ 437 (1998) handed down by the Higher People??s Court of Guangdong Province, the loss suffered by Pearl River including the loss of cargo amounted to US$ 140,400, plus its corresponding interest (accruing from 1 March,1996 to the date on which the judgment comes into force at the loan interest rate of the circulating fund of the People??s Bank of China). The legal cost of US$ 4,200 incurred in the first instance trial should be paid by Nedlloyd B. V. as well. It was specified in the On-carriage B/L No.HKGYT620 that the consignee was to order. It was not stated in this bill of lading that Nedlloyd B.V. should deliver the cargo against surrendering the original through bill of lading at the destination port. Therefore, Nedlloyd B.V., who had collected the original On-carriage B/L No.HKGYT620, should be regarded as having fulfilled its obligation of delivery of cargo as agreed upon. Article 257(1) of the Maritime Code of PRC stipulates: ?°The limitation period for claims against the carrier with regard to the carriage of goods by sea is one year, counting from the day on which the goods were delivered or should have been delivered by the carrier. Within the limitation period or after the expiration thereof, if the person allegedly liable has brought up a claim of recourse against a third person, that claim is time-barred at the expiration of 90 days, counting from the day on which the person claiming for the recourse settled the claim, or was served with a copy of the process by the court handling the claim against him?±. Basing on the foregoing stipulations, Pearl River was entitled to choose to bring up a claim of recourse against Nedlloyd B. V. in this case within 90 days counting either from the day on which it settled the claim filed by D.K.REMINGTON INTERNATIONAL, or the day on which D.K.REMINGTON INTERNATIONAL brought the lawsuit against Pearl River. The wording ?°settled the claim?± can be interpreted as voluntary resolution of the claim by the parties through negotiations or settling the dispute through litigation or arbitration. Such interpretation better accords with the principle of justice. The holder of the Through Bs/L D.K.REMINGTON INTERNATIONAL and Pearl River in this case resorted to legal action to settle the claim between them. Pearl River initiated the action against Nedlloyd B. V. after 90 days counting from the day on which it received the Copy Plaint served by the Court of First Instance upon the holder of the Through Bs/L - D.K. REMINGTON INTERNATIONAL. Apparently, Pearl River chose the day on which the original claim was settled as the starting time for counting the time limitation in respect of the recovery of claim. It was on 22 July, 1999 that the Higher People??s Court of Guangdong Province handed down a final judgment on the case of dispute between D.K.REMINGTON INTERNATIONAL and Pearl River over the release of cargo without original bills of lading. Thus that date should be ascertained as the day on which the party liable settled the claim. The day on which Pearl River brought the lawsuit against Nedlloyd B. V. was still within the 90-day time limitation Period for the recovery of the loss. The proposition made by Nedlloyd B. V. that the action brought by Pearl River had been time-barred was legally groundless and shall be dismissed by the Court of First Instance. In summary, the Court of First Instance handed down a judgment pursuant to the provisions of Article 71 and Article 257(1) of the Maritime Code of the PRC and Article 106 of the General Principles of the Civil Law of the PRC, as follows: P & O Nedlloyd B. V. shall indemnify for the cargo loss of US$ 140,400 and its corresponding interest (accruing from 1 March, 1996 to the day on which the judgment comes into force at the loan interest rate of the circulating fund of the People??s Bank of China) as well as the loss of the legal fee of US$ 4,200 sustained by Pearl River Container Transportation Ltd.. The legal fee for this case amounted to US$ 7,130, of which US$ 3,640 shall be paid by Pearl River and US$ 3,490 shall be borne by Nedlloyd B.V., who shall also pay the application fee of RMB 5,000 and the execution fee of US$ 3,000 in respect of property preservation. 



