BEIHAI MARITIME COURT

PEOPLE??S COURT OF CHINA

CIVIL JUDGMENT


No. Hai-Shi-Chu 002(2001)


Plaintiff: 	Shenzhen Xunlong Shipping Co., Ltd.

Domicile: 	2nd Floor, Shekou Station, Shenzhen, Guangdong Province

Legal Representative:	Cui Tieying, General Manager

Agents ad Litem: 	Zhao Jinsong, legal Counsel

Deng Xiaomao, Lawyer of Guangdong Qizheng Law Office


Defendant:	Jinwan Trade Co., Ltd., Fangchenggang

Domicile:	Xingang Road, Jinsha, Gangkou District, Fangchenggang, Guangxi

Legal Representative:	Weng Zhaojin, General Manager

Agent ad Litem: 	Yin Nianchang, Male, Han nationality, Teacher at Zhanjiang Oceanography University


Defendant: 	Guangxi Ocean Shipping Co., Ltd.

Domicile:	No. 37, Gucheng Road, Nanning, Guangxi

Legal Representative:	He Jianping, General Manager

Agent ad Litem:	Yuan Xiaoyong, Lawyer of Yongjiang Law Office


This court, after entertaining the cases of dispute over compensation for damage arising from collision of ships between the plaintiff Shenzhen Xunlong Shipping Co., Ltd. and the defendants Jinwan Trade Co., Ltd., Fangchenggang (hereinafter referred to as ?°Jinwan Co.?±) and Guangxi Ocean Shipping Co., Ltd. (hereinafter referred to as ?°Ocean Shipping Co.?±) on 9th January, 2001, duly formed a collegial bench and evidence was exchanged before the court on 28th March, 2001. The court held public hearings on 29th March and 12th November, 2001 respectively. Zhao Jinsong and Deng Xiaomao, the agents ad litem of the plaintiff, Weng Zhaojin, the legal representative of the defendant Jinwan Co., his agent ad litem Yin Nianchang,  and Yuan Xiaoyong, the agent ad litem of the Defendant Ocean Shipping Co. attended the court hearings. Now this case has been concluded.


The plaintiff alleged that: at 2100 hrs of 7th September, 2000, the passenger ship Xun Long 2, owned by the plaintiff, left HK-Macao Wharf, Hong Kong. After it entered the North Channel, Xun Long 2 sighted a small cargo vessel (Xiong Chang 1, owned by the defendants) approaching on starboard bow. Xun Long 2 took prompt emergency measures to avoid collision by sounding one-blast signal, reducing her speed and stopping her engine urgently. However, the ships still collided with each other at 2106 hrs. The accident was caused by Xiong Chang 1??s failure to maintain a proper look-out, to proceed at a safe speed, choose the right time to cross the channel and take effective action to avoid collision when risk of collision existed. Xiong Chang 1 seriously breached the International Regulations for Preventing Collisions at Sea and thus shall be solely liable.. After the accident, Xun Long 2 reported the accident to Hong Kong Maritime Department in time and applied to China Classification Society (CCS) for survey. As a result of the accident, Xun Long 2 sustained losses of RMB 3,066,002.10 including cost of repairs, loss of time and so on. Therefore, the court was pleaded to enter a judgment ordering the defendant to compensate the plaintiff for the aforesaid loss and bear the legal cost of this case.


The defendant Jinwan Co. defended that the collision proved to be true. However, Xun Long 2 proceeded in the channel at a high speed with bad lookout. Therefore, the majority of liability for the collision should fall on the plaintiff while the minor on the defendant. Among the cost of repair of the plaintiff??s ship, those items which didn??t come under or result from the collision such as the cost of repairs of the main propeller and the expense for changing the window curtains and the carpets, all of which shall be deducted from the cost of repairs alleged by the plaintiff. The consequential loss shall not be certified as the losses to be compensated for. The defendant shall only be liable for the losses caused by the collision in proportion to the extent of the liability it shall bear.


The Defendant Ocean Shipping Co. defended that this company was neither the shipowner nor the operator of Xiong Chang 1 and the crew members on board the ship were not manned by this company. Therefore, this company should not be held responsible for the dispute over the collision.


