Two companies, long-term partners in transporting wind power equipment, faced a sudden breakdown in their relationship. One claimed the other breached an integrity agreement, justifying its decision to withhold freight payment settlements. The other demanded immediate payment for multiple outstanding fees. What was the truth behind this dispute?

Basic Facts

In the course of their busy daily operations, Company A and Company B had maintained a long-term cooperation, primarily on transporting wind power equipment such as blades for Company B. On June 26, 2021, Company B unexpectedly issued a last-minute order, requesting Company A to transport a wind power blade, using the "HAI 1" vessel, from a dock at the Yangjiang base to a designated position at the Guangdong Electric Shapa Offshore Wind Farm. Company A used its externally chartered "HAI 1" vessel for the transport, and for security purposes, paid a waterway transport insurance fee of RMB 780.

A dispute arose over the freight. According to the contract signed between Company A and Company B, the transportation cost for a single set of blades for similar project sections was RMB 290,000. However, in May 2020, Company B entered into a contract with another company, Company C, setting the transportation fee for a single set of blades in a similar project section at RMB 210,000. The difference in transportation fees sparked the dispute.

In May 2022, Company B raised concerns, suspecting that Company A' legal representative at the time, Cai, had violated the integrity agreement signed between the two companies in September 2019. It was alleged that Cai had provided improper benefits to Company B's staff, Yi and Xie, prompting Company B to report Cai for suspected bribery and Yi and Xie for suspected embezzlement. After investigation by the public security authorities, an arrest warrant was requested for Cai and the other two individuals, but the local people's procuratorate did not approve the arrest, and all three were released.

Subsequently, Company A filed a lawsuit with the Guangzhou Maritime Court, demanding payment of RMB 350,000 for freight payment and RMB 780 for the insurance fee. In response, Company B argued that the freight should be calculated based on the RMB 210,000 agreed upon in the contract with Company C, and that Company A had violated the integrity agreement, giving Company B the right to suspend the freight payment.

How would the court rule in this dispute over wind power equipment transportation costs?

Court Decision

The Guangzhou Maritime Court concluded that Company A did not have the qualifications of a carrier and lacked a waterway transport license, which rendered the contract of carriage of goods in question legally invalid. However, since Company A had already completed the transportation using the vessel, Company B shall provide appropriate compensation according to Article 157 of the Civil Code of the People's Republic of China. Company A failed to provide evidence that the agreed-upon freight was RMB 350,000. Moreover, the contract between Company B and Company C entered into in 2020 was not deemed relevant for reference. In another dispute between Company A and Company B, the agreed freight (including insurance and other costs) was RMB 290,000 for a single set of blades. Therefore, Company A was entitled to request compensation for the reasonable freight of RMB 290,000 (including RMB 780 for insurance). As the evidence in the case could not prove that Company A violated the integrity agreement, Company B was not entitled to suspend the freight payment. Furthermore, Company B's delayed payment constituted a breach of contract, and therefore it shall pay Company A interest on delayed payment. After the judgment in this case, as well as 13 other similar cases involving time charter parties and voyage transport contracts between Company A and Company B, both parties complied with the judgment, and Company B voluntarily fulfilled the rulings in all 14 cases.

Key Significance

The Third Plenary Session of the 13th CPC Guangdong Provincial Committee outlined the "1310" Strategy, which calls for comprehensive efforts to build Guangdong into a province strong in the marine economy and to achieve breakthroughs in creating a New Maritime Guangdong. Offshore wind power has become one of the key sectors for the high-quality development of Guangdong's marine economy. This case's judgment not only legally recognized that a transport contract with an unqualified carrier is invalid, safeguarding maritime navigation and operational safety. It also fairly determined the compensation fee for the wind power equipment transport company based on Civil Code principles, protecting the interests of such enterprises. This ruling provides significant guidance for resolving related disputes regarding the transportation of offshore wind power equipment.