   In filing an appeal, Pearl River pleaded: 



   The Court of First Instance merely awarded that Nedlloyd B. V. pay US$140,400 to Pearl River as indemnity for the loss of goods, while dismissed another litigation request for the cargo loss of US$70,200 filed by Pearl River Ltd.. Pearl River was thus of the view that part of the findings of facts under the bill of lading in question made by the Court of First Instance was wrong. It was held by the Court of First Instance thus ?°It was specified in the On-carriage B/L No.HKGYT620 that the consignee was to order. It was not stated  in this bill of lading that the defendant should deliver the cargo against surrendering the original through bill of lading at the destination port. Therefore, the Defendant, who had collected the original On-carriage B/L No.HKGYT620, should be regarded as having fulfilled its obligation of delivery of cargo as agreed upon.?± Such finding was absolutely incorrect in that: 1. The alleged On-carriage B/L No.HKGYT620 issued by Nedlloyd B.V. was not collected by Nedlloyd B.V. at the time of delivery of goods at the destination port on 23 March, 1996, but was endorsed and collected by Pearl River on 16 February, 1996 after Pearl River had shipped the cargo under the B/L to Hong Kong and delivered the same to Nedlloyd B.V.. The said on-carriage bill of lading was merely used as a record of takeover of the transshipped goods, and the goods should be released against surrendering the original through bill of lading at the destination port. 2. It was specified in the On-carriage B/L No.HKGYT620 that the shipper was ?°Shixin Garments Factory?± and the consignee was ?°to order?±, and the B/L was endorsed by Pearl River Ltd.. Such bill of lading was extremely irregular. Pearl River wondered under whose instruction Nedlloyd B.V. delivered the cargo: was it Shixin Garments Factory or Pearl River? In accordance with the provisions of Article 79 of the Maritime Code of the PRC and international shipping practice in respect of delivery of goods against the bill of lading, the bill of lading in which it was indicated that the consignee was to order, just like those in which it was indicated that the shipper was to order, must be endorsed by the shipper before it could be assigned to the consignee. 3. It was stated by Nedlloyd B. V. in its fax to Pearl River. Dated 19 February, 1996 that: ?°the cargo was placed under the custody of the local Customs upon completion of discharge at Guatemala port. The carrier had nothing to do with the delivery of cargo, and it was the Customs of Guatemala who was the sole organization entitled to dispose of the cargo. Therefore, it was the local Customs rather than the carrier that should be legally responsible. The legal liability assumed by the carrier was terminated once the cargo had been delivered to the local Customs. Pearl River should file the claim directly against the Customs of Guatemala for the loss of cargo?±. This fax served as an indication that Nedlloyd B.V. itself professed that it had delivered the cargo to the Customs of Guatemala instead of Pearl River Ltd. or other consignee. In addition, Nedlloyd B.V. never furnished any list of goods handed over to the Customs or other consignee, and it was therefore reasonable for Pearl River to suspect that Nedlloyd B.V. had encroached on the goods. In the meantime, it also showed that substantially the withdrawl of the alleged bill of lading by Nedlloyd B. V. and the delivery of goods were two different matters. In other words, it was not because the cargo had been delivered to the actual consignee that the bill of lading was withdrawn from the actual consignee. In summary, the Court of First Instance found that: ?°the Defendant, who had withdrawn the original On-carriage B/L No.HKGYT620, should be regarded as having fulfilled its obligation of delivery of cargo as agreed upon?±. This was the contradiction between the failure of Nedlloyd B.V. in delivering the goods to the consignee, as proclaimed by Nedlloyd B.V., and the alleged circulation of the on-carriage bill of lading. Failure of Nedlloyd B. V. to deliver the goods to the destination port was the substance, while the circulation process of the on-carriage bill of lading was the form. As substance is absolute and negates the form, the finding of facts in relation to the on-carriage bill of lading in question made by the Court of First Instance was incorrect. Basing on the foregoing facts, Pearl River asked the Court of First Instance to order the Respondent to make compensation for the loss of goods in the amount of US$210,600, the interest accrued therefrom (counting from 1 March, 1996 to the day of actual payment at the Loan Interest Rate of Circulating Fund of the People??s Bank of China) as well as the loss of legal fee amounting to US$6760. The legal fees with respect to the court of first instance and court of appeal shall be borne by Nedlloyd B.V. 



   Nedlloyd B. V. contended that : 



   I.	It consented to and accepted the aforementioned findings made in the Civil Judgment No. GHFSZ 61 (1998) delivered by the Court of First Instance. As shown by the merits ascertained by the Court of First Instance, it was specified in the B/L No.HKGYT620 that the consignee was ?°to order?±. The said B/L contained complete and valid overleaf clauses. Hence, as established by the Court of First Instance, the relationship between the parties to the B/L with respect to their rights and obligations should be defined by the said on-carriage bill of lading. In the present case, Nedlloyd B. V. had delivered the cargo to the destination port - PUERTO QUETZAI, Guatemala safe and sound as agreed on in the aforesaid on-carriage bill of lading, and had withdrawn the whole set of the original on-carriage bill of lading. Thus it was entirely correct for the Court of First Instance to hold that ?°the Defendant (Nedlloyd B. V.), who had withdrawn the original On-carriage B/L No.HKGYT620, should be regarded as having fulfilled its obligation of delivery of cargo as agreed upon?±, which conformed to the statutory stipulations and coincided with the facts of this case. Thus such findings should be buttressed by the court of appeal. II. Pearl River, who was not a party to the B/L No.HKGYT620, was disentitled to bring any action against Nedlloyd B. V. in reliance of the said B/L. Article 42(3) of the Maritime Code provides: ?°??Shipper?? means: a) The person by whom or in whose name or on whose behalf a contract of carriage of goods by sea has been concluded with a carrier; b) The person by whom or in whose name or on whose behalf the goods have been delivered to the carrier involved in the contract of carriage of goods by sea?±. It was evident from the foregoing definition that the shipper included the person who concluded the contract of carriage of goods by sea and the person who delivered the goods to the carrier. The essential condition was the conclusion of the contract or delivery of the goods, among which delivery of goods embraced various circumstances, such as: 1. Delivering the cargo directly to the carrier. 2. Entrusting others to deliver the cargo to the carrier in his own name. Under such circumstances, the actual consignee was different from the shipper named in the contract of carriage. 