After examination, it was established that at 2100 hrs of 7th September, 2000, Xun Long 2, owned by the plaintiff, left Hong Kong-Macao Wharf, Zhonghua, Hong Kong for Shekou, Shenzhen with 35 passengers on board. Liang Zewen, the master, was steering the ship; Zhang Sian, the chief mate, and Zheng Dong were monitoring the night visual instrument and radar plotting; Fan Dongben, the engineer, was monitoring the engine. After leaving the wharf, Xun Long 2 entered the North Channel of Victoria Port, approaching Buoy No. 4 on a true course of 320 deg. and at a speed of 32 knots (the ship held the Certificate of Speed Immunity issued by Hongkong Channel Authority permitting the ship to sail at the speed of 30 knots in the channel.).  At 2035 hrs, Xiong Chang 1, owned by the defendant, left Cuiyong Container Terminal for the anchorage to wait for berth while Su Weicheng, the second mate, was steering the ship; Gao Yingguang, the master, was controlling the speed; Weng Zhaojin, the able-seaman, was engaged in radar-plotting. At that time, the weather in the water area of Hong Kong was excellent. The wind was northeasterly force 4; the sea was slight. The visibility was 3-5 miles. At 2107 hrs, in the vicinity of Long. 114º7??30??E, Lat. 22º9??12??N, Xun Long 2 sighted Xiong Chang 1 at a distance of about 0.4 mile forward of her starboard beam and sounded one-long-blast and made a hard-to-port to avoid collision. However, before the rudder effect came into force, Xiong Chang 1 collided at an angle of about 

90ºon her frames no. 18-23 of her starboard side. Only 20 seconds after sighting of Xiong Chang 1 by Xun Long 2, the collisions of the two ships occurred. Xiong Chang 1 submitted that she was proceeding on a true course of 220 deg. and at a speed of 4-5 knots, and that 10 seconds after the sighting of yellow light and red-blue side-light of Xun Long 2, the collision occurred. The radar monitoring plan made clear that neither ship took any action of reducing speed nor maneuvering to avoid collision. After the collision, Xun Long 2 was permitted to send the injured passengers on board back to Hong Kong-Macao Wharf for medical treatment at a slow speed. At that night, Xun Long 2 was towed to Hong Kong Friendship Shipyard Co., Ltd. (hereinafter referred to as ?°Friendship Shipyard?±) for berthing and repair.


On 8th September, 2002, CCS, entrusted by the plaintiff, and China Survey Co. Ltd. who was entrusted by Huaan Property Insurance Co., Ltd., the insurer of Xun Long 2 and (China Survey Co. Ltd. in turn entrusted Hong Kong Marine Survey Co., Ltd. to carry out the survey on the spot), inspected the damage arising from collision jointly and issued the written reports respectively. As confirmed by the parties at the court hearing, the survey report No. 2000BS2256 issued by China Survey Co., Ltd. could be taken as documentary evidence to prove the damage to Xun Long 2. The report stated: ?°All damage to Xun Long 2 was in the position between frame No. 18 and frame No. 23, indicating that Xiong Chang 1 collided on the frames 18-20 of Xun Long 2 at right angle and all the damage was above the water line. The report listed 30 items of damage to Xun Long 2 in 8 categories and estimated the cost of repairs at HK$1,350,000.00. Afterwards, the plaintiff entrusted CCS to inspect Xiong Chang 1. Gao Yingguang, the master of the ship, did not allow the surveyor of CCS to come on board who thus failed to conduct the survey. However, when inquired by Hong Kong Marine Department, the master and Weng Zhaojin, the sailor, admitted their not having been trained or having been trained only for about 2 days to conduct the radar plotting and lacking of fundamental idea of maneuvering ships. Gao Yingguang, the master, alleged in the marine investigation report that the paint on the port bow of Xiong Chang 1 was scraped off. 


Xun Long 2 was repaired at Friendship Shipyard from 8th September to 15th October, 2000, during which the plaintiff put the ship into operation from 30th September to 8th October for the National Holiday operation. During the period when the ship was repaired at Friendship Shipyard from 8th September to 29th September and from 9th October to 15th October, in order to maintain the normal operation of the voyage from Shekou to Hong Kong, the plaintiff chartered a passenger ship twice from other company to take the place of Xun Long 2.


