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Ningbo Maritime Court Status of Trial of Cases of Contract Disputes for Carriage of Goods by Sea (January 2011 to December 2015)

Preface

    It is expressly stated in Article 1, General Provisions, Chapter One of the Maritime Law of the People's Republic of China that ¡°This Law is enacted with a view to regulating the relationships arising from maritime transport and those pertaining to ships, to securing and protecting the legitimate rights and interests of the parties concerned, and to promoting the development of maritime transport, economy and trade. This shows that the carriage of goods by sea is one of the basic factors in the area of maritime trials and can best embody the traditions and characteristics of maritime trials. Zhejiang Province is a large province engaged in foreign trade and marine resources. Over the years, the contract disputes for carriage of goods by sea that arose from the sea waters of Zhejiang Province ,or closely related to Zhejiang Port and Shipping and foreign trade were relatively stable and representative to some extent. This Report on Maritime Trials summarizes and analyzes the status of the disputes over contracts for the carriage of goods by sea over the past five years, which is helpful for shippers, freight forwarders and carriers and other market players who are involved in the carriage of goods by sea to standardize their business conducts and conducive to the prevention and control of risks related to ocean shipping, thereby to increase the awareness of engagement and the ability to engage in business operations in accordance with the law, indirectly to reduce operating costs and gain new momentum for recovery, development and structural adjustment and upgrading of the ocean shipping, foreign trade and other industries of Zhejiang Province.

    I, Basic Information about Cases of Disputes over Contracts for Carriage of Goods by Sea

    During the period from January 1, 2011 to December 31, 2015, the Ningbo Maritime Court accepted 781 cases of disputes over contracts for the carriage of goods by sea, which accounted for 5% of the total number of cases accepted over that period, with the amount of RMB 633 million Yuan, and concluded 756 cases with the amount of RMB 431 million Yuan, which accounted for 4.98% of the total number of cases concluded over that period, ,The ratio of cases concluded in that period was 96.8% and the average number of days for trials was 92.22. These cases show the following characteristics:
 
    (I) The numbers of cases accepted and concluded in the aforesaid period were roughly the same and the types of disputes were relatively concentrated
The average number of cases accepted every year was 156, and that of cases concluded every year was 151, which meant a minor fluctuation. Disputes over the delivery of goods without the original bills of lading (hereinafter referred to as the ¡°Delivery of Goods Without the Original B/L¡±), cargo damage and destination port charges accounted for the major part of all disputes. In 2015, we concluded 126 cases of disputes over contracts for carriage of goods by sea, including 75 cases of disputes over delivery of goods without B/Ls, accounting for 59.52% of the total number of cases concluded, 27 cases of disputes over cargo damage, accounting for 21.43% of the total number of cases concluded, 12 cases of disputes over destination port charges, accounting for 9.52% of the total number of cases concluded and other types of cases accounting for 9.53% of the total number of cases concluded.  
    
    (II) Many cases involving foreign elements, Hong Kong, Macao and Taiwan were tried, and cases in which large-scale shipping companies were involved accounted for a substantial part of the cases.
    There were 393 cases where the litigants involving foreign elements, or Hong Kong, Macao and Taiwan litigants, accounted accounting for about 50% of the total number of cases accepted by us. Among them, tThe number of cases where the litigants wereinvolving foreign individuals or entities was 296 thereof, which was related to 17 countries, namely from Greece, Denmark, Liberia, South Korea, Japan, Israel, the United States, India, Germany, France, Malaysia, Chile, Singapore, the United Kingdom, Congo, Vietnam and, Panama was 296,. accounting for 37.9% of the total number of cases accepted. The large-scale shipping companies involved in such cases included A.P. Moeller-Maersk A/S (in 49 cases), Pacific International Lines (Pte) Ltd. (in 40 cases), South American Steamship Company of Chile (in 30 cases), Malaysia International Shipping Corporation Berhad (in 25 cases), etc. There were 93 cases involving Hong Kong and 4 cases involving Taiwan, while no cases involving Macao were accepted. These cases accounted for 12.42% of the total number of cases accepted. In terms of geographical distribution the destination ports involved in the cases were mainly located in the Europe, Americas and Asia.
    (III) The amounts of subject matter were generally moderate, and the litigants had strong wishes to achieve a reconciliation
    There were 561 cases concluded where the amount of subject was less than RMB 500,000 Yuan, accounting for 74.21% of the total number of cases concluded. There were only 7 cases where the amount of subject was more than RMB 5 million Yuan, accounting for 1% of the total number of cases concluded. There were 6 cases concluded by judgments and appeals thereof. As cases of disputes over contracts for carriage of goods by sea are typical cases of disputes over commercial contracts, the litigants are virtually corporations, and the majority of the defendants are carriers who are registered with the Ministry of Transport and have a strong ability to perform the contracts. In order to maintain long-term commercial cooperation, the parties in some disputes settled the disputes through voluntary reconciliation. Moreover, in the cases referred to the courts, the parties concerned have strong wishes to achieve reconciliation, and there were a large proportion of cases where the defendants attended the court hearings. Among 756 maritime cases, only 87 cases entered the enforcement proceedings, including 28 cases concluded in the form of voluntary performance or reconciliation. There were 259 cases concluded by judgments accounting for 34.3% of the total number of cases concluded in that period, 272 cases withdrawn accounting for 36.03%, and 211 cases concluded in mediation accounting for 27.95%. The cases of first instance concluded by claimants¡¯ withdrawal and mediation taken together accounted for 63.98% of the total number of cases concluded in that period, representing a year-on-year increase of 11.41%.
   