3. Entrusting others to deliver the cargo on his behalf. Under such circumstances, the principal himself was the shipper, while the person who actually delivered the cargo was the one entrusted to deliver the cargo. It could be ascertained from the foregoing ways and means of delivery of cargo that the person who directly delivered the cargo (who may be called ?°the actual shipper?±) was not necessarily the owner of the cargo so delivered. Furthermore, difference existed between the legal relationship of the aforesaid two kinds of shippers and carriers, thus the legal status of the aforesaid two kinds of shippers was distinct. The first kind of shipper may sue the carrier in reliance of the bill of lading regardless of whether the shipper??s name was specified therein. As far as the second kind of shipper was concerned, there was a pure relation of contract (bill of lading) between such shipper and the carrier, all rights and obligations shall be subject to the bill of lading. Hence, in case the second kind of shipper was not named in the box of shipper in the bill of lading, he would be deprived of the status of the party thereto. Since he was not a party to the contract, he was therefore disentitled to enjoy the rights thereunder and was deprived of the title to sue under the bill of lading. In the present case, Pearl River should be conceived as the shipper under the latter circumstance inasmuch as he was entrusted by the contractual shipper - Shixin Garments Factory to hand the cargo over to the carrier. But as by mistake, he had never put down his name in the box of shipper in the bill of lading, he had been deprived of the title to sue under the bill of lading and was disentitled to bring an action against Nedlloyd B.V. in reliance of the same. After negating that Pearl River had the title to sue as the shipper, Nedlloyd B.V. went to deal with the question concerning the burden of proof to be borne by Pearl River in case he attempted to assert the right in the name of the holder of the bill of lading. In this case, if Pearl River wished to assert the rights against Nedlloyd B.V. in the name of the holder of the bill of lading, Pearl River must first adduce evidence to prove that the B/L held thereby was lawful, which signified: 1. The bill of lading must be valid; 2. The holder of the bill of lading lawfully held the bill of lading, i.e., the holder must obtain the bill of lading and the rights thereunder in a lawful manner. Pearl River had never accomplished the aforementioned burden of proof. In the first place, Pearl River was not in possession of any set of original bill of lading, which had already been collected by Nedlloyd B.V. Secondly, even if it was assumed that Pearl River was holding the said bill of lading, the bill of lading must be effectually endorsed by the shipper specified therein when Pearl River asserted the title to the cargo thereunder in reliance of the said B/L which was an order bill of lading. The situation of the present case was that the B/L had been endorsed by the shipper named therein, namely, Shixin Garment Factory, so that, Pearl River had never acquired the rights thereunder. In view of this, Pearl River had no right to assert the rights under the bill of lading in the name of the holder thereof on the basis of the same. The foregoing views of Nedlloyd B.V. gained support from the Ruling No. JHFSCC 41(1993) . Since Pearl River was neither a party expressly indicated in the order bill of lading under consideration (the parties thereto included the shipper - Shixin Garments Factory, the carrier - Nedlloyd B.V. and the consignee - to order), nor the holder of the bill of lading, it ,therefore, did not enjoy the substantive rights to propose delivery of cargo or assert the title thereto against Nedlloyd B. V. In other words, as far as the alleged loss of goods under the bill of lading was concerned, Pearl River was not entitled to sue Nedlloyd B.V.. III. The action brought by Pearl River against Nedlloyd B.V. had been time-barred, and his litigation requests should not be supported by the court and should be dismissed in accordance with law. Time Limitation for Action means that ?°the obligee will be deprived of his right of applying to the court for compelling the obligor to fulfill the obligations according to the litigation procedures, if the obligee does not exercise his right within the limitation period prescribed by law. The limitation period prescribed by law as mentioned herein is called the limitation period for action, that is, the effective time period when the obligee can apply to the people??s court for protecting his rights according to the litigation procedures. At the expiration of the limitation period for action, the obligee will lose the right of applying to the court to compel the obligor to fulfill the obligations according to the litigation procedures. Therefore, the time limitation for action falls within extinctive prescription.?± Time limitation for action has three characteristics, as follows: 1) time limitation for action falls within extinctive prescription; 2) completion of time limitation for action does not extinguish the substantive rights; 3) time limitation for action is a compulsory prescription, that is, the time limitation for action and its specific content must be prescribed by the law of the state, and the whole of the civil subjects is required to conform to it. Any agreements reached by the parties concerned relating to shortening or extending the limitation period for action, or abandoning the benefit of time limitation in advance, shall be invalid. In this case, pursuant to Paragraph 2 of Article 1 of the Hague/Visby Rules to which the two parties involved in the case agreed to apply, i.e. ?°the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered.?± and the definition on time limitation for action mentioned above, any claim against the carrier under the three bills of lading involved in this case shall be brought ?°within one year of delivery of the goods or of the date when they should have been delivered by the carrier?±, counting from March 23 and  24, 1996 on which the goods were discharged from the ship, and in this case, the time limitation for any claims against the carrier should have expired on March 23 and 24, 1997. Besides, in respect of the limitation period for claiming for recourse, it was provided in Paragraph 3 of Article 1 of the Hague/Visby Rules that: ?°An action for indemnity against a third person may be brought even after the expiration of the year provided for in the preceding paragraph if brought within the time allowed by the law of the Court seized of the case. However, the time allowed shall be not less than three months commencing from the day when the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself.?