HIGHER PEOPLE??S COURT OF TIANJIN 

PEOPLE??S REPUBLIC OF CHINA

CIVIL  JUDGMENT


No.GJZ229(2001)


Appellant(Defendant in the first instance trial):	DSR-Senator Lines 

Domicile :	Room 1108, International Building, No. 75 Nanjing 

Road, Heping District, Tianjin

Legal Representative :  B. Y. Lee, executive vice president

Agent ad litem : Wang Peng, lawyer of Wang Jing & Co. Tianjin Office

Appellee(Plaintiff in the first instance trial)	:Hero(Tianjin) International Trade Co., Ltd.

Domicile:	No.28, Datong Road, Heping District, Tianjin

Legal Representative	:  Peng Zhijiang, General Manager

Agent ad litem : Fang Guoqing, lawyer of Yuan Hai Law Firm



Being not satisfied with the Civil Judgment No.HSC 46(2001) handed down by Tianjin Maritime Court, the Appellant, DSR-Senator Lines, filed an appeal to this court in respect of the cases of dispute over claim for loss of cargo arising from release of cargo without presentation of original bill of lading. This court formed a collegial bench according to law and held public hearings. The agent ad litem of the Appellant, Wang Peng, the legal representative of Hero (Tianjin) International Trade Co., Ltd, Peng Zhijiang and the agent ad litem thereof Fang Guoqing attended the hearing. The case has now been concluded.


It was ascertained by the court of first instance that on 28 April, 2000, Hero (Tianjin) International Trade Co., Ltd. (hereinafter referred to as ?°Hero Co.?±) consigned two TEU containers to DSR-Senator Lines for shipment from Xingang, Tianjin to New York, USA. On 5 May, 2000, DSR-Senator Lines issued B/L No.TSNATTO0872810, in which it was stated that Shipper: Hero (Tianjin) International Trade Co., Ltd.; Consignee: to order of International Chemical Purchasing Inc.; Notify party: International Chemical Purchasing Inc.; Vessel: m/v ?°E-Cheng?±; Voyage: 0398E; Freight: to collect. The cargo arrived at the port of destination on 20 June, 2000. As DSR-Senator Lines released the cargo to the consignee without presentation of the original B/L and as the consignee did not redeem the documents through payment, Hero Co. sustained a loss of USD 36,726.40 for the payment of cargo under the Bs/L and a loss of USD210.05 for the commission charged by the bank.


The court of first instance held the view that a bill of lading is a document which serves as an evidence of the contract of carriage of goods by sea as well as the carrier??s reception or loading of the goods, and based on which the carrier undertakes to deliver the cargo against surrendering the same. The carrier??s responsibility under a contract of carriage of goods by sea begins from the time of issuing original bill of lading until the time when the cargo was delivered against surrendering original bill of lading. In the present case, before the cargo was delivered and original Bs/L withdrawn, the cargo was in the charge of DSR-Senator Lines or its agent. It was incumbent on DSR-Senator Lines to excise due diligence to care for the cargo within such period. DSR-Senator Lines shall be liable for the economic loss sustained by Hero Co. arising or resulting from the consignee??s taking delivery of cargo without surrendering original Bs/L within the period when DSR-Senator Lines as the carrier was in charge of the cargo. Pursuant to Article 106, Paragraph 1 of the General Principles of Civil Law of the PRC and Article 71 of the Maritime Code of the PRC, a judgment was entered to the effect that DSR-Senator Lines shall pay to Hero Co. USD36,726.40 for the loss of cargo payment and shall pay the penalty for breach of contract accrued from 5 July, 2000 to the date of actual payment at the annual rate of 4.4375% and USD210.05 for bank commission. The above sums shall be paid up within 15 days from the date the Judgment comes into force.