The plaintiff submitted to this court the invoices for the payment of various expenses including towage paid to Friendship Shipyard, cost of repairs, hire paid during the time the ship was under repair, port dues, cost of bunker and lubricating oil, survey charges paid to CCS, expenses of boarding and traffic of the passengers delayed due to the collision, traffic and communication expenses for settling this accident, fee of marine investigation, legal consulation fee and lawyer??s fee, totaling HK$3,066,002.10, which included towage after the collision in the amount of HK$45,745, cost of repairs of the life rafts in the amount of HK$73,020, cost of repairs charged by Friendship Shipyard in the amount of HK$1,500,880 which included HK$151,402.50 for the cost of repair of the main propeller, cost for change of releasers of the life rafts, cost for change for new window curtains and new rugs, cost of repair of engine, additional expenses arising from temporary operation on the National Holidays and the added wharfage and mooring charge arising therefrom; HK$600,000 and HK$190,911 for the hire of the chartered ship from other company to take the place of Xun Long 2 from 8th September to 29th September, 2000 and from 8th October to 15th October, 2000 respectively; and HK$391,708 for bunker, HKS9,894.80 for lubricating oil, HK$119,017 for port dues occurred during the chartering period; HK$32,100 for survey fee for CCS; expenses for boarding and traffic of the passengers delayed due to the collision in the amount of HK$15,638.30; expenses of traffic and communication for settling this accident in the amount of HK$15,020; fee of marine investigation in the amount of HK$2,931; HK$5,000 for legal consultation fee; and HK$64,137 for lawyer??s fee.


It had also been established that Xun Long 2 was a twin aluminium alloy speedy passenger ship built in Norway in August 1998 with the following particulars: LOA 38m, breadth 11.20m, depth 3.90m, GT 531 MT, NT 159 MT and HP 3,152 KW. The Certificate of Vessel??s Registration was obtained on 14th August, 1998 and the owner was the plaintiff. 


Xiong Chang 1 was a general cargo ship built in Vietnam and registered in Fangchenggang, Guangxi Zhuang Autonomous Region. The particulars of the ship were as follows: LOA 53.55m, breadth 7.63m, depth 3.2m, GT 298 MT, NT 176 MT and HP 224 KW. The ship held two sets of certificates, one of which included the Certificate of Vessel??s Registration of the PRC stating that the ownership was obtained on 12th June, 1996, and the Nationality Certificate of PRC which was valid from 12th June 1996 to 12th June 2001, both of which showing that the registered shipowner was Jinwan Co. and the legal representative of the shipowner was Weng Zhaojin; the other set contained the Certificate of Vessel??s Nationality of the PRC which was valid from 21st November, 1997 to 20th November, 2002, and several Permits for Sailing at Hong Kong and Macao which were valid from May, 1997 to 30th May, 2000, from 18th September, 1997 to 17th September, 2000, from 30th May, 2000 to 30th May, 2002 respectively, both of which showing that the shipowner and the operator was the defendant Ocean Shipping Co.. Jinwan Co. was a private company under the name of Weng Zhaojin. Because individual ship operators were not allowed to operate on international ocean shipping, the company, on 20th July, 1997, entered into a ship management agreement with Ocean Shipping Co. which stipulated: The ownership of Xiong Chang 1 remains with Jinwan Co. The Ocean Shipping Co. consented that Jinwan Co. may go through the shipping procedures including the certificate of registration, Operation Certificate under the name of Ocean Shipping Co.. Shipping Operation Area: Coast of China including Hong Kong and Macao and from China to Vietnam. Management Duration: 1997 to 1998; Ocean Shipping Co., as the manager, shall be entitled to be paid the management fee in the amount of RMB30,000 per year by the shipowerner and the operator. Afterwards, Xiong Chang 1, as agreed, was registered under the name of Ocean Shipping Co. and acquired the permit for undertaking ocean shipping business for voyages to Hong Kong and Vietnam. However, Jinwan Co. did not pay the management fee to Ocean Shipping Co. as agreed. After the expiration of the management agreement, Ocean Shipping Co neither applied to relevant authorities for canceling the ocean shipping permits and the corresponding certificates obtained by Xiong Chang 1 under the name of Ocean Shipping Co., nor publicly declared to rescind the management relationship with Jinwan Co.. Jinwan Co. was engaged in ocean shipping all the time under the name of the Ocean Shipping Co. while Ocean Shipping Co. did not manage the ship in reality.