± We can see from the above provision, that after the expiration of the year provided for in Paragraph 3 of Article 1 of Hague-Visby Rules, the time limitation for claiming for recourse against the third party is decided by the limitation period prescribed by the law of the court seized of the case. However, the time allowed should be no less than three months commencing from the day when the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself. According to such a provision, in this case, the limitation period within which the carrier for the entire voyage claimed against the actual carrier was three months, counting from the day on which the Plaintiff was served with the copy of the Statement of Appeal submitted by the B/L holder D.K. REMINGTON INTERNATIOAL on February 3, 1997 and the Notice to Reaction by Guangzhou Maritime Court, that is, the time limitation shall expire on or after May 3, 1997, a period of time counting from the day of the service by the court. In this case, as the fact established by the court of first instance indicated, the Statement of Complaint of Pearl River was dated July 21, 1998, and the court entertained the case on July 24, 1998. The claim was filed far more than one year after the above-mentioned goods arrived at the destination port and far more than three months after Pearl River was served with the copy of the Statement of Complaint of the through B/L holder and the Notice to Reaction of the court. Therefore, the claim filed by Pearl River against Nedlloyd B.V. exceeded the time limitation prescribed by law, thus it shall not be protected by this court. Although on June 5, 1998, Pearl River made an application to Guangzhou Maritime Court for arresting m/v ?°Nedlloyd Houtman?± owned by Nedlloyd B.V., the act of property preservation prior to proceedings occurred after the expiration of the above-mentioned time limitation. For this reason interruption of time limitation had not been constituted. Therefore, no matter viewing the case from whatever angle, Pearl River had lost the protection of law in respect of the time limitation for action and had been deprived of the right to win the lawsuit in this case. Therefore, his litigation requests against Nedlloyd B.V. shall be dismissed according to law. On second thoughts, even the matter of time limitation should be applied by the relevant provisions of the Maritime Code of the PRC, as it was held by the court of first instance that pursuant to Article 257, Paragraph 1 of the Maritime Code of the PRC, the limitation period of 90 days for recourse is counted ?°from the day on which the person claiming for the recourse settled the claim, or was served with a copy of the process by the court handling the claim against him?±. Under this provision, the alternative conjunction ?°or?± has been clearly adopted, which definitely means that one is to be alternatively chosen out of the two. However, the court of first instance held that the wording ?°settled the claim?± should be interpreted as voluntary resolution of the claim by the parties through negotiations or settling the dispute by means of litigation or arbitration. If this be the case, wouldn??t it be senseless in Article 257 of the Maritime Code to say ?°or was served with a copy of the process by the court handling the claim against him?±? So, the parts before and after the word ?°or?± in Article 257 of the Maritime Code would be self-contradictory. How could the settlement by means of litigation either choose effective judgment (perhaps several years after the day the copy of the process was served) or filing the claim for recovery on or after the day when the copy of the Plaint was served? If the legislation was so short of definability, stability and operability, the parties concerned would be at a loss as to what to choose. Such a law will be impossible at all to achieve the essential purpose of legislation for protecting the legitimate rights and interests of the parties concerned. Prof. Zhu Zengjie, Deputy Director of the Drafting Committee of the Maritime Code, presented his views in the column of Zhu Zengjie??s Mail Box in Admiralty Adjudication Vol.2, 1995 that: it is clearly indicated in the above prescription that: ?°1.  The limitation period for a claim of recourse is 90 days; 2. Either within the limitation period (that is, within the limitation period of one year with respect to carriage of goods by sea) or at the expiration of the time limitation (one year), the limitation period for a claim of recourse shall be 90 days; 3. The day from which the time limitation of 90 days for a claim of recourse is counted shall be settled by two ways: (1) counting from the day on which the person claiming for the recourse settled the claim; (2) or was served with a copy of the process by the court handling the claim against him.?± According to his understanding, ?°the first case is such that the two parties have settled the claim, while the second case is with regard to the procedures through which a claim is brought according to law. In the first case, the person claiming for the recourse has settled the claim; in the second case, the person claiming for recourse was only served with a copy Plaint, but he was not ruled to make compensation, still less the compensation has been made and the case has been finalized. According to the above analysis, the first case indicates that as the person claiming for recourse has made compensation to the victim, he is entitled to claim for recourse, therefore it is undoubtedly logical that the time limitation is counted from the day on which the claim was settled; in the second case, a claim has been brought against the person claiming for the recourse, and the court hearing, judgment and enforcement are pending. In case the time limitation for a claim of recourse is counted after the case has been finalized, it will be a waste of time and detrimental to the timely conclusion of the case of recovery.?± According to the above analysis and enunciation of Prof. Zhu Zengjie, , it is obvious that in this case the position of Pearl River falls within the second category of the above said cases. That is, the time limitation of 90 days shall be counted from the day on which Pearl River was served with a copy Plaint of D.K. REMINGTON INTERNATIOAL by the court, and it was not necessary and should not at all be counted after the final settlement of the dispute between Pearl River and D.K. REMINGTON INTERNATIOAL. Therefore, it was entirely wrong for Pearl River to allege that according to Article 257 of the Maritime Code of the PRC, that in this case, Pearl River was still allowed 90 days for the claim even after the compensation was made to D.K. REMINGTON INTERNATIOAL. In the ??Science of International Maritime Law?·published by Beijing University Publishing House with Mr. Chen An working as the editor in chief, as regards the claim against the third party, they hold the view that ??settling a claim??, according to the systematic interpretation principle of ?°the expression of one thing is the exclusion of another?±, is different from ?°bringing a lawsuit?± and falls within the method of settling the dispute outside litigation. It mainly means that the parties concerned held consultations of their own accord and reached an agreement?±. Given the foregoing analysis, the action initiated by Pearl River against Nedlloyd B. V. had been time-barred, thus it should not be supported by this court and should be rejected pursuant to law. 