    (IV) More days were spent in trial, and overall quality of the trials was high
As qualification materials of subjects, powers of attorney, overseas evidences, etc. are subject to notarization and authentication, some maritime cases are required to be served through diplomatic channels or public notices. In addition, carriage of goods by sea refers to a lot of steps and the verification of relevant matters through communication among shippers, carriers, freight forwarders and carriers takes time. As a result of all these factors, it takes a long time to try the cases of this type of disputes. Take the cases of disputes over contracts for carriage of goods by sea that were concluded in the past five years by handing down a judgment as examples, the average number of days taken to deal with such matters as going through the notarization procedures, collecting evidence and serving documents on foreign recipients was 89 days. 
   
    In addition, due to the concentration of types of cases and the increasing clear rules for maritime case jurisdiction, the overall adjudication quality was high. For example, there were 169 cases of disputes over contracts for carriage of goods by sea concluded in 2014, including 75 cases concluded by judgment and 55 cases appealed. and only one was amended due to erroneous determination of facts, except for 19 cases for which the judgments were amended after new evidence was provided in the second instance thereof. The rate of anmending was only 1.33% of the total number of appealed cases, and there was no case which was turned back to the court of first instance for re-trial or appeal.
    II, Status of Trials of Cases of Disputes over Delivery of Goods without B/Ls
 
    (I) Main reasons
    Domestic sellers were in a passive position. Zhejiang Province is a large goods exporting province. In this general context of a global economic downturn in the shipping market, domestic sellers tended to be in a passive position, while foreign buyers often designated domestic freight forwarders to book shipping space from specified carriers to allow them to take delivery of goods without B/Ls from the agents of the carriers at the destination ports.
Some freight forwarding companies issued B/Ls in violation of the relevant regulations, and the proportion of cases resulting from delivery of goods without B/Ls increased. With the development of the shipping industry, some freight forwarding companies were qualified to act as a NVOCC and can issue B/Ls by themselves, while some freight forwarding companies illegally issued B/Ls in the name of other NVOCCs. And nonstandard operating made delivery of goods without B/Ls more likely to happen.
 
    (II) Focus of dispute
    In the cases of disputes over delivery of goods without B/Ls, the focuses included 3 aspects, namely whether the subject qualified, whether the delivery of goods without B/Ls happened and whether the losses claimed by the plaintiff reasonable. Details as follows: 


    (III) Relevant suggestions
    Suggestions for shippers
    First, accurately identify carriers to make sure the defendants in case qualified. Some freight forwarding companies intentionally take advantage of the nuanced differences between names of the carrier and the freight forwarder. In fact, the office address and staff of the carrier are virtually the same as the freight forwarder. Some shippers are unfamiliar with the export processes and mistakenly regard the freight forwarding companies who deal with the matters related to booking shipping space and inland transport as the carriers. In the case of contracts dispute for carriage of goods by sea --Taizhou Tai Yang Feng Xiang Jiao Co. Ltd. sued Maimex International Freight Forwarder and its Shanghai branch, it was expressly indicated on the bill of lading that the carrier was Maimex (Far East) Co. Ltd, who is qualified as a NVOCC. Taizhou Tai Yang Feng Xiang Jiao Co. Ltd. filed a lawsuit against the companies who operated matters related to booking shipping space and inland transport. At the end, the Court dismissed the claims as the defendants were not qualified.
    Second, truthfully declare the value of goods. Truthfully declaring the value of goods is not only the obligation of a shipper to make declarations in accordance with the law, but also an effective way to demonstrate the value of goods when the goods are damaged. Take the case of a dispute over a contract for carriage of goods by sea and delivery of goods without B/Ls between KB (Asia) Co., Ltd. and QiaoYu Co., Ltd. as an example, the plaintiff claimed that it had suffered the loss of USD 55792.49 due to the delivery of goods without B/Ls by the defendant. However, the price declared to customs by itself was US$49977.72. With respect to this difference, the plaintiff explained that it had purchased the goods in China with the authorization of a foreign buyer, then raised the price in a certain percentage and transferred to foreign customers to make profits. The declaration was made based on the purchase price. Based on the principle of official documents and documentary evidence first and in order to maintain customs¡¯ normal regulatory order, the Court determined the amount of the freight damage the plaintiff suffered basing on the amount stated on the customs declaration form.
    Third, watch out the one-year statute of limitation. In order to urge the parties to contracts for carriage of goods by sea to settle disputes as soon as possible, the Maritime Law of the People's Republic of China provides that the statute of limitations on claims against  carriers with regard to the carriage of goods by sea is one year from the date when the carrier delivers or should have delivered the goods. Some shippers have never noticed this provision, and as a result of their failure to reach agreements with the carriers after repeated negotiations or to identify the wrong carriers, they miss the one-year statute of limitations. For example, in the case of a dispute over a contract for carriage of goods by sea between KENA Co., Ltd as one party and ZhongHai (Hong Kong) Co., Ltd. and Zhejiang ZhongHai Co., Ltd. as the other, the cargo was expected to arrive at the port of destination on January 29, 2013, while the date when the lawsuit was brought was on April 24, 2014. Therefore, the claim was dismissed as the one-year statute of limitations had already elapsed.
    Fourth, apply for freezing NVOCC bonds to ensure realization of their creditor's rights. Before operating its business, a NVOCC shall pay the Ministry of Transport a NVOCC deposit of RMB 800,000 Yuan. In order to supervise active performance of contracts by NVOCCs or facilitate enforcement by the courts, an application for freezing the deposit may be made. For example, in the case of dispute over a contract for carriage of goods by sea between Ningbo Leedor Leisure Articles Co., Ltd. as one party and Zhong Hang Scanwell Co., Ltd. and Zhong Hang Scanwell International Freight Agent Co., Ltd. Ningbo Branch as the other, after trials by the courts on two levels, the effective verdict ordered the defendant to compensate the plaintiff for the losses of payments for the consignment, valued RMB 488,692.8 Yuan. After the case entered the enforcement proceedings, the compensation was fully enforced owning to the freezing measure to the NVOCC deposit during the trial.
Suggestions for carriers. Actively collect evidences at ports of destination and have such evidences notarized and authenticated. In the cases of disputes over delivery of goods without B/Ls, some carriers defended themselves by arguing that the consignments were still in the warehouses at the ports of destination and no delivery of goods without B/Ls happened by providing only the photos of the ports of description or the factual descriptions issued by the warehouses. But such materials provided by them were not exhaustive enough to prove their arguments. In the case of dispute over a contract for carriage of goods by sea and delivery of goods without B/Ls between Tianjin Era Biology Engineering Co., Ltd. and Beijing Kang-Jie-Kong International Cargo Agent Co., Ltd. Ningbo Branch, the defendant provided only the notarized documents to affirm the cargo was in a warehouse at the port of destination, but fail to prove its relationship with the warehouse or the cargo was still under its control. At the end, the Court held that the defendant made the delivery of goods without B/Ls. In order to better protect their rights and interests, carriers may authorize third-party testing organizations to test the consignments in the warehouse at the ports of destination, document in detail the consignment names, container numbers, quantities and other important informations and take pictures of the consignments for record, so as to prove that the consignments are the goods involved in the cases and still in their control. The case of a dispute over a contract for carriage of goods by sea between Ningbo Haitian International Co., Ltd. and EVERICH WORLDWIDE LTD. is a good example in this regard.