The aforesaid facts being supported by the documents submitted by the plaintiff were cross-examined by the parties and recognized by the collegial bench.  The documents submitted by the Plaintiff were: certificates of both ships; Certificate of ship??s Nationality; deck log book of Xun Long 2; Marine Accident Reports filled in by both ships after the collision for Hong Kong Marine Department; Hong Kong Marine Department??s Ascertainment Opinions on the accident; radar plotting plans; list of cost of repairs and other vouchers from the Friendship Shipyard; survey reports of CCS and China Survey Co., Ltd., Those submitted by the Defendant were Ship Management Agreement, Hongkong Maritime Safety Administration??s Investigation Document and the record of court hearings by this court.


This court held that this was a case of dispute over the compensation for damages arising from collision of ships. Both defendants had their domicile in Guangxi and the plaintiff brought an action claiming compensation for damage arising from collision before this court. Therefore, this court had jurisdiction pursuant to law. Although the accident occurred in the waters of Hong Kong, both the plaintiff and the defendants were in mainland China and the ports of registry were in China too. Therefore, according to paragraph 3 of Article 273 of the Maritime Code of the PRC: ?°If the colliding ships belong to the same country, no matter where the collision occurs, the law of the flag state shall apply to claims against one another for damages arising from such collision?±, the International Regulations for Preventing Collisions at Sea, 1972 and relevant laws of the PRC shall be applied.


The actual owner of Xiong Chang 1, the defendant Jinwan Co., was not qualified to engage in international ocean shipping. Obtaining relevant de jure qualification by registering the ship under the name of the other company certainly did not make the ship meet the statutory seaworthiness requirements objectively or de facto. The ship??s complement, from the master to the sailor on duty, being not acquired necessary professional skills or fundamental knowledge on ocean shipping, were not good at operating the radar on board for making radar plotting or equivalent systematic observation, and were not familiar with the navigation rules of look-out, crossing narrow channels or fairways prescribed by the International Regulations for Preventing Collisions at Sea, even didn??t understand them at all. When intended to cross the channel, the ship did not observe nor found out the sailing of the ships in the channel and the surroundings closely, ie. it failed to maintain a proper look-out by sight and hearing as well as by all available means appropriate in the prevailing circumstances and conditions, and consequently failed to sight Xun Long 2 sailing at high speed in the channel. It was only 10 seconds after the ship Xiong Chang 1 crossed the channel rashly and sighted Xu Long 2 that the two ships collided with each other. Obviously, the close-quarters situation had already arisen at the moment when Xiong Chang 1 crossed the channel. According to Article 5 and paragraph 4 of Article 9 of the International Regulations for Preventing Collisions at Sea, 1972 which provides: ?°A vessel shall not cross a narrow channel or fairway if such crossing impedes the passage of a vessel which can safely navigate only within such channel and fairway?±, Xiong Chang 1 was negligent in look-out and should not cross the channel when there were ships sailing there. Therefore, the greater share of the blame for the close-quarters situation should be attributed to her. Although Xun Long 2 held the Speed Immunity Certificate issued by Hong Kong Fairway Administration allowing her to proceed in the channel at the speed of 30 knots, that didn??t mean that she could proceed in the channel at that high speed at any time under any circumstances. When the visibility was less good in the evening than in day time and the North Channel of Port Victoria was very busy, Xun Long 2 should have proceeded at a safe speed, as appropriate, taking into account the time, place and so on. In fact, Xun Long 2 took a laissez-faire attitude towards the safety of herself and any other ship by proceeding at a high speed all the time. Xun Long 2 was at fault in the occurrence of the accident. The fact that it was about 0.4 mile between the two ships when Xun Long 2 sighted Xiong Chang 1 and though maintained a look-out before the sighting, Xu Long 2 failed to sight Xiong Chang 1 meant that Xung Long 2 was at fault in maintaining a proper look-out. For a ship proceeding at a speed of 30 knots, the distance of 0.4 mile could not allow sufficient time and distance for it to take effective action to avoid collision. Therefore, it could be established that before the sighting of the Xiong Chang 1, the close-quarters situation had already been there. Xun Long 2 was blamed for causing the close-quarters situation. Under the close-quarters situation, Xun Long 2 alleged that one long blast was sounded by her to warn Xiong Chang 1. However, under such conditions, the International Regulation for Preventing Collision at Sea provided that the ship shall immediately give at least five short and rapid blasts on the whistle and such signal may be supplemented by a light signal of at least five short and rapid flashes. The action of sounding one long blast was far from being enough. Though made a hard-to-port to avoid collision, there was no positive result in Xun Long 2??s attempt to avoid collision and it was collided by Xiong Chang 1 almost at right angle. Evidently, it was impossible for the ship proceeding at a high speed to take effective actions to avoid collision in such a short time and distance. In fact, the relevant evidence made it clear that up to the collision, neither ship took actions to alter the route or slow down the speed. According to the rule that the blame for causing close-quarters situation is the main principle for the apportionment of liability, while whether the action to avoid collision was taken as a minor point for considerations and under the provisions of Articles 5, 6, 7, 8, 9, 34 of the International Regulation for Preventing Collision at Sea, 1972, taking into account the circumstances under which the close-quarters situation came into existence, and whether the action to avoid collision was taken, also whether such action was appropriate and effective, this court held that the major share, ie. 70% of the liability, should be attributed to Xiong Chang 1, while the minor share, ie. 30% to Xun Long 2. The defendant Jinwan Co.??s defense that the main responsibility for the collision must fall on Xun Long 2 was contrary to the facts ascertained by this court and thus was not tenable. 