   Nedlloyd B. V. filed an appeal as follows:



   The court of first instance failed to seize on the key issues of the case during the trial and committed serious deviations in the determination of the limitation of time for claims and the interpretation of the sphere of application of the time limitation for recourse at the expiration of 90 days as prescribed in Article 257 of the Maritime Code of the PRC, so that the conclusion of this case was wrong. I. The court of first instance was wrong in giving holding on the law applicable to this case. 1. The court of first instance was wrong in determining the law and application clause in the overleaf clause of the on-carriage bill of lading involved in the case. The court of first instance held that although it was expressly provided in the Bs/L that the law of the country of domicile of Nedlloyd B. V. should be applicable to the settlement of the dispute, Pearl River had never accepted such provision. Pearl River and Nedlloyd B. V. did not reach a consensus on the law governing the settlement of dispute in this case?±, but Nedlloyd B. V. could not agree to the above view of the court of first instance. In as much as the court of first instance held that it was the booking note and the contract of carriage of goods evidenced by the on-carriage bills of lading that determined the relationship between Pearl River and Nedlloyd B. V. in relation to the rights and obligations, obviously no reason could be found to deny the applicable law expressly provided in the overleaf clauses of the above-mentioned on-carriage bill of lading. Furthermore, it was even groundless for the court of first instance to hold that Pearl River and Nedlloyd B.V. did not reach a consensus on the law governing the settlement of dispute in this case. Firstly, although the on-carriage bill of lading determining the relationship between Pearl River and Nedlloyd B.V. in relation to the rights and obligations was a format contract produced by Nedlloyd B.V., yet the contents of which had been made available to the public, so that any party concerned could freely obtain it from Nedlloyd B.V. and study it before concluding a contract. As one of the largest container liner shipping companies in the world after the amalgamation, Nedlloyd B.V. had a wide range and a huge volume of business, and such information as its liner sailing schedule was regularly published in the world??s major shipping publications.            

   Therefore, any of its business partners could have abundant opportunities finding out Nedlloyd B.V.??s sailing schedule as well as the format and the overleaf clauses of the bill of lading used by Nedlloyd B.V. In this case, as a specialized shipping company with fairly good strength, Pearl River could be comprehensively acquainted with the provisions contained in the liner bill of lading produced by Nedlloyd B.V. in the course of booking the shipping space with Nedlloyd B. V. Furthermore, even in common sense, Pearl River, who was the shipper under the on-carriage bill of lading and arranged for  transshipment of the cargo at Hong Kong for the cargo interests, should also know about the overleaf clauses of the bill of lading involved in this case. Secondly, Pearl River had consigned cargoes to Nedlloyd B.V. for shipment for many times before this consignment, and each time the bill of lading issued to Pearl River by Nedlloyd B.V. was in the same format. Therefore, Pearl River should not and could not deny the fact of knowing of the existence of the ?°Law of Application Clause?± in such bill of lading. Thirdly, in case the law of application clause in the bill of lading was inferred in the logic of the court of first instance, any law of application clause of bills of lading printed in format will no longer bear any significance of existence at all, in that they were not legally binding as they fell within the realm of ?°lack of consensus of the two parties concerned?± as viewed by the court of first instance. Obviously, the standard of ?°consensus?± as concerned by the court of first instance was neither objective nor in conformity with the actual situation. In view of this, Nedlloyd B. V. held that the issue of ?°Law of Application?± contained in the overleaf clauses of the on-carriage bill of lading in this case was the conclusion of the true intention mutually expressed by both parties concerned, which constituted the consensus of the two parties to this case. However, the court of first instance entirely ignored such a consensus reached by the two parties which was revealed from the facts and the internal logic of this case, but wrongly held that Nedlloyd B.V. and Pearl River did not reach a consensus on the law governing the dispute involved in this case. In this regard, Nedlloyd B.V. was of the opinion that this should be corrected by your esteemed court. 2. The court of first instance did not have any holding of the fact that the on-carriage bill of lading had the stipulation in its overleaf clauses that Hague-Visby Rules shall be applied. It was especially worth mentioning that the first Article of the above-mentioned on-carriage bill of lading expressly provided that Hague/Visby Rules were compulsorily applicable to this bill of lading. As to such an explicit stipulation between Nedlloyd B.V. and Pearl River in relation to the law of application, the court of first instance did not have any holding. According to the common understanding of the present international shipping and judicial practices and the provisions of Hague-Visby Rules, the Convention shall be applicable to the bill of lading if: (a) the bill of lading was issued in a contracting State, or (b) the carriage was from a port in a contracting State, or (c) the bill of lading itself provided that the rules of this Convention or legislation of any State giving effect to them were to govern the contract whatever the nationalities of the ship, the carrier, the shipper, the consignee, or any other interested person may be. Pursuant to the above provisions, as in this case, it had been expressly provided in Article 1 of the overleaf clauses of the Bill of Lading that Hague/Visby Rules shall apply, Hague/Visby Rules, as the applicable law in this case, shall be binding upon the two contracting parties to the Bill of Lading with respect to their rights and obligations. In addition, as Hague-Visby Rules itself was not a law of any State, but an international Convention well known in the field of ocean shipping and maritime justice over the world, there was no need of any evidence as to its contents. Pursuant to Article 75, sub-paragraph (2) of Opinions of the Supreme People??s Court on Certain Issues respecting Implementation of the Civil Procedure Law of the PRC that ?