In practice, it often happens that after containerized goods arrived at disport, due to B/L consignee/ receiver for whatever reason, failed to take delivery of cargo at disport in PRC up to several months or over one year, Considerable container demurrage/detention costs and storage fees etc. might be incurred including.

1)        Terminal Charges;

2)        Warehouse Handling Fee;

3)        Agent fee/Truck fee/ ODCY Handling Fee;

4)        Container Demurrage;

5)        Inspection Fee;

6)        Court fee and lawyer fee

In one case  - (MV C-L-B)

The container arrived in Qingdao on 14.03.08while it was un-stuffed /returned till 23.03.09. We were instructed on this matter in the end of Jan.2009, the container was unstuffed under re-turned within 2 months following lawyers’ involvement, including long Chinese New Year holiday.  That said, should carrier/owners have taken earlier action to minimize losses or to seek earlier legal assistance, the container would having been returned much earlier, saying no longer than 6 months since its arrival Qingdao 14.03.08.  Under such circumstances, we don't expect carrier to win 100% of container demurrage costs, demurrage claims might be justified by court at 50% depending on the merits. 

Luckily, owners got recovery from cargo interests (receiver based in Hangzhou) in this matter through amicable negotiation following lawsuit being lodged in court. The matter was settled to owner’s satisfaction out of court.

One reminder - As a matter of Chinese law, legal costs may not be fully recovered by winning party.  The principle "costs follow the event" seldom applies to lawyers' fee claims.  It is often for a winning party to bear its own legal costs.  But it is always for the losing party to bear court fee, or the court fee to be apportioned in accordance with the apportionment of fault /liability of the parties concerned.

Usual procedure to apply for release of container from Customs control:

1)        In case B/L receiver consignee fail to take delivery or have given letter of abandonment, carriers may send WP letter / or lawyers’ Letter of Demand; and

2)        If there remains NO positive response from the cargo interests and if the cargo side refuse to pay cargo inspection fee, then carrier may advance inspection fee and to apply to treat the cargo as non-owner goods and to finalize related Customs declaration;

3)        To apply to Customs for Cargo Inspection (normally by CCIC, an independent company related to CIQ);

4)        Based on Inspection Report, for the Customs to decide whether cargo should be destroyed or to be claimed/released; once cargo is released from Customs control, carrier can have containers back on same date.

5)        Whether for carrier to lodge claims for demurrage and costs etc against cargo interests based on B/ls, will depend on merits of each case and the likely chance of recovery, and the chance of enforcement of judgment.

Related Chinese Law

Art. 30 of The Customs Law of PRC "where the importer of goods fail to declare the imported goods within 3 months of the declaration of the arrival of the ship/or other transportation means, the goods shall be taken over and sold off by the Customs in accordance with law".

No.91 Order issued by CHINA CUSTOMS GENERAL, effective as of 20^th Dec 2001, its Art.4 clearly provides that:

"Where imported goods being abandoned by consignee or by owner of the imported goods, the goods shall be taken over and be sold off by the Customs", its Art. 4 further provides that,

“.cargo destruction and disposal costs, should be borne by the consignee, in case consignee cannot be ascertained, it shall be paid by liable party of the transportation facility and by the carrier..”

Art. 86 of China Maritime Code

If the goods were not taken delivery of at the port of discharge or if the consignee has delayed or refused the taking delivery of the goods, the Master may discharge the good into warehouse or other appropriate places, and any expenses or risks arising therefrom shall be borne by the Consignee. 

Carrier's Duty to minimize losses

In accordance with The General Principles of Civil Law and The Contract Law of PRC, although the consignee/shipper fail to take delivery of cargo, which amount to breach of the contract of carriage (as evidenced by the B/L), carrier/owners, are obliged to take immediate action to minimize losses. Otherwise, they would have no right to claim for enlarged losses.

In summary, following lawyers’ involvement, lawyers often propose members/carriers to take immediate action to contact local customs authority and go ahead for cargo inspection and destruction process (if destruction is determined by the Customs), including to advance costs/expenses as necessary, so as to have the laden container to be devanned and returned ASAP to carriers to minimize costs.

Destruction costs – are often considerable high, subject to discussion between carrier and related environmental organ/company, bargaining room is slim.  Attention should be paid to Cargo Inspection procedure, sometimes cargo destruction can be avoidable depending whether cargo can be put for alternative use in accordance with CCIC report.

In MV C-L-B  matter, although the cargo chili powder was concluded by the CCIC not suitable for food-processing /human consumption, after consulting cargo interests, industry friends and exchange of opinions with CCIC surveyor, it is finally concurred that the chili powder is suitable for industry use, hence the cargo having NO need to be destroyed, large amount of destruction costs were saved for the vessel owner/carrier.

In MV C-S matter, destruction costs were un-avoidable (frozen fish from India), such costs should be advanced and be borne by carrier, but not by the Customs.

No.91 Order issued by CHINA CUSTOMS GENERAL, its Art.4 clearly provides that: "...cargo destruction and disposal costs, should be borne by the consignee, in case consignee cannot be ascertained, it shall be paid by liable party of the transportation facility and by the carrier..."

In MV C-S matter, the consigned cargo was frozen fish from India.  After sample-inspection (The result from CCIC laboratory) conducted at Technology Centre of Qingdao Customs/CCIC Laboratory), the cargo was in bad condition which bacteria were far exceeding the PRC national standard of bacteria limit. As per CCIC inspection report, the cargo must be destroyed.  Owners advanced survey fee and cargo destruction costs etc listed above and finally have the containers returned to carrier in good condition within around 40 days since lawyers’ involvement.  Due to

Cargo interests/parties liable have no assets to be attached in PRC, owners/carrier did not commence legal proceedings against the cargo interests as chance of actual recovery and enforcement seem rather slim.  Owners at least controlled costs and had the containers returned soonest following lawyers’ involvement.