The cost of repairs of Xun Long 2 charged by the Friendship Shipyard was HK$ 1,500,880. However, because the damage to the ship caused by the collision was all above the water line, the repairs of the main propeller and part of the engine under the water line, the replacement of the releasers and connectors of the life rafts, the change of new window curtains and the purchase of new rugs shall not be treated as repairs of the damage caused by the collision. Therefore, such costs shall not be regarded as the cost of repairs of the damage caused by the collision. The additional expense arising from the temporary operation during the National Holidays was the result caused by the plaintiff in putting the ship under repair into operation rather than the inevitable result of the collision of ships. Therefore it shall not be treated as cost of repairs of damage caused by the collision. The additional wharfage and mooring service charge was the running cost in operation and thus shall not be counted as cost of repairs either. The above-mentioned three items, which shall not be counted as the cost of repairs of damage caused by collision, adding up to HK$ 151,402.50, shall be deducted from the cost of repairs charged by the Friendship Shipyard. Therefore the cost of repairs of damage caused by the collision was HK$ 1,349,477.50, which shall be supported pursuant to the proportion of the blame for the collision. After the collision, the plaintiff paid HK$ 45,745 for towage, HK$ 73,020 for the repair of life rafts, HK$ 32,100 for survey fee, and HK$ 15,638.30 as expenses for the boarding and traffic of the delayed passengers, which were all inevitable expenses caused by the collision and thus the claims for which shall be supported by this court according to law. The plaintiff hired a passenger ship to take the place of Xun Long 2 from 8th September to 29th September, 2000 and paid the hire of HK$ 600,000. The hire could be regarded as the loss of time and shall be indemnified by the parties liable for the collision. The fact the plaintiff put the ship into operation during the National Holidays made it clear that the ship had been repaired and could be used, and to send it to the shipyard for further repairs afterwards was unnecessary. Therefore the hire of HK$ 190,911 for hiring the passenger ship to take the place of Xun Long 1 from 8th to 15th October shall not be accepted. As to HK$ 391,708 for bunker, HK$ 9,894.80 for lubricating oil and HK $119,017 for port dues occurred during the chartering period and claimed by the plaintiff, such charges and expenses were normal running costs for the operation of the ship and had nothing to do with the collision, and shall not be agreed by this court either. As to the expenses for traffic and communication in the amount of HK$ 15,020 for handling the accident,  the accident investigation fee in the amount of HK$ 2,931, legal consultation fee in the amount of HK$ 5,000, lawyer??s fee in the amount of HK$ 64,137, were not agreed by this court because the plaintiff failed to submit sufficient evidence. To sum up, the cost of repairs sustained by the plaintiff and other acceptable economic losses was HK$ 2,115,980.80 all together, 70% percent of which amounting to HK$ 1,481,186.56, shall be borne by Xiong Chang 1.