°the party concerned is not bound to present evidence for the facts, natural law and theories known to all?±, the party concerned was not bound to present evidence for the contents of Hague-Visby Rules mentioned above. Moreover, even if the court of first instance should require such evidence presentation, Nedlloyd B.V. had already completed the process of evidence presentation in respect of the relevant contents of the Rules in the documents such as the Submissions to the court of first instance. However, being entirely regardless of the consensus reached between Nedlloyd B.V. and Pearl River on the application of law, the court of first instance did not make any holding on the application of Hague-Visby Rules in this case, but subjectively held that the law of PRC shall be applied in Nedlloyd B. V.??s opinion. The above-mentioned view of the court of first instance was wrong as it was obviously in lack of factual and legal basis. 3. The above said view of the court of first instance did not comply with the judicial principle established by the judicial precedents of the Supreme People??s Court. According to retried case concerning dispute over release, taking delivery of and agency release of goods carried by sea without presentation of bill of lading arising between Yue Hai Company, Cang Ma Company and Te Fa Company, and the Case No. JTZ 1(1997) tried by the same court, which were published in the Public Notice of the Supreme People??s Court of PRC, Vol. 1, 1997 by the Supreme People??s Court, a dispute over release of goods without presentation of original bill of lading should be ?°a dispute over contract of carriage of goods by sea?±. On this basis, the Supreme People??s Court admitted the legal force of the law of application clause contained in the Bill of Lading in both of the two cases mentioned above, by holding that Hague Rules and Hague-Visby Rules should be respectively applicable to the two cases, and further holding that the carrier should bring the action for indemnity within one year as provided for in the above-mentioned Rules. Although China is not a case-law country, yet the precedents announced in the public notices of the Supreme People??s Court and the judicial principles established by these precedents are assuredly of fairly good value of reference and certain binding force to the courts at a lower level. In this case, the act of the court of first instance as derogating from the above-mentioned precedents and the judicial principles of the Supreme People??s Court in the trial was obviously improper and shall be rectified according to law. II. The court of first instance was wrong in giving holding on the time limitation for action in this case. Article 1, Paragraph 2 of Hague-Visby Rules which the two parties involved in the case agreed to apply provided: ?°the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered.?± According to this provision and the definition on time limitation for action mentioned above, any claims against the carrier under the three bills of lading involved in this case shall be brought ?°within one year of delivery of the goods or of the date when they should have been delivered by the carrier?±, counting from March 23 and  24, 1996 on which the goods were discharged from the ship, and in this case, the time limitation for any claims against the carrier shall expire on March 23 and 24, 1997. Besides, in respect of the limitation period of claiming for recourse, it was provided in Article 1, Paragraph 3 of Hague-Visby Rules that ?°An action for indemnity against a third person may be brought even after the expiration of the year provided for in the preceding paragraph if brought within the time allowed by the law of the Court seized of the case.          

    However, the time allowed shall be not less than three months commencing from the day when the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself.?± From the above provision, we can see that after the expiration of the year provided for in Article 1, Paragraph 3 of Hague-Visby Rules, the time limitation for claiming for recourse against the third party is decided by the limitation period prescribed in the law of the court seized of the case. However, the time allowed shall not be less than three months counting from the day when the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself. According to such a provision, in this case, the limitation period within which the carrier for the entire voyage entitling to claim against the actual carrier was three months, counting from the day on which Pearl River was served with the copy of the Statement of Appeal submitted by the B/L holder D.K. REMINGTON INTERNATIOAL on February 3, 1997 and the Notice to Reaction served by Guangzhou Maritime Court, that is, the time limitation shall expire on or after May 3, 1997, a period of time counting from the day of the service of the court. In this case, as the fact having been held by the court of first instance indicated, the Statement of Appeal of Nedlloyd B.V. was dated as July 21, 1998, and the court seized of the case on July 24, 1998. The claim was filed far more than one year after the above-mentioned goods had arrived at the destination port and far more than three months after Nedlloyd B.V. had been served with the copy of the Statement of Appeal of the through B/L holder and the Notice to Reaction by this court. Therefore, the claim filed by Nedlloyd B.V. against Pearl River exceeded the time limitation prescribed by law, thus it shall not be protected by this court. Although Pearl River did apply to Guangzhou Maritime Court on June 5, 1998 to arrest m/v ?°Nedlloyd Houtman?