Released on 14^th March 2019[1]

Case 1[2]: Dispute on Contract of Carriage of Goods by Sea

Keywords: delivery of cargo without original bills of loading/ port of discharge in Brazil

Fact of Case:

On October 2015, Wenzhou Bai Li Lan Rubber Tire Co., Ltd. (“ Shipper”) booked container space from Mediterranean Shipping Company S.A.(“MSC”) to ship the cargo from Ningbo, China port to Navigentes, Brazil. The original B/Ls were issued to the shipper with information as below: Shipper was Wenzhou Bai Li Lan Rubber Tire Co., Ltd.; Consignee was Turbo Auto Pecas Eaccessrios LTD; loading port was Ningbo, China; port of destination was Navigentes, Brazil; CY-CY; 1108 tire in total; prepaid freight. After the shipment of the cargo, Shipper did not released the original B/Ls to Consignee because the cargo price was not received.

On 9^th December 2015, the cargo was discharged at wharf Portonave, Navigentes which was registered in the system of Siscomex (Brazil International Trade Integrated System). On 11^th December 2015, the cargo was transferred from the wharf to Bonded Zone of wharf Poly and finally delivered to Consignee.

The Shipper, as the holder of B/Ls, incurred their loss of cargo price, so filed lawsuit to Ningbo Maritime Court against MSC.

Judgement of Courts:

1 Ningbo Maritime Court opined that Shipper and MSC has reached on a contract of carriage of goods by sea; it was clearly found that the cargo discharged at Brazil can only be delivered or accepted by port authority under the law of Brazil; MSC has delivered the cargo to port Portonave as per Brazilian law, which shall be considered as completion of carrier’s responsibility; shipper did not prove that MSC once assisted Consignee on delivery of cargo without original B/Ls. Hence, the court decided that MSC had no liability against the loss of Shipper and dismissed the request of Shipper. Shipper refuse to accept this ruling and appealed to Zhejiang High Court.

2. Zhejiang High Court dismissed the appeal of Shipper and upheld the ruling of Ningbo Maritime Court.

Meaning of Case:

Article 7 of “Provisions of the Supreme Court on several issues concerning the application of law to the trial of cases involving the delivery of goods without original bill of lading” stipulated that “Where the carrier has to deliver the goods to the local customs or port authority in accordance with the law of the place of discharge specified in the bill of lading, he shall not be civilly liable for the goods delivered without an original bill of lading.”

In this case, both second and first instance court opined that the carrier has delivered the goods as per the above article and has no more control of cargo; Besides, Shipper could not prove that carrier once provided documents such as original B/Ls, delivery order or any other documents with similar effect to assist Consignee on delivery of cargo without original B/Ls, thus Shipper shall bear the result from his insufficient evidence.

Case 2[3]: Dispute on Subrogation from Marine Cargo Insurance

Keywords: Cargo loss/ CIF price / No Market Price/ Actual Sale Price

Fact of Case:

On 8^th April 2015, MV. Asia Aspara shipped two types of liquid cargo --Palm kernel oil and fatty acids from Lubbok, Indonesia to Zhapu port and issued two sets of B/Ls for cargo. B/Ls described information as below: cargo clean on board; consignee to order; fatty acids 5499.775mt;Palm kernel oil 10499.775mt.

On 18^th April 2015, the vessel arrived at Zhapu port for cargo discharging. On 22th April, all cargo discharge was completed. Unfortunately, it was found that the vessel discharged part of fatty acids into the volume of Palm kernel oil which caused serious cargo damage at RMB 945491.57. The cargo insurer reimbursed RMB 975041.86 in total to cargo receiver and got subrogation against MV. Asia Aspara. The cargo insurer filed lawsuit to Ningbo Maritime Court against the shipowner Asia Aspara Limited for RMB 975041.86 and relevant interest.

Judgement of Courts:

1. Ningbo Maritime Court opined that the cargo loss incurred within the period of carrier’s responsibility; the cargo insurer reimbursed RMB 975041.86 which is more than the actual cargo loss RMB 945491.57. Based on above, the court decided the carrier shall pay RMB 945491.57 and the relevant interest to cargo insurer while did not support the the insurer’s request for extra payment. The cargo insurer refused to accept this ruling and appealed to Zhejiang High Court.

2. Zhejiang High Court dismissed the appeal and upheld the ruling of Ningbo Maritime Court.

Meaning of Case:

When the cargo damage happened, there’s no market price and price fluctuation of sound goods at destination for case as reference price because of lack of mature trade market for those cargo. Hence, it’s hard to calculate the percentage of damage but could calculate the price difference between the CIF price of sound cargo and the actual sale price of the damaged cargo, which shall be the compensation amount to the cargo insurer.