    II, Disputes over Destination Port Charges
    (I) Main reasons
    In some cases, disputes between carriers and shippers arise for destination port charges such as container demurrage, storage charges, etc. as the consignments are not picked up for a long time after arriving at the ports of destination due to the consignees going bankrupt, the consignments are examined by customs, or the consignments are abandoned. The main reasons for such disputes are as follows:
Poor handling. Some shippers refuse to give any instructions to deal with the consignments on the grounds that they have received the payments for the consignments or have no relationship with the consignments at the ports of destination. Some tend to take a passive and evasive attitude while unable to reach a consensus on such matters as shipping the consignments back, transshipment, etc. through consultation with the carriers.
    Loss mitigation measures are not in place. Some carriers fail to promptly inform shippers of the risk of non-taking delivery of goods or goods going to be auctioned off or destroyed by customs, or to take effective loss mitigation measures, making destination port charges increase as the time goes by.
 
    (II) Focuses of disputes
    In the trials of cases of disputes over destination port charges, the arguments mainly focus on whether or not the defendants are the shippers of the consignments involved in the cases, whether or not the defendants should assume the responsibility to compensate the destination port charges, whether or not the expenses claimed by the plaintiffs are reasonable, and whether or not the plaintiffs have performed the obligation to mitigate losses, etc. Details as follows:


    (III) Relevant suggestions
    Suggestions for shippers and consignees
    First, shippers should promptly give instructions on how to deal with the consignments. In accordance with Article 65 of the Contract Law of the People's Republic of China, if the consignments are not picked up after arriving at the port of destination, the freight and reasonable destination port charges incurred therefrom shall be borne by the shippers. Therefore, a shipper shall always keep an eye on the status of consignments. Once becoming aware that the consignments are detained at the ports of destination due to non-taking delivery of goods, it shall promptly contact the carrier through its booking agent and notify the carrier of the instructions on how to deal with the consignments, including shipping the consignments back, transshipping the consignments, abandoning the consignments or applying for auctioning off the consignments, otherwise, it shall bear reasonable destination port charges incurred therefrom.
    Second, consignees should pick up consignments without delay. In practice, some consignees delay in picking up consignments based on various types of concerns. The consequential stevedorage, warehousing costs and other charges of the same kind incurred at the ports of destination shall still be borne by them. Take the case of dispute over a contract for carriage of goods by sea between MISC Berhad and Zhejiang Rongxiang Chemical Fibre Co.,Ltd as an example, the glycol carried by the plaintiff was contaminated, and the defendant, who acted as the consignee, refused to pick up the consignment on the grounds of the contamination, resulting in the stevedorage and warehousing costs after the plaintiff unloaded the consignment to a rented shore tank at the port of destination. After hearing the case, the Court held that even though the goods involved in the case were contaminated, the defendant should still be obliged to mitigate the losses by promptly arranging unloading and consignment pick-up. As to the contamination of the consignment, the defendant may file claims separately. Accordingly, the Court ruled that the aforementioned costs should be shared by the parties based on the degree of their respective fault.
    Suggestions for carriers
    First, actively perform the obligation of notification. If consignments are not picked up after arriving at the ports of destination due to non-taking delivery of goods or the consignees¡¯ refusal to pick up them, the carriers concerned shall inform the shippers concerned in writing, including by e-mail or fax, requiring the shippers to promptly give instructions on how to deal with the consignments, otherwise, the adverse consequences arising therefrom shall be borne by the shippers. Take the case of dispute over a contract for carriage of goods by sea between China Shipping Container Lines (Hong Kong) Co., Ltd. and Ningbo Zhonglin Foreign Trade Co., Ltd. as an example, the carrier failed to perform the aforementioned obligation of notification and the destination port charges were incurred through the fault of the carrier. Therefore, the further losses incurred therefrom were solely borne by the carrier. Where consignments are about to be destroyed or auctioned off by customs at the ports of destination, the carriers concerned shall promptly notify the shippers concerned. Take the case of dispute over a contract for carriage of goods by sea between A.P. Moeller-Maersk A/S, Ningde Food Co., Ltd. et al. as an example, the plaintiff did not contact the shipper for a long period of time after receiving the notice from the customs at the port of destination of the consignment being abandoned, or did it take any measures. As the plaintiff was so negligent, the Court supported the destination port charges in its sole discretion.
    Second, actively perform the obligation to mitigate losses. First of all, carriers may reduce the destination port charges by transferring consignments to other warehouses, i.e. transferring the containers containing the consignments to warehouses requiring lower warehousing costs. Second, they may apply for auctioning off the consignments. Where a shipper does not give further instructions on how to deal with consignments, in accordance with Article 88 (1) of the Maritime Law of the People's Republic of China, if a consignment has not been picked up within 60 days from the date immediately following the date when the vessel arrives at the port of discharge, the carrier concerned may apply to the court for an order on selling by auction the consignment on which it is entitled to lien; where the consignment is perishable or the expenses for keeping such consignment would exceed its value, the carrier may apply for an earlier sale by auction. Take the case of dispute over a contract for carriage of goods by sea between A.P. Moeller-Maersk A/S as one party and China Container Lines (Shanghai) Limited and CCL LOGISTICS CO., LTD. as the other party as an example, as no party gave instructions on how to deal with the consignment, the plaintiff, who acted as the carrier, effectively reduced destination port charges by applying in accordance with the Maritime Law of the People's Republic of China for auctioning off the consignment involved in the case, and the reduction was approved by the effective judgment.
Suggestions for freight forwarding companies. Make good communications and liaison. During carriage of goods by sea, freight forwarding companies are the hubs connecting shippers with carriers. Shippers get the information about arrival, transshipment and return of consignments from carriers through freight forwarding companies. Through the freight forwarding companies, the carriers inform the shippers of the current status of the consignments at the ports of destination and are informed of the further instructions from the shippers. Unless otherwise agreed. a freight forwarding company shall not be responsible for compensating destination port charges as long as it has performed the aforementioned obligation. Take the case of dispute over a contract for carriage of goods by sea between A.P. Moeller-Maersk A/S as one party and Cuori Electrical Appliances (Group) Co., Ltd. and SINOTRANS Zhejiang Co., Ltd. Ningbo Mingzhou Branch as the other party as an example, it was ascertained through trial that the defendant did not need to compensate the destination port charges as it had performed the obligation to promptly inform the other party to the contract and was not accountable for the destination port charges.
    III, Disputes over Freight Loss and Damage
    (I) Main reasons
    During carriage of goods by sea, a wide variety of the risk of freight damage exists, for example, ethanol and coal being mixed at the time of loading or being mistakenly unloaded, quality of goods being deteriorated, containerized goods falling into the sea or being immersed in sea water or hulls rupturing or catching fire, leading to full damage of the goods. Reasons of disputes over freight damage include improper management of consignments by carriers, imperfect hand-over procedures, omission to sign consignment hand-over forms, etc.
    (II) Focus of dispute
    In the cases of disputes over delivery of goods without B/Ls, the focuses included 3 aspects, namely whether the subject qualified, whether the delivery of goods without B/Ls happened and whether the losses claimed by the plaintiff reasonable. Details as follows:


    (III) Relevant suggestions
    Suggestions for shippers
    First, notify carriers the inspection time of cargo damage and improve the acceptance rate of the test reports. Once aware of cargo damage when picking up consignments, consignees often unilaterally authorize testing institutions to identify the causes and scope of the cargo damage but not notify carriers to participate in the test, making the validity of the test reports to be challenged. Take the case of dispute over insurance benefit subrogation according to the contract for carriage of goods by sea between PICC P&C Taizhou Branch and Mariana Express Lines Pte. Ltd. as an example, after aware of the freight damage, the consignee unilaterally authorized a testing institution to identify the conditions of the freight damage but not notify the carrier to participate in the test. Besides, there were other defects in the test report. As a result of these facts, the Court dismissed the claims of the plaintiff because the freight damage was not actually proven.
    Second, properly pack dangerous goods and perform the duty to inform by marking the dangerous goods. In accordance with the Maritime Law, a shipper shall properly pack the dangerous goods which are going to consign, mark and label the dangerous goods and notify the carrier of the formal name, the nature of the goods, prevention of harm measures and other relevant information in written form. Otherwise, the carrier shall have the right to unload or destroy the goods when necessary without any liability for damage and with the right to claim against the shipper for the disposal costs incurred therefrom. Take the case of a dispute over a contract for carriage of goods by sea between Ningbo Aoran New Energy Science & Technology Co., Ltd. and Zim Integrated Shipping Services Ltd. as an example, the defendant, who acted as the carrier, carried 773 tons of unsaturated acyclic hydrocarbons, which are dangerous goods. The goods in transit leaked with which the materials of the soft sacks containing were not compatible. The defendant unloaded the goods at the Port of Long Beach, the United States. Thereafter, the plaintiff brought a lawsuit to the Court on the grounds that it failed to take delivery of the goods even with the B/L. After hearing the case, the Court held that as the shipper had not declare the dangerous goods to the carrier and the defendant unloaded the goods when the goods leaked, therefore without the liability to damage. And the claims of the plaintiff were dismissed.
    Third, shippers shall in time go through the procedures for registration of maritime claims during public notification of maritime claims. In accordance with the Maritime Law of the People¡¯s Republic of China, with respect to damages to goods during the operation of vessels, the carrier liable may limit his liability to maritime claims and once Maritime Claims Limitation Fund is established by a carrier, the creditors of the carrier shall apply to the maritime court for registration of maritime claims during public notification of the maritime claims. If the carrier does not do so within the specified time limit, he shall be deemed to waive the maritime claims.
Suggestions for carriers
    First, have the goods hand-over procedures done properly. One of the focuses of dispute over freight loss and damage is that in which transport segment the freight damage is incurred is unknown, especially in the case of transport of containerized goods and large bulk goods. Therefore, signing equipment interchange receipts and inspecting the quality and quantity of the goods at the ports of loading and ports of discharge are very important for all parties involved when defining responsibilities.
Second, service vessels and properly keep the service records. In accordance with the Maritime Law, if a cargo damage accident occurs due to failure by a carrier to identify latent defects in a vessel by due diligence, the carrier shall not bear the liability for damage but the burden of proof. Take the case of a dispute over a contract for carriage of goods by sea between PICC P&C Ningbo Branch and Mitsui O.S.K. Lines, Ltd. as an example. All the goods were lost due to hull rupture. As the carrier provided the accident ship maintenance records and an inspection report issued by a ship classification society to prove that the accident involved in the case was due to the defects in design of the vessel which were not discoverable by due diligence by the carrier, the Court ruled that the claims of the plaintiff shall be dismissed.
Conclusions
    At present, the international maritime shipping market as a whole is still in a depression, the pressure still exists by the fact that freight capacity is relatively surplus and the profits of a majority of shipping liner companies drop sharply or even are far less than its losses. With increase in uncertainties about international political and economic situation, new situations to carriage of goods by sea are increasing. With continuous implementation and promotion of the "One Belt, One Road" and the free trade zone strategy, legal risks lurking in the projects directly related to the maritime shipping industry, maritime development and exploitation and many other fields have increased. Creation of a soft environment at a high level for the shipping industry and construction of an international maritime judicature center with international influence require the joint efforts of all parties concerned, including the maritime judicature community. It is our expectation that communities from various social sectors would continue to pay close attention to and support Zhejiang¡¯s maritime trials, including new trend and new development in the trail of cases of disputes over contracts for carriage of goods by sea.