± owned by Nedlloyd B.V., yet the act of property preservation prior to proceedings occurred after the expiration of the above-mentioned time limitation, for this reason interruption of time limitation had not been constituted. Therefore, viewing the case from whatever angle, Nedlloyd B. V. had lost the protection of the law in respect of the time limitation for action and had been deprived of the right to win the lawsuit in this case. Therefore, its litigation requests against Pearl River shall be dismissed according to law. On second thoughts, even the matter of time limitation should be applied by the relevant provisions of the Maritime Code of the PRC as it was held by the court of first instance (the grounds for which were the same as in the foregoing Pleadings of Pearl River), the court of first instance had serious mistakes in interpreting and holding the meaning of Article 257 of the Maritime Code, therefore it should be rectified according to law. III. Part of the facts of this case was not ascertained by the court of first instance or the ascertainment was not clear: 1. The court of first instance did not give holding on such an important fact that Nedlloyd B.V. was not the actual carrier of the goods under Bs/L No. HKGVA207 and No.HKGVA208 involved in this case. As revealed by the facts established by the court of first instance, the goods under Bs/L No.207 and No.208 were loaded on m/v ?°OOCL FAIR?± at Hong Kong on February 10, 1996, and were actually shipped to Guatemala per the same vessel. Nedlloyd B.V. was not the shipowner of m/v ?°OOCL FAIR?±. According to the registration of ships in Lloyd??s Register 1995-96, the shipowner of the vessel was Orient Overseas Container Line Ltd. (hereinafter referred to as ?°OOCL?±). For this reason, as regards the two consignments of goods mentioned above, Nedlloyd B. V. was not the actual carrier, but the contract carrier same as Pearl River. The contract carrier, as it was held by the court of first instance, shall not undertake any liabilities for the delivery at the port of destination. In addition, in the court hearing of the first instance, Nedlloyd B.V. merely alleged that the goods were discharged and under the custody of the Customs, but not that the goods were delivered to any receiver, and Pearl River had never presented any evidence that Pearl River delivered the goods to anybody. In fact, basing on the facts mentioned above, the responsibility for delivery of the goods at the port of destination actually should not be undertaken by Nedlloyd B.V. Without even holding on such an important fact that the actual carrier for the consignment of goods was ?°OOCL?±, the court of first instance was obviously groundless in adjudicating that Nedlloyd B.V. undertook the liability for the release of goods at the port of discharge. Nedlloyd B.V. Hereby once again emphatically pointed out that Nedlloyd B.V. was neither the carrier for the entire voyage, nor the actual carrier for the goods involved in this case. Its identity was only the contract carrier under the on-carriage bill of lading involved in this case. In this case, Nedlloyd B.V. had taken back the full set of original on-carriage bill of lading in respect of the two consignments and accomplished his obligation as contract carrier under the on-carriage bill of lading. Therefore, Nedlloyd B.V. shall not be held liable for the losses alleged by Pearl River. 2. Nedlloyd B.V. held that the court of first instance was not clear in holding the following facts in the judgment of the first instance: Did Pearl River exercise due diligence as the carrier for the entire voyage? Did the agent at the loading port fulfill the obligation of delivery as per the through bill of lading? As indicated by the facts established by the court of first instance, Pearl River, as the carrier for the entire voyage, was entrusted by the shipper to ship the goods in question from Sanbu, PRC to Puerto Quetzal, Guatemala, and issued through bills of lading No.PRBT-96008, No.PRBT-96009 and No.PRBT-96012 correspondingly. Pursuant to Article 46 of the Maritime Code of the PRC , the responsibilities of Pearl River, as the carrier of the goods in question for the entire voyage, covered the entire period from the time the carrier took over the goods at Sanbu, PRC, until the goods were delivered at Puerto Quetzal, Guatemala. As regards the normal process of transportation, the actual consignee shall exchange for the on-carriage bill of lading with Pearl River??s agent at the discharging port by surrendering the through bill of lading, which was obtained after payment of the equivalent price, and then exchange for the delivery order by surrendering the on-carriage bill of lading before the goods could be taken. The second-leg carrier??s obligation was fulfilled, as long as he had withdrawn the on-carriage bill of lading issued by him at the port of discharge. In this case, after Nedlloyd B. V. had fulfilled the obligation of presenting evidence by presenting the full set of original on-carriage bill of lading to the court and given proof that Nedlloyd B.V. had properly performed the obligation of the second-leg carrier, the court of first instance had never conducted any investigation to find out whether the carrier for the entire voyage had fulfilled his due obligations. Instead, obviously without any factual basis, the court held that Nedlloyd B. V. should fulfill the obligation of delivery of the goods at the port of discharge, under the circumstances of entirely not knowing whether the carrier should designate the agent at the port of discharge, who was the agent at the port of discharge and whether he had fulfilled the obligation of properly delivering the goods which should have been performed by the carrier for the entire voyage. 3. Nedlloyd B. V. could not agree to the holding of the court that as Nedlloyd B. V. had not provided with the court the list of the articles handed over to the Customs, it was unable to hold that the carrier had fulfilled his obligation of delivery of the goods. After the goods arrived at the port of destination, Nedlloyd B.V. had withdrawn all the three sets of original on-carriage bills of lading which were issued by itself, and delivered the goods to the Customs for supervision according to the regulations of the port of destination. Therefore, as the second-leg carrier, Nedlloyd B.V. had properly fulfilled all the obligations that