Being not satisfied with the judgment, DSR-Senator Lines filed an appeal to this court, requesting to adjudicate the Appellant not liable for the compensation on the grounds specified below: 1. At the time of initiating the lawsuit, Hero Co. failed to prove that it had the title to the cargo in question. It was stated in the Bs/L that: Consignee should be to the order of International Chemical Purchasing Inc. This revealed that the consignee should be either International Chemical Purchasing Inc. or some other party to its order. In this case, the Appellant delivered the cargo in accordance with the agreement, and thus had performed the contract of carriage of goods by sea as prima facie evidenced by the Bs/L. In accordance with Article 79 of the Maritime Code of the PRC, the said bills of lading could not be transferred unless it had been endorsed by International Chemical Purchasing Inc., but it had not been endorsed in this case. The Appellee could no longer enjoy the rights under the Bs/L after they had been transferred through endorsement, although it did obtain the B/L. Therefore, it was not in a position to enjoy the title to the cargo under the Bs/L. 2. Since the Appellee did not intend to retain the title to the goods, and in accordance with Article 72 of the General principles of Civil Law of the PRC, the property in the cargo in question transferred to to buyer at the time when the cargo was delivered to the carrier, and the Appellee no longer had the rights over the said goods. 3. As a quasi document of title, the bill of lading is the token of the right of possession of the cargo rather than the ownership of the goods. Therefore, the possession of the bill of lading itself does not prove that the bill of lading holder has accordingly obtained the ownership of the cargo under the bill of lading. The fact that ?°to order of International Chemical Purchasing Inc.?± was stated in the ?°consignee?± column of the Bs/L under the present case bore out that the cargo had been transferred to the possession of International Chemical Purchasing Inc. and that International Chemical Purchasing Inc. had thus obtained the right to dispose of the said cargo through endorsement. Or, it can be said that the rights of which the Bs/L were tokens belonged to International Chemical Purchasing Inc., rather than the Appellee. 4. It was legally groundless for the court of first instance to support the Respondent??s claims for penalty for breach of contract and bank commission.


The Appellee, Hero Co. answered as follows: 1. The shipper stated in the Bs/L was the Appellee, who held three original Bs/L issued by the Appellant and thus certainly had the title to suit. Even from the angle of the function of the bill of lading as a document of title to the goods, since the Appellant could not deliver the cargo with the three original Bs/L being in possession of the appellee, the Appellant shall be held liable therefor. 2. The Appellee relied upon the three original Bs/L without any endorsement to sue the Appellant. If the Appellant thought that the Bs/L in question had been transferred to a third party, the Appellant shall bear the burden of proof. As for the provisions of Article 72 of the General Principles of Civil Law of the PRC that was quoted by the Appellant, if the Appellant alleged that the title to the goods had been transferred, the Appellant shall adduce relevant evidence to prove so. 3. It was entirely right for the court of first instance to order the Appellant to pay penalty for breach of contract and bank commission. It was because the Appellant released the cargo without being surrendered bills of lading that the Appellee was unable to collect the cargo payment and thus sustained loss of interests, and the foregoing penalty and commission could be anticipated. 


During the proceedings in second instance trial, the Appellant did not present any evidence, nor did he raise any dissension on the evidence as to the three original Bs/L submitted by the Appellee during the proceedings in first instance, the faxes revealing the Appellant??s approval of the release of the cargo without presentation of Bs/L, the sales contract, invoices, packing lists, and the three Receipts / Debit Notes of the bank commission in the amount of USD 210.05.. The facts of the case investigated by the court of first instancel trial were affirmed by this court after hearing.


This court was of the opinion that after the Appellee brought a lawsuit before the court of first instance, the Appellant was legally summoned by the court but refused to attend the hearing without any justified reasons. The Appellant filed an appeal before this court after the court of first instance handed down a judgment in default of the Appellant. Moreover, the Appellant did not put forward any dissension on the matter of jurisdiction. Therefore, the Appellant shall be deemed to have been submitted to the jurisdiction of the court of first instance.