Attached: Five Typical Cases of Disputes over Contracts for Carriage of Goods by Sea

 
 Five Typical Cases of Disputes over Contracts for Carriage of Goods by Sea

Case 1:
    The right carrier has not been identified, the one-year statute of limitations has elapsed
    therefore the shipper¡¯s claim cannot be upheld by the operation of the law

 [Case Brief] In August 2011, Ningbo Huazhan Marine Engineering Co., Ltd. authorized FS International Limited Ningbo Branch to book shipping space for shipping a batch of goods. The latter delivered to the former a bill of lading stating that the carrier shall be Shanghai FS Container Line S.A., the shipper shall be Ningbo Huazhan Marine Engineering Co., Ltd., the port of departure shall be the Port of Ningbo, and the port of destination shall be a Colombian port. The goods were stored in a warehouse in Bogota, Columbia since their arrival at the port of destination in October 2011. Ningbo Huazhan Marine Engineering Co., Ltd. never took delivery of the goods from Shanghai FS Container Line S.A. Although Ningbo Huazhan Marine Engineering Co., Ltd. repeatedly talked with FS International Limited and its Ningbo Branch about shipping the goods back, no consensus was reached. On July 26, 2013, Ningbo Huazhan Marine Engineering Co., Ltd. brought a lawsuit against FS International Limited and its Ningbo Branch to Shanghai Maritime Court, claiming that FS International Limited and its Ningbo Branch should bear the liability for damage. On October 23, 2013, Shanghai Marine Court handed down the civil judgment (2013) Hu Hai Fa Shang Chu Zi No. 1069 which dismissed the claims of Ningbo Huazhan Marine Engineering Co., Ltd. and determined that Shanghai FS Container Line S.A. was the carrier under the contract for carriage of goods by sea involved in the case. On December 13, 2013, Ningbo Huazhan Marine Engineering Co., Ltd. brought a lawsuit against Shanghai FS Container Line S.A. to Ningbo Maritime Court, claiming that Shanghai FS Container Line S.A. should compensate for the loss of the goods.
[Results] After hearing the case, the Court held that the goods involved in the case were still in the warehouse at the port of destination, the shipper, Ningbo Huazhan Marine Engineering Co., Ltd. did not take delivery of the goods from the port of destination, and the carrier, Shanghai FS Container Line S.A., did not reject the shipper¡¯s application for taking delivery of the goods. Therefore, the claim that the carrier infringed upon the control of the goods was not upheld as there were no sufficient evidence or bases to support. In accordance with the Maritime Law of the People¡¯s Republic of China, the statute of limitation as to when shippers may file claims against carriers shall be one year. The goods involved in the case were delivered to the port of destination in October 2011, but the time when the shipper brought the lawsuit involved in the case was December 2013, and the shipper could not prove that there had been circumstances where the statute of limitation shall be discontinued, therefore, the claims were filed after the one-year statute of limitations had elapsed. Based on these facts, the Court dismissed the claims of the shipper, Ningbo Huazhan Marine Engineering Co., Ltd.
 [Typical Significance] How to identify carriers often becomes the focus of disputes over contracts for carriage of goods by sea. The differences between a freight forwarding company and a carrier are obvious because the former does such businesses as packing, inland transport, customs declaration, booking shipping space, etc. and the latter does the business of carriage of goods. As the NVOCC business has been included in the business scope of freight forwarding companies and some bad freight forwarding companies act with ulterior motives, in some circumstances, it is difficult to accurately identify the carriers. In order to miss true carriers, some shippers tend to sue freight forwarding companies together with carriers. As a result, multiple defendants being involved has become one of the typical characteristics of cases of disputes over contracts for carriage of goods by sea, which is to some extent a waste of judicial resources. In practice, shippers should identify carriers based on, inter alia, the information on B/Ls and performance of the relevant terms and conditions. In this case, it was expressly stated on the bill of lading that Shanghai FS Container Line S.A. shall be the carrier carrying the goods involved in this case. However, Ningbo Huazhan Marine Engineering Co., Ltd. brought a lawsuit against FS International Limited, who conducted the freight forwarding business, and its Ningbo Branch. As a result, the Court dismissed the claims of Ningbo Huazhan Marine Engineering Co., Ltd. for the defendant did not have the capacity to be the defendant.
To urge all parties involved to resolve disputes in a timely manner and expedite the circulation of goods shipped by sea, Article 257 of the Maritime Law of the People's Republic of China provides that the statute of limitations on disputes over contracts for carriage of goods by sea shall be one year after the date when a carrier delivers or should have delivered the goods. As some shippers or carriers are unfamiliar with this special provision, they tend bring lawsuits until no settlement of disputes is reached after prolonged consultation with their counterparties, but the one-year statute of limitations has elapsed for a long time. Ningbo Huazhan Marine Engineering Co., Ltd. ended up losing the case because it did not identify the right carrier and it brought the lawsuit against the carrier, Shanghai FS Container Line S.A., after the one-year statute of limitation had elapsed.
Case 2:
A freight damage accident occurs due to failure by the carrier to identify latent defects in a vessel by due diligence
The carrier shall not bear the liability for damage