Case 3[4]: Dispute In Tort

Keywords: H&M Insurance / Overdue Premium/ Termination of Insurance Policy

Fact of Case:

On 25^th Dec 2012, Chenzhou Shipping Group and Hongkong Chenglu International Ships Management Co., Ltd. (“the insured”) entrusted T&Z Insurance Broker Co., Ltd.(“the broker”) as their exclusive insurance broker to arrange H&M insurance for the insured.

On 11^th Jan 2013, the broker got reply from PICC Guangdong (“the insurer”) on the final quotation of the insurance and forwarded it to the insured.

On11th March 2013, the broker sent email to the insured with attachment of insurance policy where it was agreed that the payment of annual premium could be paid in 4 installment; in case the payment was delayed, the insurance policy would become null and void. On 19^th March, the insured paid their first installment of premium.

On 20^th June 2013, the insurer informed the insured that since the payment of premium was seriously delayed, the insurance policy has been null and void on 16^th June 2013.

On 15^th October 2013, the vessel incurred incident and sank at Pohang, Korea which caused 11 crew death and 1 missing.

On 26^th April 2014, the insured filed lawsuit to Ningbo Maritime court against the insurer for compensation on the above incident. Ningbo Maritime court ruled that the insurer shall pay about RMB39 million and interest to the insured. The insurer appealed to Zhejiang High Court which dismissed the appeal and upheld the ruling of first instance court. The underwriter requested retrial to Supreme Court. During the retrial, the insurer and the insured reached an amicable agreement, that is, the insured got partly reimbursement from the insurer.

In order to get more compensation, the insured sued the broker T&Z in tort to Ningbo Maritime court.

Judgement of courts:

1. Ningbo Maritime Court opined that it has been clearly and mutually agreed that “once delay payment, the insurance policy will be null and void”; the insured who clearly got knowledge on this term did not raised any objection on this term before agreement but accepted it by their signature; the insured sued T&Z in tort but failed to prove that T&Z has intentional act which has causation with their final loss. Hence, the court decided to dismissed the request of the insured. The insured appealed to Zhejiang High Court.

2. Zhejiang High Court dismissed the appeal of the insured and upheld the ruling of first instance court.

Meaning of Case:

As to the nature of relation between the insured and the broker, in this case, the first and second instance court preferred to consider it as a contract of brokerage (mediate). The broker who earned brokerage from the insured, was an independent third party among the insurer and the insured, instead of agent of either party.

The insured as plaintiff in this case, had burden of proof on broker’s malicious intention, intentional behavior, result of its behavior and causation between such behavior and result. However, in this case, the insured failed to prove so, thus their request was not supported by the courts.

Case 4[5]: Dispute on Liability Insurance

Keywords: Liability Insurance/ Sue and Labor Expense

Fact of Case:

The vessel MV. Xing Hang 227 was owned by Xue Enjun while registered under the name of Jiangsu Xinghang Shipping Co., Ltd. (“the shipowner”).

On 27^th Feb 2014, the shipowner pursued carrier’s liability insurance from Yong’an Insurance Co., Ltd (“liability insurer”) for the vessel. It was agreed in this insurance policy that the limitation compensation amount for each incident was 1million yuan; deductible was either RMB 5000 or 10% of the amount of loss whichever is higher.

On 21^st Sep 2014, the vessel shipped 970mt steel for Fu Min Co., Ltd. (“the cargo owner”) from Changzhou to Foshan. On 25^th Sep 2014, the vessel had collision with another vessel which caused sink of MV. Xing Hang 227 and cargo on board. As per the compulsory request of Taizhou Maritime Authority, the shipowner entrusted third party for the salvage of its vessel and cargo, which costs lighterage RMB 231,000 pick-up Fee RMB68,760 and storage fee RMB 108,000.

The shipowner claimed for the above fee against its liability insurer which was rejected, then the shipowner filed lawsuit to Ningbo Maritime Court.

Judgement of Court:

1. Ningbo Maritime Court opined that: the ligherage, pick-up fee and storage fee  spent by shipowner for salvage of the vessel was sue and labor expenses; even though sue and labor expenses could somehow mitigate the liability of shipowner to the cargo and another collided vessel, it was not covered by liability insurance. Hence, the court dismissed the request of shipowner. The shipowner appealed to Zhejiang High Court.

2. Zhejiang High Court dismissed the appeal and upheld the ruling of first instance court.

Meaning of Case:

Article 240 of Maritime Code of PRC stipulates that “The insured shall pay, in addition to the indemnification to be paid with regard to the subject matter insured, the necessary and reasonable expenses incurred by the insured for avoiding or minimizing the loss recoverable under the contract, the reasonable expenses for survey and assessment of the value for the purpose of ascertaining the nature and extent of the peril insured against and the expenses incurred for acting on the special instruction of the insured. The payment by the insurer of the expenses referred to in the preceding paragraph shall be limited to that equivalent to the insured amount.”