As the owner of Xiong Chang 1, the defendant Jinwan Co. shall be primarily liable for the collision caused by the ship. Although the defendant Ocean Shipping Co. was not the de facto owner of the ship, yet the defendant consented to and assisted Jinwan Co. in registering Xiong Chang 1 under its name, which turned the defendent into the de jure owner of the ship, entitling her to lawfully possess, utilize, profit from and dispose of the ship, and, when the ship infringed upon another people??s rights, obliging her to compensate for the losses, restore it to its original conditions in the capacity of the owner pursuant to law. In addition, Ocean Shipping Co.??s aforesaid act objectively enabled Jinwan Co., who was not qualified for international shipping operation, to be engaged in shipping between Hong Kong and Macao. Ocean Shipping Co. was the manager of Xiong Chang 1 in name, however, in reality, Ocean Shipping Co. adopted a ?°none of my business?± attitude towards the shipping qualification and capacity of the ship and never performed her duty of management. Therefore, Ocean Shipping Co. was at fault subjectively and was guilty of dereliction of duty objectively in neglecting the managment of the ship. After the expiration of the management agreement, Ocean Shipping Co. neither applied to the relevant authorities for canceling the ocean shipping permits and the corresponding certificates obtained by Xiong Chang 1 under the name of Ocean Shipping Co., nor declared openly to rescind the management relationship with Jinwan Co. Jinwan Co. was engaged in ocean shipping all the time under the name of the Ocean Shipping Co. Therefore, it could be ascertained that both defendants modified the performance duration of the management agreement by their acts, and up to the time of the accident, Xiong Chang 1 was still under the management of Ocean Shipping Co. Because Ocean Shipping Co. was the de jure owner of Xiong Chang 1 and was also responsible for the management of the same, she shall be liable jointly and severally for the damage arising from the ship??s tortious act of collision. 


According to Article 169 of the Maritime Code of the PRC:

?°If the colliding ships are all in fault, each ship shall be liable in proportion to the extent of its faults ??

The ships in fault shall be liable for the damage to the ship, the goods and other property on board pursuant to the proportion prescribed in the preceeding paragraph???±and Article 130 of the General Principles of the Civil Law of the PRC:

?°If two or more persons jointly infringe upon another person??s rights and cause him damage, they shall bear joint liability.?±,

The judgment is entered as follows:


1. 	The defendant Jinwan Trade Co., Ltd. Fangchenggang shall compensate the plaintiff Shenzhen Xunlong Shipping Co., Ltd., within 10 days upon the day on which this judgment comes into force, HK$ 1,481,186.56 for cost of ship??s repairs and any other economic losses, for which the defendant Guangxi Ocean Shipping Co., Ltd. shall be jointly and severally liable.

	

2. 	Any other claims lodged by the plaintiff are dismissed.


The acceptance fee of RMB 29,340 for this case shall be paid by the plaintiff, the defendant Jinwan Co. and the defendant Ocean Shipping Co. in the amount of RMB 9,340, RMB 10,000 and RMB 10,000 respectively. The acceptance fee prepaid by the plaintiff shall not be refunded by this court separately, while that to be borne by the defendants shall be directly paid to the plaintiff within 10 days upon the day on which this judgment comes into force.


Any party who contests this judgment may lodge an appeal before the Higher People??s Court of Guangxi Zhuang Autonomous Region by submitting a statement of appeal to this court with copies in the number of the opposing parties within 15 days upon the service of this judgment. The appeal fee of RMB 29,340 shall be prepaid within 7 days upon the expiration of the time limit for filing appeals. The appeal shall be considered as withdrawn in case neither the appeal fee is paid in time nor the application for deferred payment thereof is filed in time.


Payee: 	Litigation-Fee-Special-Account of the Higher People??s Court of Guangxi Zhuang Autonomous Region

Account No.	886100010

Deposit Bank:	Agricultural Bank of China Gucheng Road Branch, Nanning





Presiding Judge 	Zhang Desheng

Judge	Zhang Qiancheng

Judge	Ni Xuewei


(Official Chop of Beihai Maritime Court)


Date	19th December, 2001


Certified true copy


Clerk	Xiao Zibei