[Case Brief] On June 1, 2013, Shaoxing Bayuan Textile Co., Ltd. applied to PICC P&C Ningbo Branch for a cargo transportation insurance with an insured amount of US$25238.4. On that date, the goods were loaded on the ship "HYUNDAI BRAVE" and then transferred to the ship "MOL COMFORT¡± on the way. Mitsui O.S.K. Lines, Ltd. issued the B/L involved in the case in its capacity as the carrier, stating that the shipper shall be Shaoxing Bayuan Textile Co., Ltd., with the value of the goods being US$56468.16, the port of departure being the Port of Ningbo, and the port of destination being the Port of Jeddah, Saudi Arabia. On June 17, 2013, the ship "MOL COMFORT¡± sank in the Indian Ocean due to rupture of the middle section of the hull, leading to complete loss of the goods on board. After paying Shaoxing Bayuan Textile Co., Ltd. insurance claims of US$25238.4, PICC P&C Ningbo Branch brought a lawsuit to the Court, claiming that Mitsui O.S.K. Lines, Ltd. should compensate it for freight damages of US$25238.4 and the interest thereon. The Court further ascertained that Mitsui O.S.K. Lines, Ltd. did not identify any latent defects in the design of "MOL COMFORT", i.e. the vessel involved in the case, through its daily inspection of the vessel. As shown in the investigation reports issued thereafter by ClassNK and the Ministry of Land, Infrastructure, Transport and Tourism respectively, it was found out after safety inspection of the sister ship of the ship involved in the accident that it was probable that the rupture of the hull was caused by insufficient safety margins and that therefore there were defects in the design of the ship.
 [Results] After hearing the case, the Court held that it was the latent defects in the design of the ship "MOL COMFORT¡± that led to the sinking of the ship. Mitsui O.S.K. Lines, Ltd. authorized ClassNK to carry out the daily inspection of the ship "MOL COMFORT¡± on time. In the inspection, ClassNK never identified any defects in the design of the ship, nor did it suggest the carrier that there were latent defects in the ship. According to the service records, Mitsui O.S.K. Lines, Ltd. had regularly conducted daily maintenance and checking of the ship. In that process, the hold No. 6 which subsequently ruptured was never deformed. This is to say that Mitsui O.S.K. Lines, Ltd. treated the ship "MOL COMFORT" with due care and the latent defect could not be identified indeed. In accordance with Article 51 (1) (12) of the Maritime Law of the People's Republic of China, the liabilities on the part of Mitsui O.S.K. Lines, Ltd. may be released, and the Court dismissed the claims of PICC P&C Ningbo Branch.
 [Typical Significance] In accordance with the Maritime Law of the People's Republic of China, during carriage of goods by sea, the carrier shall be subject to the incomplete fault liability system and the liabilities on the part of carriers may be released under the 12 circumstances as described in Article 51 of the Maritime Law of the People's Republic of China, such as the natural characteristic or improper packaging of the goods which causes freight damage. And the carrier shall assume the burden of proof under these circumstances aforesaid except in the fire situation. In shipping practice, some shipping companies are companies with only one ship, and their non-standard management vessels and failure to carry out daily maintenance and inspection of the vessels in strict accordance with the relevant regulations and to keep intact maintenance records make it difficult for carriers to adduce evidence. It is impossible to rescue and inspect the vessel involved in the case as it has sunk, but the hold maintenance records provided by the carrier and the inspection report issued by the classification society prior to the occurrence of the accident can prove that the carrier regularly conducted daily maintenance and checking of the ship. ClassNK and the Ministry of Land, Infrastructure, Transport and Tourism found out through safety inspection of the sister ship and simulation that the accident was caused by deformation and rupture of outer planks of the ship involved in the case which resulted from insufficient safety margins of the designed system of the ship. The deformation and rupture constituted latent defects in the ship which were not discoverable by the carrier by due diligence. Based on these facts, the Court ruled that the carrier shall be released from the liability for the freight damage.

 Case 3:
Improper packing of dangerous goods by the shipper leads to contamination of the goods on board. The carrier takes appropriate measures to make the goods harmless, and the B/L holder is not entitled to claim compensation for damages from loss of the goods