The Courts opined that the above article mentioned the “ loss recoverable under the contract” and “ insured amount” which are the items only in property insurance; in this case, the plaintiff and the defendant agreed on liability insurance contract, the liability to third party was the subject matter itself which could not cause other loss and there’s no insured amount agreed under the contract. Hence, the court believed that the above article which provides that the insured can claim for sue and labor expense against the insurer can only apply to property insurance instead of liability insurance, thus dismissed the request of the insured.

Case 5[6]: Dispute on Labor Contract

Keywords: Labor Contract/ Regulation on Work Injury Insurance

Fact of Case:

On 1^st Jan 2015, Mr. Lv Yang was employed by Long Sheng Co., Ltd.as crew on MV. Bei Cang Hai 10 which was arranged P&I insurance in North of England P&I Club. Long Sheng paid part of social insurance for Mr. Lv, however, the work injury insurance was suspended.

On 4^th Jan, when Mr. Lv did maintenance work on board, he was seriously injured and become dead because of gas explosion. The death of Mr. Lv was identified as work related death by authority.

On 25^th August 2016, the wife/kids/parents of Mr. Lv and Long Sheng Co, Ltd. reached an amicable agreement which provided that Long Sheng Company shall pay RMB1.43million to the family of Mr. Lv as final and full compensation to the death of Mr. Lv. On 7^th Sep 2016, RMB 1.43million was paid by Long Sheng Company to the bank account of the family of Mr. Lv.

After that, the family of Mr. Lv sued Long Sheng Company to Ningbo Maritime Court for extra RMB 3million compensation amount.

Judgement of Courts:

1. Ningbo Maritime court opined that the Long Sheng Company has paid 1.43 million to the family of Mr. Lv which is much higher than the legal standard of compensation provided by Regulation on Woke Injury Insurance, and both of Long Sheng Company and the family of Mr. Lv has executed the amicable agreement, thus decided to dismiss the request of family of Mr. Lv.

Meaning of Case:

Article 12 of the Supreme Court's Interpretation on Several Issues Concerning the Application of Law in the Trial of Compensation for Personal Injury Cases stipulated that “...if the worker suffer personal injury as a result of work injury accidents, and the workers or their close relatives sue to court against employer to bear civil liability for compensation, they shall be informed to deal with the dispute in accordance with the Regulations on Work Injury Insurance . ”

In this case, the death of Mr. Lv was a result of work injury accident, the Regulation on Work Injury Insurance shall be applied to calculate the compensation amount to the family of Mr. Lv.

Case 6[7]:  Disruption of Civil Proceeding

Keywords: Vessel being arrested/ Crew refused to disembark

Fact of Case:

Mr. Liang, Mr.Xue and Mr. Ren, three officers of MV. Fu Hang applied to Ningbo Maritime Court for arrest of MV. Fu Hang on dispute of overdue wages. On 1^st July 2016, the court decided to arrest the vessel and requested the respondent- the shipowner to be liable for the safety of the vessel during the arrest. However, Mr. Liang, Mr.Xue and Mr. Ren refused to disembark from the vessel and insisted for the payment of their overdue wages.

On 8^th Feb 2017, one of the mooring chain was suddenly broken and caused the ground of the vessel. The local marine department did investigation and made conclusion that the shipowner shall be primarily liable while three officers shall also take secondarily responsibility for the incident.

On 27^th Dec 2017, the shipowner sued three officers to Ningbo Maritime Court to claim 50% of loss of vessel caused by the incident.

Judgement of Court:

1. Ningbo Maritime Court opined that the conclusion of the investigation report on the legal relationship between the relevant parties and the allocation of liability for incident did not have a direct binding force on the civil disputes before the due proceedings; Shipowner sued Mr. Liang, Mr.Xue and Mr. Ren in tort, however, failed to prove that they had subjective fault, act in tort and causation of between their act and the incident, thus decided to dismissed the request of shipowner. However, because those three people refused to disembarked from vessel, which seriously disrupted civil proceeding, the court decided to fine each of them RMB 10000.

2. The Shipowner refused to accept the ruling of the court and appealed to Zhejiang High Court, but finally withdraw its appeal.

Meaning of Case:

In a maritime trial, the maritime administrative investigation or its conclusion is an essential evidence especially in the absence of evidence to the contrary, but is not the direct basis for the court to determine civil liability. The accident conclusion in this case has not fully analyzed the fault factors, act in tort and causal relationship that affect the bearing of civil liability, and the accident liability identified by it was not enough to be directly adopted by the judgment, so the plaintiff should still bear the burden of proof and the legal consequences of failure to provide evidence.

It is the legal right of the crew to apply for arresting the vessel due to the arrears of wages of the shipowners. However, if any participant in the proceedings or any other person refuses to carry out the effective judgment or order, disrupting the proceedings, he or she shall be subject to judicial punishment or even be investigated for criminal responsibility.