During the hearing of second instance, both parties applied the Maritime Code of the PRC and the General Principles of Civil Law of the PRC as the basis for claim and defense. Hence, the both parties shall be deemed as having reached an agreement on the application of the law of the PRC in resolving disputes of this case. Therefore, in accordance with Article 145 of the General Principles of Civil Law of the PRC, this case shall be governed by the law of the PRC.


The sales contract for the cargo in question was signed on FOB term, and the charterer should be the buyer of the goods. After the Appellee, as the seller, delivered the cargo to the Appellant at the loading port, the Appellant, as the carrier, issued a full set of original Bs/L stating the shipper was the Appellee, then the relationship of the contract of carriage of goods by sea evidenced by Bs/L was established between the two parties. Furthermore, pursuant to Article 42 (1) of the Maritime Code of the PRC, the Appellee was the person who delivered the cargo to the carrier in connection with the contract of carriage of goods by sea, and was the shipper of the cargo under the bill of lading. The Bs/L in question were ?°order?± Bs/L and the consignee was to the order of International Chemical Purchasing Inc. But by the time the Appellee settled the exchange by way of D/P, the buyer had not effected payment. That was why the collecting bank returned the full set of documents while the Bs/L, instead of being transferred, were controlled by the Appellee and the collecting bank he entrusted. The Appellee was in legal possession of the Bs/L without endorsement of the named party to whose order the cargo under the Bs/L was delivered. The allegation of the Appellant that the Bs/L in question could not be transferred unless they had been endorsed by International Chemical Purchasing Inc., but in fact the Bs/L had not been endorsed was untenable. So was the allegation that the Appellee held the Bs/L but did not have the rights thereunder after transfer by endorsement. Under FOB price term, the loading of goods on board only indicates that the risks shift to the buyer, while the title to the goods does not transfer simultaneously. In this case, since the buyer failed to effect payment in exchange for the documents and the Appellee held the full set of the Bs/L, the Appellee still possessed the title to the cargo under the Bs/L. The allegation of the Appellant that the title to the goods shifted to the buyer when the goods was delivered to the carrier, and that the Appellee no longer possessed the title to the goods in question were legally groundless and thus untenable. As the carrier, the Appellant had the obligation to exercise due diligence to care for the cargo as well as to ensure to deliver the cargo against presentation of original Bs/L during the period he was in charge of the cargo. Due to the Appellant??s fault, the consignee took delivery of the cargo without surrendering the original Bs/L, which resulted in the failure of the Appellee to get the cargo payment and to control the cargo even with the original Bs/L in hand. Hence, the Appellant shall bear the liability for the losses resulting therefrom. The views and findings of the court of first instance trial with respect to the cargo loss and bank commission as well as the amounts thereof were correct and should be maintained. The loss of interests accrued from the loss of cargo shall be supported. However, only the relationship based on contract of carriage of goods by sea evidenced by Bs/L existed between the two parties, but there was no agreement upon any penalty for breach of contract. Hence, the loss of interests should not have been stated as a fine for breach of contract in the judgment of first instance trial, which was erroneous in such presentation. In summary, pursuant to Paragraph 1 of Article 153 of the General Principles of Civil Law of the PRC, the judgment is hereby entered as follows:


The major adjudication in Civil Judgment No.HSC 46(2001) shall be rectified to the effect that DSR-Senator Lines shall pay to Hero Co. USD 36,726.40 plus its interest (accruing from 5 July, 2000 to the date of payment decided herein on the basis of the corresponding USD deposit interest rate issued by the People??s Bank of China) as indemnity for the loss of cargo, and pay USD210.05 for bank commission. The above sums shall be paid up within 15 days from the day on which this Judgment comes into force.


The Appellant DSR-Senator Lines shall pay RMB 7,431 and RMB 7,431 respectively for court fees of first instance and second instance.


This judgment shall be final.





Presiding Judge:  Xie Lipeng

Acting Judge :  Zhang Rongli

Acting Judge :  Li Xuechun


Certified true copy



 Date     :  January 30th, 2002

 Clerk    :  Yan Zhining