 [Case Brief] In November 2009, Ningbo Aoran New Energy Science & Technology Co., Ltd. purchased 780 tons of unsaturated acyclic hydrocarbons from SUMEC CENTRO AMERCIA DEVELOPMENT LTD. On December 31 that year, Zim Integrated Shipping Services Ltd. received 773.19 tons of unsaturated acyclic hydrocarbons destined for Ningbo, China in Guanta, Venezuela. It was stated on the B/L issued by Zim Integrated Shipping Services Ltd. that the shipper shall be ASIA PROJECT SERVICES LTD and the informant shall be Ningbo Aoran New Energy Science & Technology Co., Ltd. The goods were subsequently loaded on the ship "ZIM HAIFA" (voyage No. 022w) after being transshipped at the Port of Kingston, Jamaica. The goods seriously leaked on the way heading to the Port of Long Beach, the United States. On February 15, 2010, the ship arrived at the port of Long Beach. After out of box audit, two soft sacks containing goods which were leaking were discovered in each container. As shown in the inspection results, the cause of the leakage was the incompatibility between the materials of the soft sacks and the goods. As a kind of liquid substances harmful to the environment, the goods involved in the case were the dangerous goods No. 3082 as defined in the UN Recommendations on the Transport of Dangerous Goods. Zim Integrated Shipping Services Ltd. unloaded and transferred the goods involved in the case and cleaned the ship, cargo holds and other containers involved in the case to keep contaminants away. After the ship "ZIM HAIFA¡± arrived at the Port of Ningbo, Ningbo Aoran New Energy Science & Technology Co., Ltd. could not receive the goods with the original B/L endorsed by SUMEC CENTRO AMERCIA DEVELOPMENT LTD. As a result, Ningbo Aoran New Energy Science & Technology Co., Ltd. brought a lawsuit to the Court, claiming that the Zim Integrated Shipping Services Ltd. should deliver the goods involved in the case or compensate it for the loss of value of the goods amounting to US$397800.
 [Results] The Court held that the shipper did not declare to the carrier that the goods involved in the case were dangerous goods when they made the deal. The goods leaked in transit due to poor airtightness of the soft sacks used to pack the goods and incompatibility between the materials of the soft sacks and the goods, contaminating the ship and other goods. Zim Integrated Shipping Services Ltd. unloaded the goods at the Port of Long Beach, the United States to make the goods no longer harmful. This action was justifiable, and therefore Zim Integrated Shipping Services Ltd. shall not assume the liability for damage. Accordingly, the Court dismissed the claims by Ningbo Aoran New Energy Science & Technology Co., Ltd. and this dismissal was affirmed by the court of second instance.
 [Typical Significance] In ancient seafaring, sailing is synonymous with risk. With the advancement of science and technology and the development of means of communication, marine risks are now substantially different from what they were in the past. But, ensuring the safety of the goods on board remains the primary goal of carriers. One of the measures that have been taken by carriers is implementing more stringent regulations on the transport of dangerous goods. To this end, shippers are obliged to properly pack the goods and make truthful declarations, otherwise, they shall bear the adverse consequences. In this case, the shipper failed to truthfully declare that the goods involved in this case were dangerous goods and to properly pack the goods. The goods leaked, resulting in leakage of the goods and contamination of the other goods on board. The carrier shall not bear the liability for damage that resulted from its unloading and destroying the goods on these grounds, and is entitled to make a claim against the shipper for the reasonable expenses incurred therefrom.

Case 4:
After arrival of the goods at the port of destination, both the carrier and the shipper shall perform their respective obligations,
otherwise, they shall bear the destination port charges incurred through their respective faults.

 [Case Brief] In October 2013, Cuori Electrical Appliances (Group) Co., Ltd. authorized SINOTRANS Zhejiang Co., Ltd. Ningbo Mingzhou Branch to book shipping space for its goods pending shipment. It was stated on the B/L issued by A.P. Moeller-Maersk A/S that the shipper shall be Cuori Electrical Appliances (Group) Co., Ltd. On November 19 of that year, the goods arrived at the Port of Barcelona. On December 10, 2013, Cuori Electrical Appliances (Group) Co., Ltd. inquired of A.P. Moeller-Maersk A/S whether the goods could be shipped back and whether they could negotiate the container demurrage incurred at the port of destination and other matters for the buyer had gone bankrupt without taking delivery of the goods, but it received no response. In February 2014, SINOTRANS Zhejiang Co., Ltd. Ningbo Mingzhou Branch inquired of Cuori Electrical Appliances (Group) Co., Ltd. on three occasions whether the latter could give instructions on how to deal with goods due to non-taking delivery of goods at the port of destination, the latter responded by telling the former that the ownership of the goods involved in the case had been transferred to another person and the goods had nothing to do with it. In early May 2014, Cuori Electrical Appliances (Group) Co., Ltd. inquired of A.P. Moeller-Maersk A/S whether the latter would ship the goods back, it again got the answer that the goods would not be shipped back and the goods had nothing to do with the latter. As the goods were detained at the port of destination, A.P. Moeller-Maersk A/S brought a lawsuit to the Court, claiming that Cuori Electrical Appliances (Group) Co., Ltd. and SINOTRANS Zhejiang Co., Ltd. Ningbo Mingzhou Branch should jointly compensate the container demurrage of ?30,104 and return the containers involved in the case to it or compensate it for the value of the containers of US$4,600 in lieu of the return.
 [Results] After hearing the case, the Court held that knowing that the consignee was applying for bankruptcy protection and therefore was unable to take delivery of the goods after the goods arrived at the port of destination, Cuori Electrical Appliances (Group) Co., Ltd., as the shipper, did not continuously keep an eye on the status quo of the goods at the port of destination and subsequent treatment of the same, nor did it give any instructions on how to deal with the goods. As the carrier, A.P. Moeller-Maersk A/S failed to promptly notify the interested parties of non-taking delivery of goods upon arrival of the goods at the port of destination, nor did it take any loss mitigation measures such as transferring the goods to warehouses requiring lower warehousing costs. Therefore, a part of the fault lies with it. There was no fault lying with SINOTRANS Zhejiang Co., Ltd. Ningbo Mingzhou Branch because SINOTRANS Zhejiang Co., Ltd. Ningbo Mingzhou Branch had promptly performed the duty to inform. Based on the degree of fault lying with A.P. Moeller-Maersk A/S and Cuori Electrical Appliances (Group) Co., Ltd. respectively as well as business benefit and value of like containers, the Court ruled that Cuori Electrical Appliances (Group) Co., Ltd. should compensate A.P. Moeller-Maersk A/S for container demurrage of RMB 50,000 Yuan and return the containers involved in the case within 30 days or compensate A.P. Moeller-Maersk A/S for the loss of the containers equal to RMB 18,000 Yuan in lieu of the return.
 [Typical Significance] This case is a typical case among the cases in which the goods are not taken after arriving at the ports of destination, and the shippers do not give instructions on how to deal with the goods, or the shippers and the carriers cannot reach a consensus on shipping the goods back and transshipment, nor do the carriers promptly inform the shippers or take effective loss mitigation measures, leading to prolonged detention of the goods at the ports of destination with a large amount of container demurrage, storage charges and other expenses and referral to court for settlement of the disputes through litigation. In that type of disputes, the defendants defend themselves mainly on the following grounds: (1) that they do not have the capacity to be the defendants. Some shippers argue that they have transferred the goods to others or received the payments for the goods in full and that the destination port charges have nothing to do with them, turning their back on the disputes. Generally, courts would hold that in accordance with the principle of privity of contract, if a consignee fails to take delivery of goods, the carrier concerned shall still have the right to make a claim against the shipper concerned for reasonable freight and destination port charges; (2) that the plaintiffs do not perform the obligation to mitigate losses and therefore they should not bear further losses incurred therefrom. Courts usually determine whether or not the destination port charges are reasonable based on such factors as the length of time when the goods involved in the cases are detained at the ports of destination, the total amounts of the destination port charges and the measures taken by the carriers and the shippers during the detention (such as giving instructions, applying for auctioning off the goods, etc.).