it should fulfill according to the provisions of the on-carriage bill of lading, and completed the carriage he was in charge of. As mentioned above, the obligation of release of goods at the port of destination was undertaken by Pearl River as the carrier for the entire voyage. Therefore, Pearl River shall be held liable for presenting evidence in respect of release of goods at Guatemala. The court of first instance made no ruling on the afore-mentioned evidential documents furnished by Nedlloyd B.V., but on the contrary, determined that Nedlloyd B.V. had not properly fulfilled the obligation of delivery of cargo on the grounds of its failure in discharging the burden of proof in the judgment. The court of appeal was called upon to redress the mistake made by the court of first instance in this respect. IV. The court of first instance partially violated the procedural law in hearing the present case. In this case, the court of first instance established that Nedlloyd B.V. made an indemnity on the basis of the amount of liability to be borne by Pearl River to the holder of the through Bs/L as determined in the Civil Judgments No. YFJERS 436 and 437 (1998) handed down by the Higher People??s Court of Guangdong Province on 22 July, 1999. As shown by the facts in this case, the last round of court hearing was held on 14 April, 1999 , earlier than the time when the foregoing judgments were rendered. Subject to the said provision of the Civil Procedure Law, if the court of first instance intended to rule on the onus to be borne by Pearl River by reference to the amount ascertained in the aforesaid two judgments, then the two judgments should have undergone the legitimate procedures for cross-examination. But in effect, the aforesaid judgments had never been cross-examined by Nedlloyd B.V. and Pearl River at the court hearing, nor had Nedlloyd B.V. any opportunity to plead for the amount ascertained therein. Hence, Nedlloyd B.V. took the view that the court of first instance failed to follow the statutory procedures for cross-examination when determining the amount of indemnity in this case, thus such mistake should be rectified by the court of appeal, and the litigation requests filed by Pearl River in the first instance should be dismissed in accordance with the law. In summary, Nedlloyd B.V. requested the court of first instance to amend the first and the second items of the original judgment according to law, to order that Nedlloyd B.V. be not liable for the losses alleged by Pearl River, and adjudicate according to law that Pearl River bear the legal fees in the first and the second instances of this case. 



Pearl River argued: I. Whether the overleaf clauses of the memo bills of lading for the second-leg voyage were valid and whether the present suit was time-barred became the focus of attention of the dispute between the two parties. Container Ltd. was of the opinion that this case should be governed by the law of the PRC, and it was not  time-barred. Thus Nedlloyd B.V. should be liable to make indemnity for its failure to deliver the goods as agreed upon. II. In this case, the memo bill of lading for the second-leg voyage could not regulate the acts of both parties in transportation. 1. In this case, the memo bill of lading for the second-leg voyage, which had been regained on the spot at the office of Nedlloyd B.V. in Hong Kong, the port of shipment, was devoid of the functions and features of the bill of lading regarding ?°the document based on which the carrier undertakes to deliver the goods against surrendering the same?±. Hence, it was not a bill of lading in legal sense, but the evidence of the taking over of the goods by Nedlloyd B.V. (1) The procedures for issuing the memo bill of lading for the second-leg voyage to Container Ltd. by Nedlloyd B.V. was as follows: Container Ltd. transported the cargo to Hong Kong and handed it over to Nedlloyd B.V. After Container Ltd. paid the freight, Nedlloyd B.V. informed Container Ltd. to send its staff to the Hong Kong office of Nedlloyd B.V. and affix its seal on the reverse side of the memo bill of lading for the second-leg voyage, which was later regained on the spot by Nedlloyd B.V. , who gave the short form bills of lading without overleaf clauses to Container Ltd. instead. The seal affixed by Container Ltd. on the bills of lading served as the evidence of payment of freight, and Nedlloyd B.V. would not release the cargo to the holder of the original bills of lading at the destination port without the endorsement made by Container Ltd.. As stated by Nedlloyd B.V. in his Statement of Appeal, before Container Ltd. consigned the cargo in dispute to Nedlloyd B.V. for shipment, Container Ltd. had entrusted Nedlloyd B.V. to transship the cargo for many times, in which cases Nedlloyd B.V. had issued the bills of lading in the same form as those of Container Ltd. (2) It was stated by Nedlloyd B.V. in his Statement of Appeal that Nedlloyd B.V. had withdrawn the full set of original bills of lading (3/3) issued by it after shipping the cargo to the destination port, and had handed the cargo over to the local Customs for supervision as per the regulation of the port. This was a story fabricated by Nedlloyd B.V. In accordance with shipping practice, the procedure for ?°delivering the goods in exchange for the bill of lading?± in respect of the delivery of goods at the destination port is that the carrier hands over the cargo to the consignee, who endorses the bill of lading, which is then regained by the carrier. But in the present case, despite the fact that the memo bill of lading for the second-leg voyage endorsed by Container Ltd. was still held by Nedlloyd B.V., Nedlloyd B.V. did not deliver the cargo to the consignee. Evidently, the memo bill of lading for the second-leg voyage issued by Nedlloyd B.V. was not regained after delivery of goods at the destination port, but was withdrawn at the time of transshipment at Hong Kong. (3) Nedlloyd B.V. stated in the fax d