Case 5:
The shipper fails to apply for registration of its maritime claims during the maritime claims registration period publicly notified by the fund for limitation of liability for maritime claims established by the carrier, and is therefore deemed to have waived the maritime claims
 [Case Brief] On March 14, 2012, with the authorization from CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL, CMA CGM S.A., carried a set of drying equipment from the Port of Shanghai to the Port of Dar es Salaam. It was estimated that the equipment would arrive at the Port of Dar es Salaam on April 20 that year. On the evening of March 15, 2012, the ship "Bareli", which was involved in the case, hit the rocks because it was sailing off the course when berthing at the Jiangyin Port Area within the Port of Fuzhou, leading to a rupture of the middle section of the hull. Water entered the cargo holds and caused damage to most of the goods located in the case. On June 5 that year, CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL sent a jettison authorization letter to CMA CGM S.A. On April 15, 2013, CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL referred the dispute involved in this case to Shanghai Maritime Court for litigation, but Shanghai Maritime Court did not accept this case. After failing to reach a consensus on compensation through consultation with CMA CGM S.A., CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL brought a lawsuit to Ningbo Maritime Court, claiming that CMA CGM S.A. should compensate it for damage to the goods equal to US$116,631 and the interest thereon on June 4, 2013. The Court further ascertained that in October 2012, CMA CGM S.A. applied to it for the establishment of a fund for limitation of liability for maritime claims other than those for loss of life or personal injury. In November that year, CMA CGM S.A. posted a public notice on the People's Daily Domestic Edition and the People's Daily Overseas Edition three times in a row. On January 7, 2013, Ningbo Maritime Court decided to approve the application of CMA CGM S.A. for the establishment of the aforesaid fund.
 [Results] After hearing the case, the Court held that although the goods of CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL were damaged in the accident involved in the case, the maritime claims of CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL were limitable. As CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL failed to have its maritime claims registered within the maritime claims registration period publicly notified by us, in accordance with Article 121 of the Law of the People's Republic of China on Special Procedures Concerning Maritime Litigation, it shall be deemed to waive the maritime claims. Upon occurrence of the accident involved in the case, CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL notified CMA CGM S.A. to jettison the goods. Therefore, the goods were actually not delivered. The ship involved in the case was expected to reach the port of destination on April 20, 2012. Although it referred the dispute involved in the case to Shanghai Maritime Court by bringing a lawsuit to that court on April 15, 2013, the case was not accepted, and such non-acceptance did not constitute discontinuation of statute of limitation. Therefore, when it brought a lawsuit to Ningbo Maritime Court, the one-year statute of limitations had elapsed. Based on these facts, the Court dismissed the claims of CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL.
 [Typical Significance] Limitation of liability for maritime claims is one of the systems peculiar to maritime laws. It is mainly designed to ensure and promote the development of the cause of the maritime transport undertaking and appropriately limit carriers¡¯ liabilities. Therefore, it is different from the general principle of actual compensation. In accordance with Article 207 of the Maritime Law of the People¡¯s Republic of China, the carrier liable may limit his liability of maritime claims for the loss of or damage to goods incurred during their operation process. Upon occurrence of the accident involved in the case, CMA CGM S.A. applied to us for the establishment of a fund for limitation of liability for maritime claims and obtained our approval for that application. In order to urge creditors to promptly exercise their rights and facilitate resolution of disputes over accidents involved in maritime cases, creditors are expected to apply for registration of their maritime claims during the periods determined in the public notices posted by maritime courts for the establishment of funds for the limitation of liability for maritime claims. Failing to do so will be deemed as the creditors¡¯ waiver of their maritime claims. As the shipper of the goods involved in the case, CONCORDE POUR L'INDUSTRIE ET L'EXPLOITATION SPRL would have been entitled to be indemnified in accordance with the law out of the fund for limitation of liability for maritime claims established by the carrier, CMA CGM S.A. for the damages had been damaged for reasons attributable to the carrier. However, it ended up bearing the adverse consequence of ¡°being deemed as a waiver of maritime claims¡± for it was negligent in not having its maritime claims registered.

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